The cryptocurrency Bitcoin is nearing the $10,000 mark this week, hitting all-time highs of $9,721 on Monday. The price of a single coin has continued to boom over the course of the year, leaving investors divided on opinions of whether to put money into the growing market. It’s been a good year for Bitcoin investors to say the least.
Bitcoin started the year at $1,000 and by October, had risen to over $5,000. The recent months have seen huge jumps into and beyond the $7-8k marks for the cryptocurrency, and now it is set to break through a huge “psychological barrier” on the price and breach of $10k. Will its value continue to increase way into the tens of thousands?
Some potential investors are extremely wary of Bitcoin, claiming that it is neither a currency or commodity and that it has no intrinsic value other than the fact that people are currently willing to pay money for it. It’s rising value, they say, is determined only by whether someone is willing to spend more on the coin than the next person. These investors think that Bitcoin is a “giant speculative bubble.”
Of all its critics, JP Morgan is perhaps the most outspoken and has gone so far as to call cryptocurrencies a “fraud.” Of course, he would say that given that virtual currencies bypass the need for traditional banking systems and institutions. Cryptocurrencies represent an inherent threat to the central banking systems because they can be excluded from the transaction process altogether.
On the other side of the fence are the investors who are in support of Bitcoin and who are likely making a lot of money from it. The online poker boom has made its fair share of millionaires since its rise to popularity in 2003, but this pales in significance when compared to the recent “Bitcoin boom.”
Those who have had success believe that the value of Bitcoin is true enough. After all, what is the true value of fiat currency other than the backing it has from an institution that assigns the value? Bitcoin works in the same way. The more confidence investors and consumers have in the blockchain technology and its applications, the more valuable it becomes.
The market cap of Bitcoin now exceeds that of IBM, Disney, McDonald’s, Morgan Stanley, Goldman Sachs and even General Electric, one of the largest and most established companies in the world. The 16.7 million Bitcoins currently in circulation are now worth $160 billion. And over 120 hedge funds are joining the troupe of private investors and adding Bitcoin to their portfolios. Chicago Mercantile Exchange (CME), the largest derivatives exchange in the world, have announced that they will soon offer Bitcoin exchange.
If the Bitcoin’s value does represent a bubble, it seems to be a long way from bursting. In fact, Bitcoin seems to be going from strength to strength. Meanwhile, other cryptocurrencies are now increasing in value as Bitcoin gains strength, so that the potential for investment is not only in one coin but in many. The question for confident investors is not whether cryptocurrency will have a place in the future, but which coins will survive and become spendable.