Bitcoin grows rapidly and virally. But why?
In July last year, each Bitcoin cost US$2,600. By November 2017 it was up to US$8,171. On Thursday this week it was trading at US$14,633. That’s a massive increase in value, the likes have never been seen before.
The limited number of Bitcoins available has led to this “feeding frenzy” by investors. There are other cryptocurrencies, but Bitcoin has the highest profile. Inevitably, the interest generated by Bitcoin’s rocketing rise in value has lead people to look at other cryptocurrencies, known as altcoins.
The largest U.S. exchange, Coinbase, now offers three cryptocurrencies. Just last year, it only offered Bitcoin. Those three are: Bitcoin, Litecoin and Ethereum
And it’s not only Bitcoin that’s been zooming up in value, the altcoins have too. A year ago, the total value of all cryptocurrencies was about US$14 billion, with Bitcoin making up US$12 billion of that. Today, the overall cryptocurrency market is worth more than US$658 billion, with Bitcoin accounting for US$237 billion of that.
Why has Bitcoin’s value jumped so high and so suddenly?
The cryptocurrency is increasingly being accepted by mainstream investors. It used to be the domain of tech enthusiasts and criminals (because it’s easy to hide from governments). Some observers think that its rise in popularity is related to citizens of closed economies, like China, wanting to protect their wealth by swapping their home currency with one that has international value. And then there are countries like Japan where Bitcoin is now a legal payment method. The next hike in cryptocurrency values will likely come when Wall Street learns how to deal properly with this unworldly currency.
Still not sure what Bitcoin is?
Competition in this market is producing a race to make the next great altcoin. It’s not too late to get on board, but be sure you understand cryptocurrencies before you do. If you’re not sure what Bitcoin is or how it works and are too unsure to ask? Read ‘Bitcoin: Love it or is it too volatile and risky for you?’.
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