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Japan had accepted trading and usage of bitcoin in 2017 and 260000 retail merchants had started using it since last year. But regulating Bitcoin network by any means is too far fetched as the network is too decentralised and the governance is not concentrated in few jurisdictions. Unlike private blockchain, Bitcoin network is publicly accessible and the nodes are spread throughout the world. Regulation can be imposed on the unregulated exchanges, which are not directly related to the blockchain.

The ultimate aim of cryptocurrency is not the virtual coin, but I believe it is the purpose of the creation that matters. The creation of a bloackchain to solve issues or to improve the existing systems should be the main purpose of creating new blockchain. The purpose can be serving those who are unbanked or underbanked. If the purpose is clear, the demand of the coin will be wide spread after its introduction.

It is not the Government is threatened by the Bitcoin, it is the very livelihood of a laymen on the street who will be affected if the virtual coin is widely used. Government through central banks around the world use monetary and fiscal policies to either increase or decrease money supply. It can be interest rates, tax, printing more money etc, and the daily borrowing/lending costs, transaction costs etc are in turn affected. The free market was the main culprit that brought down the economy in 1929s, and the episode gave birth to mix economy. The role of the central authorities with cooperation from the private sector ensure the smooth running of the economy. Without the check and balance from central authorities, private sector will reap larger than usual benefits/profits; imagine that laypersons have to pay to use street light, too much pollution, hospitals charge exorbitant prices, schools will be closed to those who cannot afford etc. These happen because the money supply now is controlled by the so called free market.

If Bitcoin becomes currency, the authority and ability to intervene during crisis, deflation and downturn will be replaced by pure market forces. It is the free market that brought down the economy in 1929 crisis which highlighted the importance of mix economy, in which private and public join forces to "run" the economy. One cannot deny the role played by banks as intermediaries in almost all of the economic transactions, but at the same time money is created in the banking system. Money creation is the main impediment to Bitcoin becoming currency.

One needs to understand the support of virtual coin is enabled by its platform. If the platform is widely used, then the potential of the coin is more recognised. The platform used to create Etherium is also used in other applications similarly the Ripple platform is also used in international money transfer etc. But the platform used to create Bitcoin is solely for Bitcoin. An investor would like to invest in platform that has potential to be accepted by wider public.

Unlike stock market in which investors can ascertain the fundamental value of a company based on cash flow, net income etc. If the market price drops below tangible asset value or book value, investors will find the stock as a good bargain. In virtual coin, the volatility of price is purely on demand and supply which in turn is determined by perception and confidence that the virtual coin will be widely accepted as medium of exchange in the future. Thus, it is near to impossible to know the true value of Bitcoin and the potential of it appreciates in value.

Unless one has the crystal ball that can tell the future, there is no way one can say in certain term the trajectory of the price of Bitcoin. But what I believe is that if the virtual coin is truly well accepted, it should be an alternative investment instrument either to hedge, as a safe heaven etc given the capital market uncertainty nowadays. But the demand of the virtual coin is low as indicated by the plunge in price from $6500 couple of months ago to $3600 now.

I am more to the short term investor and will liquidate when the profit warrants it. Virtual coins are very volatile and unpredictable, and unlike investing in stock market in which we can ascertain the value of a firm based on net income, cash flow etc, one does not know the true value of virtual coin until some government announces/denounces the coins. Thus to me if the herd mentality is present, I just follow the crowd, there is no other trading strategy.

The very existence of crypto coins resides in the block chain technology. Unless the exchange that holds the coins was hacked and all the holdings were stolen, there is no way the virtual coins would disappear without reason. The positive news is that more than more businesses and financial institutions start to recognise the potential and usefulness of the technology, the virtual coins will be around, at least for the near term. It will be used to facilitate business transactions rather than a tool for speculation.

I believe another Bitcoin rally to its previous peak level is far fetched if not impossible. But there are many alternatives in the market which have more potential in terms of wide acceptance and price appreciation. Look at Ripple and Etherium, the former is used by many banks around the world for money transfer and international transactions, and the latter is the backbone/platform for many smaller crypt coins. I believe these two coins will garner large followings in the future.

Among all the virtual coins, Bitcoin is the most profitable if one successfully dislodged it when its price was at its peak in Dec 2017. But there are two sides of a coin, when there are winners there are also losers. It is a zero sum game. If one had purchased the Bitcoin when the price was $20,000, one is suffering a huge loss now.

Mining activities have garnered less and less interest given the large drop of price for most of the virtual coins. The huge initial layout and the monthly high electricity bill have made the mining not profitable compared to one year ago when the Bitcoin was at its peak and Ether was at $400. Many miners have started to sell their mining tools and I observed lots of investors have started shifting to other investment markets such as share market.

