Cryptocurrency bitcoin has soared in value towards the end of 2017, leading some in business to consider the value of accepting it as payment for goods and services.
Indeed several Australian homes, including in Melbourne and the Gold Coast, are currently being advertised for sale with bitcoin as an accepted method of payment.
My Business has also heard unconfirmed reports of several SME operators accepting the digital currency from select customers.
At the time of writing, one bitcoin had soared to more than $22,400 – many times the price at which it began the year.
However, business owners toying with the idea of accepting bitcoin as a form payment should be wary, with some economists and digital security experts alike raising red flags.
Sylvain Lejeune of WatchGuard Technologies said that bitcoin – just like other digital currencies – are likely to attract the attention of hackers and criminals as their value rises.
“They will become much more appealing targets for cyber criminals looking to make millions. We predict that hackers will find a vulnerability severe enough to completely wipe out a popular cryptocurrency by destroying public confidence in its security,” he said.
“Ethereum [another digital currency] already saw a near-50 per cent drop in value back in 2016 when hackers exploited a vulnerability in a popular blockchain application to steal more than $50 million in ethereum cryptocurrency.
“Since then, bug bounty programs and public code reviews have become a major part of blockchain development, but attacks have continued, including one that targeted a popular ethereum multi-signature code wallet and made between $100 and $500 million in ethereum permanently inaccessible.”
Meanwhile My Business’ sister publication InvestorDaily reported that rising transaction costs could cause a bitcoin price crash – much like rising interest rates can affect house prices.
“One thing you’re seeing now is the transaction costs of buying and selling bitcoin rising very quickly,” Erik Norland, executive director and senior economist at CME Group, is quoted as saying.
However, he emphasised that current costs and indicators didn’t mean that a crash in the value of bitcoin and other digital currencies is necessarily imminent.
“It should not be construed that we are in imminent danger tomorrow, next month, in January, or in the first quarter,” he said.
“We don’t know the timing of the crash, we don’t know how much the price will rise from now – I truthfully don’t know.
“It’s [simply] an indicator that investors in bitcoin should be paying attention to.”
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