When could be the end of Bitcoin as a digital currency?

“While Bitcoin has been touted as the next big payment revolution, the fundamental issue is that Bitcoin lacks a robust system of rewards for transaction-generating miners,” Nicholas McKinnon, director of frontier strategy at BMO Capital Markets told Forbes. “That translates into a structurally deflationary currency.”

To illustrate his point, McKinnon went back to the much-maligned and unsophisticated Dot-Com boom of the mid-2000s. Like in the early 2000s, there are thousands of startups in the space that each have the goal of introducing new and creative ways to collect money from users, he said.

“But these companies have all tried to launch before, failing time and time again, and they all are suddenly launching when the value of the new concept rises to a premium,” he said. “History shows the only way to stop the bubble before it pops is to let a lot of buyers in. But once the bubble has burst, the new players also run.”

Is Bitcoin safe as a currency?

Some have likened Bitcoin to being a safe haven, given that it is hard to wipe out as a currency. And even though it is very volatile, as McKinnon noted, it does not appear to be an easy bet to make shorting or buying.

“Bitcoin has been vilified by the financial media for the last month, but it’s still worth just a fraction of what it was worth just four months ago,” Gordon Johnson, a portfolio manager at R.W. Pressprich & Co. Inc. in New York, told Investopedia. “I would not be too quick to declare Bitcoin dead, especially considering that a Bitcoin is worth significantly more than the sum of its parts, and there is currently no real mainstream adoption for Bitcoin.”

Johnson said the biggest problem is that Bitcoin is not widely accepted in many countries. In the U.S., for example, all you can do with Bitcoin is pay for the media sites or online gambling services that accept the digital currency.

“The biggest issue is that in developed countries, credit cards are much more readily accepted and are in a much better position to be used by businesses,” he said. “Bitcoin has yet to be accepted as a method of payment in many countries, making it a much more difficult proposition to become accepted for use by businesses. In addition, Bitcoin is not backed by any government and is not insured in the same way that cash is, which are typically one of the most stable forms of money.”

Should I buy Bitcoin?

Another point of caution is the fact that, unlike a Visa or MasterCard, you cannot guarantee that you will get your money back if you lose your wallet or laptop.

But just because it is not widely accepted doesn’t mean that Bitcoin or your hardware device. However, if there is a major security breach, then people like Johnson will buy up and flip the Bitcoins for real cash to protect themselves from their own mistakes.