In the world of cryptocurrency, bitcoin is all people are talking about as of late. That’s largely due to its rise in value, which now makes it more valuable than one of the world’s most precious metals.
The price has soared mightily, surpassing the price of gold.
Bitcoin’s value gains has put a renewed focus on whether this digital currency has staying power, or if it’s part of another internet bubble that will burst any day now.
Observers note several advantages of bitcoin, which include its holders being able to make purchases easily, such as through apps like Wirex. Its mobile wallet makes it more convenient to use, and keep track of, bitcoin transactions.
Critics point out several issues that indicate that bitcoin’s value rise is unsustainable, with one reason being due to it being unregulated by any government agency. Also, the volatility of bitcoin, which makes investing in it an exercise in futility for those looking for stable, sure-fire returns.
The negative comments do not sway bitcoin enthusiasts. That includes holders and investors of the digital currency. They all seem to become giddier with each $100 price increase in value the cryptocurrency posts.
In this piece, we’ll go over the rise of bitcoin’s value, and note why it has staying power as a disruptor in the currency space.
Giving gold a run for its money
Bitcoin’s value has soared more than 130% since the beginning of the year. To put its rise in a clearer perspective, bitcoin’s currency value has moved $100 or more almost every day since April.
Having a value that is higher than gold’s is not the only thing that bitcoin enthusiasts can brag about. Bitcoin is also up considerably against the U.S. dollar this year.
Those are some of the reasons we’re seeing headlines everywhere that say bitcoin is the new gold. At the time of writing on May 28, bitcoin’s price was $2,203.59. Gold’s price per ounce was about $1,268.
Bitcoin’s price was down from its record high of $2,790, which bitcoin hit on May 25.
This $400 move lower is indicative of bitcoin as volatility is in its DNA. That kind of volatility is one of the reasons bitcoin hasn’t earned a top spot as a worthy investment. On that same note, people are reluctant to even use the cryptocurrency to conduct transactions, given its worth one day may be sharply different, in a matter of hours.
How bitcoin beats gold
Bitcoin is outshining gold for the moment, it has many other pluses.
For example, imagine toting around a block of gold to conduct transactions! Because bitcoin is digital, bitcoin is easier to conduct transactions.
Then there is the benefit of bitcoin being virtually untraceable. Purchasers can buy goods or services without the worry of “Big Brother,” watching. However, that anonymity comes with worries that bitcoin can increase the amount of mischievous, and even illegal, purchases that can be made using the digital currency.
Another plus for bitcoin is that its transactions are backed up via a record called the blockchain. This is very helpful in preventing fraud and zero in on perpetrators when it occurs.
Jason Cassidy, President of Crypto Consultant, said that bitcoin’s volatility should be expected given that it is a new type of financial system. He told Coin Telegraph that it is natural to witness a certain level of speculation.
“Organic growth is certainly taking place and progress is being made from the top down. Government recognition and approval, continued merchant and consumer adoption along with innovative services are helping broaden the currency’s appeal and utility.”
Cassidy’s comments came after bitcoin last week had hit record highs, but then plummeted. He sees bitcoin’s price volatility lessening over time.
An interesting test on how bitcoin can survive in the mainstream came last week. Abigail Johnson, the CEO for asset manager Fidelity announced that it had rolled out a program allowing its employees to make purchases at its cafeteria.
Johnson admitted, however, that the number of employees buying their lunches using bitcoin was barely at 100.
“I guess we have a lot of hodlers,” she said. Hodlers are those who use bitcoin, but try not to sell it just because its values spikes.
The new-fangled digital currency has its place in the crypto world, and that’s true for investors and everyday merchants and shoppers. Those notions have served to help its value soar higher, and make it more than its weight in gold.
Investors, and those who use bitcoin to conduct transactions, should remain optimistic about the cryptocurrency having more room to run.