Bitcoin Falls 40% in a Few Weeks - Is It Over for the Crypto-currency?

Bitcoin, the darling of libertarian, fiat money avoiders, has plunged nearly 40% in a few short weeks. After an incredible run this year, soaring like a rocket from a bit more than $200 to $1,203 between October and late November, bitcoin has collapse back down to $752.

Bitcoin, the darling of libertarian, fiat money avoiders, has plunged nearly 40% in a few short weeks.

After an incredible run this year, soaring like a rocket from a bit more than $200 to $1,203 between October and late November, bitcoin has collapse back down to $752.

This is massive volatility and a painful correction for those who have been buying for the first time this last month.

After lots of positive press this year, some big names have been coming forward against bitcoin in recent weeks. Some of these experts are notable gold and silver fans, yet don't think this pioneer of the crypto-currencies is all it's cracked up to be.

So what gives?

Is it game over for bitcoin?

Probably not.

Bitcoin was always due a correction sooner or later. No financial market or asset can keep rising forever at the pace BTC had since September.

Bitcoin was up many hundreds of percent since the beginning of 2013. For financial market participants it was feeling pretty bubblicious.

However, bitcoin's appeal remains.

Crypto-currencies really can improve efficiency and speed in transferring money. In the same way that PayPal disrupted the legacy banking system, bitcoin et al are poised to disrupt PayPal and the banking infrastructure that remains in this area.

That sounds pretty good to me. I find it pretty costly to donate to causes and blogs I like using PayPal.

When it comes to payments, we need to keep an eye on bitcoin's adoption rate. The more people, businesses and organisations using the likes of BitPay, the brighter the future looks for bitcoin and other new monies.

Bitcoin is still community money

However, the biggest reason d'etre for crypto-currencies is that fact that they serve as an alternative to government-controlled money, which is often printed without our permission.

Bitcoin and its brethren still empower people and communities as they remove supply from the hands of politicians and their whims.

That is a big selling point.

The cost of living across the world never seems to stop rising and plenty of economists point to money-printing and central bank policies as part of the reason.

If new forms of money really do mean more stable prices and less painful energy bills, bitcoin will not be disappearing in a hurry.

The implications for your savings

Whilst it is true that bitcoin, and other crypto-currencies, have experienced severe price drops in the last weeks, they're continued existence and maturation has big implications for how we invest, save and think about money.

The crypto-markets remain frontiers and few people are advising risk-averse savers and the less well off to throw lots of money into these new markets.

Creative destruction continues apace within the digital currencies. If you're worried about losing your money, you might want to keep watching from the sidelines.

However, increasing numbers of people are experimenting by moving small quantities of money using payment processors like the aforementioned BitPay. There are other processors growing too, like Coinapult, based in Panama.

The growth in this payments area is being enabled by rising numbers of small and medium-sized business accepting bitcoin. Whilst big business hasn't truly joined the bandwagon yet, the likes of Virgin and others are starting to sell goods and services for bitcoin.

If you were lucky enough to have ridden the bitcoin rocket this year, you can now trade in some of your gains for a trip into space with Virgin Galactic.

Crypto-currencies remain a compelling new phenomenon.

There will be set backs and price drops along the way. We could be seeing one right now.

Ultimately though, the popularity of digital money continues to grow.

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