2016 was a rough year for countries, consumers and currencies alike. As noted by The Hacker News, however, the much-maligned digital currency bitcoin managed to rally and post a three-year trading high of more than $1,020 per bitcoin as of Jan. 2.
The new bitcoin price has cryptocurrency investors bullish even as moderates warn that the surge could be temporary. With strong gains in the first days of 2017, is this a flash in the pan or another step toward market domination?
Investors and bitcoin users are right to be excited, since the last time the currency traded so well was just before the Mt. Gox debacle of late 2013. Some gains can be attributed to increasing consumer confidence in digital currencies. Along with bitcoin, other alternatives such as Ethereum, Ripple and Litecoin are gaining popularity among North American users.
As the BBC pointed out, however, bitcoin’s biggest boost came from China, which experienced a 7 percent decrease in the value of its national currency. Experts suspect that nationals are using crypto alternatives to circumvent government rules that prevent money from leaving the country.
China is now the hottest location for digital currency trading, helping to boost the bitcoin price by 125 percent over the past year. Other markets such as India, where many high-value cash bills are now worthless after the implementation of government-sponsored digital alternatives, are also fortifying this historically unstable market.
Prices over $1,000 certainly sound promising, but can bitcoin maintain this value over the long term? Some sources point to increased legitimacy and longevity. CryptoCoinsNews noted that bitcoin will get native support in Microsoft Excel this year, allowing users to “track, calculate and analyze bitcoin data.”
It’s not all sunshine and rainbows, however. According to News BTC, a move by the Central Bank of Sweden to introduce an electronic version of its krona was well-received by experts but panned by citizens. In fact, just two percent of Swedes have ever used bitcoin or similar currencies. Adoption of the e-krona could potentially push citizens into the digital future or cause them to double-down on a cash-based economy.
Bitcoin Price Rounds to Zero
The Financial Times, meanwhile, argued that even with bitcoin’s value now north of $1,000, the only number that matters in this equation is zero. In terms of the daily amount traded worldwide, bitcoin effectively rounds to zero, while selling off all existing bitcoins at the current price only amounts to the worth of a small enterprise. In this way, bitcoin is like a pyramid scheme since it only gains value as more converts push up the price and always promises bigger returns just over the horizon.
The truth probably lies somewhere between big boost and total crash. Due to high trading prices and continued interest from investors worldwide, it’s hardly a stretch to count the cryptocurrency among legitimate money trades. Still, assuming continually upward movement is foolhardy at best.
Cautious optimism is perhaps the best course. Bitcoin is here to stay as more digital miners and investors jump into the fray, but it may not always pay to play.