Bitcoiners: “Price Drop Is the Norm, Have Some Faith”
On June 26, Bitcoin price fell 9.3% in its biggest one-day drop since January 2015. Altcoins like Ethereum and Litecoin also suffered a price drop with a drop of 23.6% and 13.71% respectively on the same day.
The end of the bull market? Bitcoiner Yang doesn’t think so.
“It happens all the time. If you don’t get used to it, you’d get a heart attack,” said Yang, an early bitcoin adopter who works at a state-owned company at Henan province.
Though he has always been optimistic about the price of bitcoin, the current bull still takes him by surprise.
“I’m not buying any cryptocurrencies until the bull market comes to an end. The transaction volume is too high on exchanges. There must be bubbles. I don’t want to get trapped at this high price.”
Yang first learned the concept of bitcoin in 2013 when he read an article about the most dangerous currency in the world.
“It was a Wednesday and the price of bitcoin was 100 yuan. And I was shocked to find the price rose to 300 yuan in a few days. I thought it was too late to buy it.”
Later when bitcoin price increased to 600 yuan, Yang realized that it’s never too late to buy bitcoins and he bought 25 bitcoins.
In 2013, bitcoin price increased from 85 yuan in January to 8500 yuan in November which led to a media hype. More bitcoin newbies who were in high hopes of getting rich stepped into the world of bitcoin. But the price dropped dramatically in December from 8000 yuan to 3100 yuan.
“I was really lucky,” Yang said,” before the market crashed, I sold my bitcoins to buy a house. I made some money at that time, but I never thought the price would go this high in 2017.”
Since 2014, bitcoin certainly has confronted moments of darkness. Over the years, Yang bought 30-odd bitcoins with his salary at an average price of 3000 yuan.
Now the price of per bitcoin can be 20,000 yuan when you went to bed and 16,000 yuan when you wake up. But Yang says it is just the way it meant to be.
“The more you care about the price, the easier you get scared. It’s all about whether you have the faith in the technology.”
The blockchain technology is as indispensable to bitcoin as water to fish. It enables bitcoin to be accepted as a legal currency.
As of today, Germany, Japan, Canada and Korea have recognized bitcoin as a legal currency. Particularly in Japan, over 5000 stores accept bitcoin as a means of payment, including BicCamera and Peach Airlines.
In 2015, on bitcoin pizza day, Yang exchanged 0.0522 bitcoins worth of 80 yuan for a pizza.
“It’s definitely not easy to convince pizza stores of accepting bitcoin as payment. After a lot of talking, finally a guy nodded his head yes. It’s the best pizza I ever had. Later when bitcoin price reached 8000 yuan, I persuaded the guy to sell them for cash and he was happy to earn some money. But I didn’t expect the price would go so high…”
Apart from bitcoin, Yang also invest in altcoins. He bought 2000 litecoins when the price was around 4 dollars. He never sells one for cash wondering litecoin price will keep surprising him just like bitcoin.
“Bitcoin is a value investment and altcoins are more speculative than bitcoin,” noted Yang, “From the perspective of public acceptance and technical maturity, altcoins are way too risky than bitcoin.”
At present, over 800 altcoins are listed on CoinMarketCap.
“Altcoins are more vulnerable to a 51% attack which is not a real threat to bitcoin,” complained Cheng who calls himself a victim of altcoins.
As early as in 2010, the Beijing-based bitcoiner already heard a lot about bitcoin.
“Back then, I thought it was a scam. But the more I learned about it, the more I realized how significant it is.”
He then bought several bitcoins in October 2013, but due to its price stagnancy he later switched to altcoins, such as dogecoin and feathercoin.
In early 2014, Cheng started to mine Auroracoin and got 7 or 8 coins per day. The price kept going up and he invested more in it until a sudden price crash.
“I was so regretful! I didn’t exchange them for fiat money, and I didn’t exchange them for bitcoin. Big mistake!”
At the end of 2013, Cheng built a small bitcoin exchange after two months of working. Unfortunately, the exchanged suffered a 51% attack.
“Clients’ altcoins just disappeared. Transaction history showed assets are still in the exchange, but somehow they are gone.”
Cheng shut down the exchange shortly after the attack.
“It’s so hard. People kept calling you every day to check if their assets are safe. They trust big exchanges.”
But the same thing could also happen to big exchanges. In 2016, Bitfinex was hacked and lost 119,756 bitcoins. The exchange told customers they would share over 36% of the loss of the assets but would be compensated for these losses with tokens of credit.
“As the cryptocurrency market is experiencing a bull market, we have forgot the incident.”
On the whole, Cheng has great faith on bitcoin. He is now developing two algorithms to predict trend of bitcoin price.
“You can learn something from studying on the historical data on exchanges. Sure there will be a black swan event, but it’s rare.”