Bitcoin: will 2015 be a make-or-break year?

It is barely understood by the general public, its value is in freefall and it has a serious image problem. Daniel Roberts asks can the currency survive 2015?
Last year was an annus horribilis for bitcoin. Its price, once up above $1,200, sunk below $250. The second-largest bitcoin exchange had to temporarily suspend operations after a large-scale hack. And there have been two high-profile criminal prosecutions of bitcoin entrepreneurs. It was enough for some commentators to dub 2015 a make-or-break year for the currency, with experts saying it needs to find a purpose or face extinction. But that’s only one side of the story. There’s also been a flood of venture capital and bitcoin startups, as well as interest from legitimate bodies such as the New York stock exchange, which suggests bitcoin is here to stay.
Typically described as a cryptocurrency, bitcoin is really a peer-to-peer system that allows you to move value around the world, in decentralized fashion, without the usual headaches and fees. Its backers argue it is faster and more secure than conventional currency. They cite its potential for sending remittances and for storing secure documents. It could revolutionize the banking system, they say.
The bitcoin community hasn’t been helped by the high-profile actions of some of those associated with it. Ross Ulbricht is currently on trial for allegedly running the online marketplace Silk Road, on which anonymous buyers used bitcoin to purchase illegal drugs. Charlie Shrem was sentenced in 2014 to two years in prison for helping Silk Road customers transfer money illegally using his exchange BitInstant. Those prosecutions have added to the idea that bitcoin is a resource for criminals, but figures from the community argue that their stories have very little to do with the currency and its chances of lasting success. ‘The technology is technology, it’s neutral in character,’ says Jerry Brito, executive director of the non-profit Coin Center. ‘Someone’s going to use it, if it’s good, which I think it is.’
The negative headlines that come along with the Silk Road trial, or with other bad news like the breach of bitcoin exchange BitStamp early this year, fuel wariness and add to the notion that many in the public still have: bitcoin is an unstable investment, it’s unsafe, and it is used for crime.

This post was published at The Guardian on 3 February 2015 21.41 GMT.