As of today (June 7, 2015) Bitcoin sits around $226, a major drop from its peak value of over $1000. I've seen a lot of talk about how this means bitcoin has failed as a viable currency and a lot of investors have lost hope. To clear the record, I have never recommended investing in any cryptocurrency. I think Bitcoin is about as viable of an investment as EUR, USD, or CNY. Currency has historically been a very poor investment. I have also never speculated on the value of Bitcoin in intervals longer than a month.
Here is the reason why, just because Bitcoin is the future doesn't mean it's worth anything. I'm sure fanboys are at this point shuttering and immediately scrolling to the bottom of this article to write nasty comments, but I don't want those of you still reading to mistake my position as one against the Bitcoin protocol. I still without a doubt believe cryptocurrency is the future. If you want a little more background on my thoughts please read
A Vision of the Future for Bitcoin and Cryptocurrency.
I've said before that I believe cryptocurrency is the next logical abstraction of currency. The same way trade notes superseded gold, and fiat superseded trade notes. The nuance to understanding the fall in Bitcoins value is understanding that just because one form of currency replaced the other
does not mean the currency replaced was less valuable. Even thought fiat eventually replaced gold as our preferred transactional currently we're not trading in thousands of gold coins for single dollar bills.
This parallel summarizes my view on those who claim Bitcoin will be worth some untold millions per coin someday. It's ridiculous, I don't speculate over the course of years and Bitcoin could still be worth thousands per coin. I don't know, and I don't claim to but I can tell you for certain that Bitcoin will not be worth X amount simply because it will replace the dollar.
