Bitcoin has often been described as a being a bubble. This led many to say that at some point, this bubble would definitely come to an end. This has all just been hearsay and opinion up until now, but it seems that this might actually be finally happening.
Last week, the price of Bitcoin dropped by 20 percent; but that was not the only one. Other popular cryptocurrencies, such as Ethereum and Ripple also saw huge losses. Although there are often many reasons for this drop, experts are saying that the cause for Bitcoins price drop is simple, as this is because the initial price rise was driven by demand primarily from Asia, and since both the South Korean and Chinese government are clamping down on the trading on cryptocurrencies, with some shutting them down completely.
The price of Bitcoin is notoriously volatile, so the fact that the price has dropped recently is not out of the ordinary, but this recent news has highlighted some potential problems. Bitcoin was designed so that transactions are approved by a network of computers as opposed to a single government. Ownership of Bitcoin is very consolidated though. To put it simply, about 40% of Bitcoin is held by 1,000 users, and the top 100 addresses control about one sixth of the issued currency. So, when one person sells their Bitcoins, it can dramatically change the value of this virtual currency. Bear in mind that some Asian countries have clamped down on illegal trading, this can have a devastating and long lasting effect on the virtual currency on the whole.
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