For the first time since its creation, the popular cryptocurrency bitcoin is now worth more than $2000 per coin. With that valuation, the total market cap of bitcoin is estimated to be around $32 billion.
The virtual currency bitcoin was created back in 2009. Transactions do not require individuals to use their real name, there are no transaction fees and no middle man. This gives individuals the ability to send and receive money completely anonymously. Bitcoin requires the use of a virtual wallet, and can be purchased through an online exchange or Bitcoin ATM. Over the years an increasing number of legitimate services and retailers have begun to accept payment of the cryptocurrency.
An economics professor at the University of Georgia, Jeffery Dorfman, has said that because of bitcoins unstable value and slow transaction time, it is more of an asset rather than a currency. The value of the cryptocurrency increased 140 percent in 2016, and 49 percent in the past month. Dorfman argues that it is in the best interest of the people to not have their debts or investments denominated in a currency with value changing b nearly 40 percent monthly. As for transactions time, they can be slow due to the process of protecting the security of its blocktrain.
There are also restrictions to the number of bitcoin transactions that can be completed daily. Changing any rules for processing bitcoin transactions has been largely met with criticism from the bitcoin community from those who hope to presence its traceability and anonymity. It has been claimed that bitcoin’s security negates its value for everyday use, and its main value is for speculation and for shielding transactions; something that is much more of a commodity asset that people trade. Dorfman claims the speculation surrounding the cryptocurrency has value, as it adds to market liquidity and determines assets’ market value.
Bitcoin first broke the $1000 valuation mark back in 2013, but due to a combination of variables, the currency saw a steep drop in value. Support from financial institutions, and general stability, bitcoin returned to the $1000 mark last year. Since then, the currency’s valuation has continued to grow consistently through 2017.
Experts have linked the growing value of bitcoin partly to a surge in trading in Japan and Korea. Tokyo only just recently approved bitcoin’s use as a legal currency for retailers. The two countries now account for two of the top five bitcoin trading markets in the world.
“Japanese and Korean markets are trading at a strong premium as Asian fever is leading the price. Although scaling and the transaction backlog is an issue – bitcoin is defying its negative fundamentals,” the CEO of CryptoCompare Charles Hayter was cited by Finance Magnates portal.
CyrptoCompare data indicates the Korean won and Japanese yen have gained value and driven gains in trading. Japan’s yen bitcoin market has traded at a higher level than the bitcoin’s US dollar; because the yen holds the largest share of bitcoin trading, it pushes the prices higher.
Brian Kelly, CEO of Brian Kelly Capital Management, a digital asset strategy company, has said another reason for the rise in value has been thought to be because of the large number of people buying as a hedge against political chaos. In the past, bitcoin has acted as a safe haven for investors concerned about potential political instability and the performance of other asset classes. Major stock markets have shown a drop in recent days as separate reports of potential scandals in the US and Brazilian presidencies spooked investors.
Bitcoin is currently in uncharted waters, and there are a number of various predictions in where the cryptocurrency is headed. The future of the currency could be described as uncertain. In order to achieve greater success, the community will need to sort out scaling issues, which would then give investors confidence that bitcoin’s infrastructure will be able to support itself as it grows.
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