Another week of extreme price volatility in the Bitcoin marketplace. So what else is new, right? It was similar to many of the recent price yo-yo’s this time around as the price dropped from $450 to $360 early in the week on fears of a crackdown by the Chinese government on the virtual currency. Reportedly, a number of Chinese Bitcoin exchanges have been notified that their banks would no longer support transactions beginning next week.
By the end of the week cooler heads had prevailed and as of Friday Bitcoin was trading at $420. The drop earlier in the week represented the first time since November that BTC had dropped below $400. Even with Friday’s price recovery BTC is down almost percent over the last three months and over 60 percent from its high of $1100 last year.
While the price volatility of the digital currency is an issue–and could be a barrier to more rapid mainstream adoption–the mass media is really ‘missing the forest for the trees’ when it comes to the Bitcoin story. There are now shortage of hysterical reports when a big price drop occurs but significantly fewer updates when it inevitably finds market equilibrium and the price rebounds. Of course the price drops play into the mainstream media narrative of generating panic and fear, while by the time it recovers they’ve moved on to another story.
More significantly, it misses the most revolutionary component of Bitcoin entirely–the frictionless movement of money through a decentralized network of computers is the real source of Bitcoin’s disruptive potential. To take banks, regulators and government out of the transfer of money and allow individuals and companies to spend and transfer money anywhere in the world for whatever purpose they want is the real potential game changer with Bitcoin. It’s also why the guardians of the status quo in the financial industry, governments and the media are terrified of it–it creates the potential of a world where the free flow of money is not constricted by political or ideological whim of the power elite.
Maybe at some point the mainstream media will catch on to what is really significant about Bitcoin but it’s not surprising that they’re so far behind the curve. They didn’t exactly respond well to the Internet explosion, after all.