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Tech in 2018: Did Bitcoin bubble finally burst this year?

Bictoins remained a volatile cryptocurrency throughout the year and is now headed to its lowest valuation in recent months. Is the bitcoins mania finally over?

tech Updated: Dec 29, 2018 16:41 IST
Kul Bhushan
Kul Bhushan
Hindustan Times
Bitcoins,bitcoins 2019,bitcoins 2018
Can bitcoins make a comeback in 2019?(REUTERS)

Bitcoin, the world’s best-known and biggest cryptocurrency, raced to $19,000 valuation in December 2017. Despite initial spike in valuation and interest from users and institutions around the world, bitcoins remained a volatile cyrptocurrency throughout 2018. At the moment, bitcoin is trading at $3,900 approximately.

The slump in valuation of bitcoins has been going on for quite a few weeks now. Things are unlikely to get better for the cryptocurrency from here. According to industry pundits, bitcoins is headed towards its lowest valuation in last one year, even though the dip could be short-term.

“There’s still a lot of people in this game,” Innes, head of trading for Asia Pacific at Oanda, a forex company, is quoted as saying by Bloomberg. If Bitcoin “collapses, if we start to see a run down toward $3,000, this thing is going to be a monster. People will be running for the exits.”

Trajectory of bitcoins thus far has been very close to what the industry pundits have predicted. JP Morgan’s boss Jamie Dimon last year famously called bitcoins a “fraud” and that it was more useful for criminals than mainstream usage. ALSO READ: Bitcoin’s plunge in volume stirs questions about its popularity

Unpredictable nature of bitcoins has already taken toll on some firms. One of the biggest casualties has been mobile computing giant Nvidia. The company posted a disappointing earnings report in November months after being major beneficiary of the crypto mania late last year.

The mobile computing firm flooded the market with crypto mining chips with growing demands for bitcoins. The demand for crypto chips evaporated soon after the bitcoins valuation started to fluctuate.

“Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected,” said Jensen Huang, founder and CEO of Nvidia.

ALSO READ: 10 things to know about virtual currency Bitcoin

One of the biggest hurdles for the bitcoins and cryptocurrency alike has been the governments around the world haven’t been bullish on the virtual currency. For instance, India, one of the world’s biggest economies, does not consider cryptocurrencies as legal tender.

“The government does not consider crypto currencies as legal tender or coin and (will) take all measures to eliminate the use of crypto assets...,” Finance minister Arun Jaitley had said while presenting the Union Budget 2018-19 in the Lok Sabha earlier this year.

Cryptocurrencies faced a big crackdown from internet giants like Facebook, Google and Twitter among others. Facebook and Google in particular were stricter in their crackdown in a bid to prevent cryptocurrencies-related through their platforms. Months later, both the companies went soft on the cryptocurrencies ads.

Cryptocurrency mining malware increased by 86% in Q2 2018, according to a new McAfee Labs report ( REUTERS )

Security concerns

Security has emerged as one of the biggest problems for the cryptocurrencies including bitcoins. From fraud, hacking to illegal mining, cryptocurrencies are yet to address the critical security concerns.

According to McAfee Labs Threats Report - September 2018, cryptocurrency mining malware increased 86% in Q2, 2018.

“Although less common than ransomware, cryptomining malware has quickly emerged as a factor on the threat landscape. After growing around 400,000 in the fourth quarter of 2017, new cryptomining malware samples grew a stunning 629% to more than 2.9 million samples in Q1 2018. This trend continued in Q2 as total samples grew by 86% with more than 2.5 million new samples. McAfee Labs has even identified what appear to be older malware such as ransomware newly retooled with mining capabilities,” said the report.

The report says cybercriminals have also found new angles including illegal coin mining and theft leading to profits. ( McAfee )

“A few years ago, we wouldn’t think of internet routers, video-recording devices, and other Internet of Things devices as platforms for cryptomining because their CPU speeds were too insufficient to support such productivity,” said Christiaan Beek, Lead Scientist and Senior Principal Engineer with McAfee Advanced Threat Research.

“Today, the tremendous volume of such devices online and their propensity for weak passwords present a very attractive platform for this activity. If I were a cybercriminal who owns a botnet of 100,000 such IoT devices, it would cost me next to nothing financially to produce enough cryptocurrency to create a new, profitable revenue stream.”

Yes to Blockchain

Blockchain has been the biggest beneficiary of the growing interest in cryptocurrency. The decentralised technology, which facilitates the cryptocurrencies, has evolved into a more trusted platform for a variety of purposes, ranging from supply management to healthcare.

Blockchain-based phones also became a reality this year. Sirin Labs launched the world’s first blockchain-based phone, Finney. HTC also launched a blockchain-based phone.

Back in India, NITI Aayog partnered with Oracle, Apollo Hospitals and Strides Pharma Sciences to pilot a real drug supply chain using blockchain decentralised ledger and IoT software.

“AI, ML, blockchain and data science are no longer buzz phrases. These technologies have evolved from pilot projects to becoming mainstream. Today, for example, AI is being used in remote surgeries, and Google Pixel smartphones have changed the way you photograph on mobile thanks to machine learning. As a result, going forward, these technologies will be at the core of every organisation’s business strategy. According to IDC’s Worldwide Semi-Annual Cognitive Artificial Intelligence Systems Spending Guide, cognitive and AI spending will grow to $52.2 billion in 2021,” said Vishal Agrawal, Managing Director, India and SAARC, Avaya.

Globally, many technology giants are fast joining the blockchain bandwagon. This year we saw Facebook creating a separate blockchain division. The social networking giant is even said to be working on its cryptocurrency that would work with WhatsApp. Amazon recently introduced Amazon Quantum Ledger Database and Amazon Managed Blockchain services for records management.

Despite cryptocurrencies failing to take off, blockchain is expected to expand into wider areas of supply chain, finance and peer-to-peer payments in different sectors including insurance, healthcare, infrastructure, and more.

First Published: Dec 29, 2018 16:36 IST