Bitcoin’s price surged this week, crossing the $18,000 threshold for the first time since December 2017, The Information reports.
The Backstory: According to Investopedia, Bitcoin is “Bitcoin is a digital currency created in January 2009 following the housing market crash.” It’s a non-physical, decentralized form of payment balanced in a public ledger that everyone can access. Though, Bitcoin isn’t backed by any banks or governments.
Flashback to 2017 when Bitcoin’s popularity exploded. Its value almost reached $20,000 toward the end of the year, before plummeting 80% in 2018.
Now, Bitcoin finds itself amid another rally. It’s consistently gained value since spring and crossed the $18,000 mark for the first time in nearly three years.
- Prices dipped in March when the Covid-19 pandemic first his the U.S. as the idea that “digital currencies might serve as a safe haven amid gyrations in traditional securities” faded. But Bitcoin’s recent performance begs consideration of whether it could be a “flight-to-safety play after all.”
So why now? Well, analysts see Bitcoin as a way of assuaging inflation concerns as governments try to pump up struggling economies. Also, the digital currency has “gained wider acceptance among some financial technology firms.”
- Payment platform Square bought $50 million worth of Bitcoin last month.
- PayPal announced customers would be able to buy and sell Bitcoin, and other digital currencies, using their accounts, which will roll out over the next few months.
The Final Word: Bitcoin’s gone down this path before. So, it’s too early to tell if this is just another volatile cycle or if the gains are ready to hold.
Please watch the quick 15 minute YouTube video I did on Bitcoin. Bitcoin represents the first and best candidate to be the internet manifestation of gold and money uncontrolled by central banks or corporations. Regardless of if the experimentation eventually works out, it looks like an attractive asymmetrical bet towards the upside.
Remember that there is a network effect with money – money is only useful when others also own and use it. Thus, the most-adopted ones gain the majority of the market share. That means the Bitcoin and potentially Ethereum networks have the highest chance at taking the lionshare of value.