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Bitcoin: Where Will It Go?

Summary

Bitcoin has had a substantial increase in transactions during its boom of 2017 but what implications will this have on the exchanges?

Will this cause problems for online exchanges?

Mt Gox lost 850,000 bitcoins in 2014, what implications would this have today?

Bitcoin has been gaining more and more attention in the media as it has made extraordinary gains in 2017. In January of this year bitcoin was trading at around $1,000 for one coin and 11 months later it has increased to over $17,000. The amount of transactions per day have had similar results. In the beginning of 2017 their was about 250,000 transactions a day and that number has increased to 450,000 transactions a day and still seems to be on the rise with news like bitcoin futures.

To date, bitcoin has reached 15 all time highs in 2017 alone so it is clear that the market is getting recognition from outside investors. However, less than 1% of the worlds population owns bitcoin and of the people that do, majority of them have less than 0.001 Bitcoin.

In 2010 a Bitcoin exchange was founded under the name Mt. Gox. Based in Tokyo, Japan this exchange became the largest bitcoin exchange and between the years 2013, and 2014 handled over 70% of all bitcoin transactions worldwide. In February of 2014 Mt. Gox suspended all Bitcoin withdrawals and after weeks of limited statements on the details of the situation at hand, the company announced that approximately 850,000 bitcoins were stolen or lost through mismanagement of the hot wallet. Of the 850,000 bitcoins lost, about 750,000 of those were owned by customers.

In 2014 the loss amounted to about $450 million USD , during this time Bitcoins price was fluctuating between 550-750. If an exchange were to suffer a problem like Mt. Gox in 2017 the loss would be tremendous. At 17,000 a coin,the loss would be 14.5 billion dollars if such a crisis were to happen again.

Coinbase is another online platform for buying, selling, transferring and selling cryptocurrency. And as of December 2017 the Coinbase iOS app is the #1 app on the appstore due to its easy access to cryptotrading. Coinbase claims to have over 50 billion USD in digital currency exchanged and serves 10 million customers. In fact, Coinbase has exceeded Charles Schwab brokerage firm's active brokerage accounts.

As news reports speculate that a bubble is going to burst, will HODLers suffer the consequences through another exchange crashing entirely? Or will the platforms secure themselves to handle the increased number and rate of transactions. Coinbase has faced minor crashes due to buying and selling frenzies but as bitcoin gains price the awareness of it increases and thus the interest. With Coinbase being the leading exchange in cryptocurrency and a bubble imminent, it doesn't seem like a safe place to hold investments in this climate.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Bitcoin is very sporadic and any money you invest can be lost entirely
I am not endorsing the buying, selling, exchanging or mining of Bitcoin