November 28, 2013
Business newspapers, magazines and online feed!
This stuff makes up most of my morning. Being an enthusiast about what is happening in the world markets, I happened to have stumbled upon an article reflecting the growth of Bitcoins.
For those who might scratch their heads hearing Bitcoin – Bitcoin is a peer to peer digital currency that has gained huge popularity and acceptance amongst the common masses and investors across the globe. Bitcoins use cryptography in allotting the address to the Bitcoin which is called a wallet. The owner may transfer Bitcoin to someone else’s wallet via a public ledger.
Now, the part that caught my amazement was the revelation that price of Bitcoin has shot up from $150 to beyond $1000 in the past one and half month.
The profit for the major part of the year wasn’t substantial. Investors even lost some money in months of June and July. But the stats reflect a profit of nearly 400% in last month. In the present world scenario where an investor would have to do endless head-boggling for making some small time returns in investor market, a commodity offering 400% monthly return is awe to anyone’s eye. But the mere reflection of 400% doesn’t make it a safe investment. At certain points of time, Bitcoin has price has even reduced to half within a single day.
Then again, the thought that I have been pondering over ever since I ran into this graph- how can this be possible? What are the factors leading up to this growth?
The possible reasons that greatly increased the price of Bitcoin can be never ending buying of Bitcoin by China. A glance at fiatleaks.com would certainly vouch for the same. Moreover, limited supply because FBI ceased some Bitcoins of the drug website silk route, the increase was bound to happen. Yet these notes would not explain the maniac growth witnessed in the price.
The reason that I state can somehow explain this behaviour of the price. The number of Bitcoins in circulation today is 12010725. Considering world’s population to be 7 billion, it would mean nearly 600 people on this earth together hold 1 bitcoin. With effective regulation and each individual seeking considerable profit, the price rise can be justified. Moreover, it was in 2013 that Bitcoins were declared acceptable by firms like Reddit and Foodler. This gave Bitcoin the popularity hype that it needed to boost its price.
The popularity of Bitcoin has increased so much that number of transactions in Bitcoins has been increasing ever since!
With over a 10 million Bitcoins in circulation as of now and each Bitcoin priced for over $1000, the total market capture for Bitcoin is 10 billion. Many speculators have put forward their theory that Bitcoin would soon go out of existence. As a common man, I would also not be trusting in a currency that fluctuates so much within a matter of days. Supporting the stand of other speculators, I believe that future of Bitcoin is bleak.
Now, if the Bitcoin is to go out of existence, what would happen to the people holding Bitcoins? That remains a matter yet to be seen! As of now, Bitcoins seem to be a highly risky investment opportunity where money scales up and down like a flash!