Bitcoin value fell below $3 in mid-October 2011, a 90 percent fall since the currency hit its peak in early June 2011.
Supporters argue that Bitcoin has fundamental advantages over conventional currencies. The system is designed to transfer funds without a central authority, freeing Bitcoin users from bank fees and government regulations. The Bitcoin protocol offers robust anonymity, and the protocol guarantees that there will never be more than 21 million Bitcoins in existence, which supporters have argued would give the currency a stable value.
Supporters argue that Bitcoin has fundamental advantages over conventional currencies. The system is designed to transfer funds without a central authority, freeing Bitcoin users from bank fees and government regulations. The Bitcoin protocol offers robust anonymity, and the protocol guarantees that there will never be more than 21 million Bitcoins in existence, which supporters have argued would give the currency a stable value.
Unfortunately, the currency's value hasn't proven stable in practice. Since few retailers actually accept Bitcoins, the currency's value has fluctuated primarily as a bubble-driven commodity.