Bitcoin, the digital currency is gaining a lot of significance all over the world. Immediately after the introduction of Bitcoin, the value of the digital currency started gaining. However, after the scandal over mining of bitcoins by tech companies, the price dropped suddenly. Bitcoin raised again in 2016, reaching the much awaited $1000 mark in 2016. Now, for the first time in the history of Bitcoins, the value of one bitcoin has surpassed the price of one ounce of gold. Investors celebrate bitcoin as the digital gold. On Thursday, bitcoin was priced at $1,271 whereas one ounce of gold was selling at $1,235.
Bitcoin is an entirely digital currency created in the year 2009. Software developer under the name Satoshi Nakamoto introduced bitcoin to the world market as a digital currency and its limit is set. It is not printed on paper and it is mined through computers.
Around the same time in 2016, bitcoin was priced at $421.60. Now, it is valued at more than $1200. In just 12 months, the value of Bitcoin has tripled and the value continues to increase. In comparison, gold was traded at almost the same price last year.
Even though gold price continues to increase every year due to the limited availability of the metal, the value is not rapidly increasing like bitcoin. The value of bitcoin is not influenced by the fluctuations in the currency market.
About four years ago, Tyler and Cameron Winklevoss proposed bitcoin exchange-traded fund (ETF). The Securities Exchange Commission is expected to make a decision on March 11th. If the proposal is approved, it would start the first bitcoin ETF in the United States of America. In that case, ETF will purchase bitcoins for $300 million. This will effectively double the value of the digital currency.
Bitcoin could easily become an alternative asset in the future, even surpassing the popularity of gold. The total number of bitcoins available is just 21 million and it is not controlled by any company or country. However, it is much easier to trade bitcoin than gold because the currency is absolutely digital. About 100,000 merchants worldwide including Microsoft, Expedia and Dell accept bitcoin payment. You can even use a portion of you bitcoin for payment and it is impossible to do it with gold.
Investors are interested in using bitcoins and this has decreased the popularity of gold. The price continues to increase because of the interest in the digital currency. The users of bitcoin have doubled in just one year and this new digital asset is here to stay. However, economists are not sure how this demand will keep up in the future. There is nothing like bitcoin before and the concept is itself arbitrary.
Even though bitcoin has reached an all-time high in recent days, it is not going to be extensively used like regular old currency. Bitcoin is regarded as a medium of exchange and it doesn’t have a definite store of value. The investors are nevertheless enthralled by the digital fool’s gold.