Cryptocurrencies took a dive and articles emerged about the crypto-bubble bursting. In my opinion this is not the case. Three recent events have caused the price drop. The first is the hack at the Coincheck exchange at the end of January where $530 million worth of XEM coins have been stolen. The second event is the banning of crytocurrency purchase on credit cards. Finally, China decided to block access to international cryptocurrency exchanges by using the Chinese firewall.
A hack at a cryptocurrency exchange is of course old news. There have been at least 3 dozens of known hacks since 2011 that can be attributed to a variety of reasons. It shouldn’t be a surprise that software that is still far from reaching version 1.0 is vulnerable to all kinds of threats. Software bugs, inside jobs and a lack of understanding of the complex cryptocurrency environment that is still emerging, will keep tormenting the crypto-world. Each time, after such a hack, bitcoin has come back stronger and new crypto-currencies have emerged. What is surprising to me though, is that everyone seems to have bought (or would like to buy) cryptocurrencies. When even elderly people talk about the price of bitcoins while standing at the queue to pay for their grocery… well then you have a bubble (that will eventually burst).
Blocking access to cryptocurrencies or making it harder to buy them will cause a price drop, but in my opinion, it will eventually drive the price higher than ever before. People will still want to buy cryptocurrencies, and once they find the way to do it they will go all-in now that the price is low. What will cause the bubble to burst is when people will become aware of the risks and pitfalls associated with cryptocurrencies and don’t take radical steps like Didi (although it is an amazing publicity stunt) but this might take a while 🙂