Despite a Tumultuous 2014, Bitcoin Still Has Value

By Sean Michael Kerner  |  Posted 2014-12-30 Print this article Print

Another shadow cast over Bitcoin in 2014 was the bizarre stalking of the person one publication had identified as the mysterious Satoshi Nakamoto, the inventor of Bitcoin. On March 6, Newsweek claimed that the Bitcoin founder was Dorian Prentice Satoshi Nakamoto. Dorian Nakamoto disputed the claims, even as journalists chased him around looking for comments. To date, the real Satoshi Nakamoto remains unknown and has not revealed himself or herself to the public.

The spectacular failure of Mt. Gox, the 51 percent attack risk and the race to find Satoshi Nakamura, were all events that created some drama in the Bitcoin world. Stepping off the dramatic stage, there were many events in the Bitcoin world that served to strengthen the viability and legitimacy of the cryptocurrency, even as the actual value declined.

In the United States, several levels of government took interest in Bitcoin over the course of 2014. On March 26, the Internal Revenue Service provided guidance on how Bitcoin should be treated for tax purposes. The IRS does not consider Bitcoin to be legal tender, but rather as property that can be taxed.

In New York State, a proposed framework for Bitcoin regulation, known as the BitLicense was announced in July. The purpose of the BitLicense is to help protect consumers against fraud.

From a commercial perspective, use of Bitcoin and interest in its value has continued to grow over the course of 2014. In April, Bloomberg, one of the world's leading financial news organizations, began to track Bitcoin pricing values.

The acceptance of Bitcoin as a form of payment was a key trend in 2014. Technology vendor Dell began accepting Bitcoin in July. In August, Dell CEO Michael Dell announced that his company had a $50,000 server order that was paid in Bitcoins.

Microsoft, which announced its embrace of Bitcoin on Dec. 11, is working with Bitcoin payment processor BitPay, which also works with PayPal.

Don't Count Bitcoin Out

Although the value of the cryptocurrency has declined over the course of 2014 and it has had its share of troubles, the Bitcoin movement persists and will likely continue to survive for the foreseeable future.

On Jan. 29, before the Mt. Gox collapse, venture capitalist and Internet browser pioneer Marc Andreessen explained why he was bullish about Bitcoin. For Andreessen, leveraging the power of distributed computing for transactions without the need for a central authority offers an advantage. That benefit has not changed over the course of 2014, even though the value of Bitcoin has. It's that opportunity that Andreessen sees in Bitcoin—to disrupt and reinvent the way transactions are performed that will keep Bitcoin relevant.

Markets move on supply and demand—just ask any oil trader. The price of crude oil has also fallen dramatically over the course of 2014, from a high over $100 a barrel to settling in just above $50 in December.

Bitcoin has value because there is demand and there is opportunity. While demand may grow or wane over any given period, it is clear that after a year of great challenge for Bitcoin, the opportunity remains for 2015 and beyond.

Sean Michael Kerner is a senior editor at eWEEK and Follow him on Twitter @TechJournalist.


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