If it is a property, it must be a very volatile and risky property. Tax payers will certainly lose out as they have to fork out huge tax amount for a property which value is too uncertain. It will be a double whammy if the price of the property drops a lot.

If the price of Bitcoin appreciates again, I will definitely sell to claim whatever profit available. The trading in crypto coins is akin to playing musical chair, the one who does not get a chair when music stops losses the game. Those who got the seat when it stops, hope the music stops forever. Those who lost/do not get a chair, hope the music to play again. Why would the winners who had reaped huge windfall when the price was at its peak in Dec 2017, want to come back to support the price?

One cannot even predict the price movement of shares of local bourse, whats more the price of Bitcoin which is traded around the globe. Furthermore the price of Bitcoin is not based on fundamental, the movement is purely dependent on demand and supply which in turn are determined by confidence. It is impossible to predict the price movement.

Many traders are still on the fence with regard to the price of Bitcoin since the heavy sell down last week. If the price plunges to $3000, it will trigger more sell down and loss of confidence among the traders. Given that many have reaped tremendous profit since the peak in December 2017, it is hard to say that the same traders will throng the same market to support the price. It is like a game of music chair, if one has won a seat/chair, it is better not to let the music to continue. Only those who lost wish the game will continue.

It is the loss of confidence especially the perceived risk of trading in unregulated exchanges, that triggers the sell down and follow through by other traders that cause the plunge in the price of virtual currencies. The exchange OKEx in Hong Kong that unprecedentedly forced early settlement of Bitcoin cash contract last week caused the loss of confidence among traders on unregulated exchange. Given the size of the trading activities, at one time OKEx claimed to handle more than $ 1 billion transaction per day, the follow through sell down has had tremendous negative implications on the overall market.

After the force sell in Hong Kong recently, the confidence in Bitcoin started to unravel. Market starts to realise the instability of certain crypto coins especially Bitcoing, Ether and others. Although the blockchain technology is innovative and able to reduce business transaction costs if applied widely, the virtual currencies as alternative currency to fiat money is not yet perceived to be viable. One has to go back to the basic functions of a currency.

Given the volatility of the price, as an investor I would liquidate and move to other investment. The price has dropped from $20k since Dec 2017 and to $6500 at the time of writing, and given the negative publicity it receives from the investment fraternity, I would liquidate the price, collect from profit and move on to other opportunity.

If the price of Bitcoin, Ripple, Etherium drop to unprofitable level, mining which requires substantial resources from outside the network (i.e. electricity), will not garner as much followings as before. But to upkeep the overall performance and functioning of the network, mining has to be continued. Lower mining activities mean higher compensation to the miners as less number of miners are sharing the reward and will again attract new miners to the network. In other words, the mining activity will find its equilibrium or stable level.

The exact mechanism involved in controlling block chain is not really available and central banks around the world realise it takes an uphill task to control the chain and the network in a protocol. To qualify as a chain, a new transaction has to be validated and approved by nodes in the network and that requires references to the history of the previous transactions of a commodity, a hash string has to be created, connected to the previous string and stamped by the nodes/miners. If central banks were to control, then they have to control the creation of the hash strings throughout the network. Given the network is decentralised, collusion among the nodes to change/control the network is impossible.

The sudden surge and drop in price of any commodity happens when the commodity is owned by small number of people/organisations. The volatility is caused by too much concentration of market power in the handful of investors/speculators. That is why we hear so many comments that the price could be manipulated and the market is not 100 percent free.

If one is interested in virtual coin/currency, one does not need so much backing and recognition from central banks. After all, the purpose of the invention is to take out the role of the central authority from dictating the price, what kind of information etc. If one has a niche market and network, one can introduce virtual coin to the network. It is self sustaining when there are miners/nodes who can support the network in exchange for small tokens as in the Frontier (network for Etherium) and others. There are so many virtual coins now in the market that are introduced by big companies and they do not need the backing from central banks.

The definition of investment and speculation is not clear cut but one can understand that the anticipation and hope one has on price of a commodity, disregarding the fundamental value is speculation, not investment. This is not my definition but one offered by Benjamin Graham, the guru of Warren Buffet. One can refer to the book entitled "Intelligent Investor" for further clarity about these two terms, investment and speculation. When these two terms are understood, only then we have our direction and intent clear.

One has to understand what supports the price of a virtual coin. Wide acceptance and network are two important supports that Bitcoin and Etherium enjoyed at the moment that sustain the price. This is because they convey a better potential that these two coins have the necessary base to be accepted compared to other alt coins. Although the alt coins are very cheap, the potential of price increase and profit is very minimal.