It’s hard to deny that Bitcoins and other similar cryptocurrencies have had an explosion of growth over the last couple of years. The availability of these alternatives to mainstream currency has made them much more popular among young people in certain social circles.
While a lot of transactions that happen using Bitcoins are completely innocent, the currency has also received a lot of support from criminal communities around the world. The main draw for these groups is the fact that they can use the currency to sell illegal items and it’s nearly untraceable.
As the popularity of Bitcoins as a cryptocurrency grows in modern culture, it begs the question of whether or not a currency backed by criminals can survive in the modern era. A major risk factor that may be off-putting to those looking to invest in Bitcoins is the fact that once Bitcoins are seized by the government for being used illegally, they may never re-enter the economy.
The Bitcoin Bubble
It’s entirely plausible that at some point the Bitcoin bubble will burst, drastically reducing the value of the cryptocurrency and leaving many people scrambling to make up for lost resources and finances. This could happen in a number of different ways, including government intervention, criminal crackdown, or purposeful sabotage.
The first way that the Bitcoin bubble may burst is as a result of government intervention. Cryptocurrencies are a new technology and the laws surrounding them are still being defined today. A government could decide to outlaw, ban, or seize Bitcoin assets, which would have a massive impact on the cryptocurrency.
Another way that the bubble could burst is through increasing criminal crackdowns by federal agencies. As it stands, there are likely millions of dollars worth of bitcoins floating around the web that have connections to the drug industry and other illicit services. These funds could be seized at any time by the government as part of an ongoing investigation into illegal activities on the web.
The final way that the Bitcoin bubble could collapse is through purposeful sabotage of the cryptocurrency economy. While a large number of people are using Bitcoins, a well-executed cyber attack has the potential to all but eliminate the currency. Especially as computers gain more and more processing power, it will become easier and easier to hack into Bitcoin wallets and encryption keys. No one knows for sure if or when an attack like this could happen, so it’s important to stay vigilant at all times.