Bitcoin’s volatile tendencies were on full display this past week. After flirting with record highs just over one week ago, bitcoin fell to its lowest level in over a month, $746.79, on Thursday (Jan. 12). While that may still seem like a pretty solid value, that figure represents a 35 percent drop from its high of just over $1,150 on Jan. 5.
The price has recovered a bit since Thursday morning. Bitcoin’s value breached the 800s later in the day and, at the time of writing, sat at $819.19, a rise of 5.57 percent since the day’s trading began. But after all of the recent highs and lows this past week, nothing about bitcoin’s value seems certain at the moment.
Most of the recent volatility can be linked to regulatory concerns coming from China. The nation of over 1.3 billion accounts for over 90 percent of the world’s bitcoin trading volume and houses over 80 percent of the world’s bitcoin mining operations. Needless to say, if Chinese regulators even look at bitcoin the wrong way, investors around the world fear the worst.
This time around, decreases in the digital currency’s value came after China’s central bank, the People’s Bank of China, launched a probe into major bitcoin exchanges in Beijing and Shanghai, including BTCC, Huobi and OKCoin, investigating possible instances of market manipulation, money laundering and unauthorized financing.
Over-the-counter trader Zhao Dong, in an interview with CoinDesk, said he has no worries about the future of the bitcoin. He believes the People’s Bank of China merely wants to limit investor risk and not, as many fear, crack down hard or outright ban the digital currency. Zhao was quoted as saying: “It’s true that there is some panic selling, but old bitcoiners like me aren’t panicking at all. Actually, it’s a good opportunity to make a profit.”
As of now, the central bank has yet to comment on whether any violations were found during the probe, so perhaps the worst of the value drop is over for now. Though there are never any guarantees with bitcoin.
Despite its volatility, bitcoin continues to find itself gaining quick traction in new world markets, especially where national currency finds itself in a tough spot. In nations with cash struggles, the underbanked and unbanked are increasingly turning to digital currencies in the face of an uncertain economic future.
Near the end of 2016, the Nigerian economy saw a recession — contraction of 2.24 percent in the third quarter — as well as inflation and a weakened currency following drops in the sale and prices of crude oil. The NLRC, which advises the Nigerian government, drafted a bill in November of last year to promote the development and maintenance of its currency market, in part by making it a criminal offense for citizens to hold cash outside the banking system.
As one result, bitcoin’s adoption got a boost in the nation of over 175 million as many sought out alternative finances. Bitcoin transactions and investments remain untaxed in Nigeria, adding to its perceived value as an alternative to the naira.
The trend is clear in Nigerian Google searches for bitcoin. There were relatively few until June last year when the economic crisis kicked into high gear. After that, searches for bitcoin skyrocketed and surged again after Christmas, with interest reaching an all-time high in the past few days.
The number of merchants in Nigeria who accept bitcoin for goods and services is limited as of now. Even so, Nigerians have increasingly begun to investigate the digital currency as a way to reduce the personal financial effects of the nation’s current economic struggles, to circumvent the proposed NLRC provision on cash holdings and foreign currency exchange or to continue holding earnings without having to go through banking systems.
While digital currency can provide a way to keep cash without relying on banks, it can become a necessity for others when banks refuse to work with them at all.
A new digital currency with a focus on one particular market recently made its online debut. While bitcoin has spent years attempting to shed its public image as a facilitator of transactions in the drug trade, this newest digital currency is specifically for the marijuana industry — joining the ranks of potcoin, hemp coin, dopecoin, cannacoin and others.
Perkscoin (PRC), which was debuted earlier this month, is a digital currency specifically made for users on the cannabis social network CannaSOS to address the issue of banks refusing to process payments and deposit funds affiliated with the legal marijuana market.
While some efforts have been made for banks to accommodate the needs of the cannabis industry in the U.S., only some 3 percent of the nation’s close to 12,000 federally regulated banks and credit unions actively serve the marijuana industry due to its illegality on the federal level.
This means that, in states where marijuana is legal for recreational and/or medical use, dispensaries have had to store their cash revenue outside of banks, which can increase the likelihood of robbery, and cannabis-based startups can have a difficult time acquiring funding.
Some U.S. politicians are working to ensure legal marijuana businesses have access to banking services, but CannaSOS is providing a digital currency solution while Washington hashes things out (pun absolutely intended).
As of now, PRC can be exchanged or gifted within the CannaSOS network. The company plans to expand its offerings to a PRC rewards card and to eventually extend the use of the digital currency to participating dispensaries.