Bitcoin breaks the thousand dollar mark
The Thousand Dollar Plus Bitcoin
Today, as trading began the bitcoin hit the 1000 dollar market the thousand dollar plus bitcoin has arrived. A long expected event. In fact as trading continued it rose to almost 1017 dollars before dipping and then rising again to 1013. this was the first time the bitcoin hit this level for three years. Can the thousand dollar plus bitcoin sustain itself at this level? Many predict that it will.
Demand for the bitcoin virtual currency has risen dramatically due to problems with some of the major real currencies in the world. Bitcoin outperformed every currency of the world during 2016 with an increase in value of 125%. See live bitcoin trading values here.
One of the major currencies in the world, the Chinese yuan has fallen dramatically and had its weakest performance for more than 20 years. Hyper inflation in Venezuela has caused people to seek investment in stable currencies. Currency controls to fight money laundering in India have also had an impact on the value of bitcoin against other currencies.
Long gone are the days when in the very brief history of bitcoin, it was viewed with scepticism. We have all heard stories of bitcoin being used by ireputable drug dealers, mafia and tax evaders. When people see their hard earned cash slipping through their fingers they vote with their feet. It has been the failure of governmemt controlled currencies which has impacted on the success of bitcoin. Bitcoin does not have any government controls, it exists with autonomy outside of any legal restrictions. Bitcoin does not have any capital controls, it operates in a free market with low commissions attached. World currency rates do not matter once the switch has been made to bitcoin. That is of course if your exit currency is falling, which is why people are making the switch.
The future of bitcoin
Bitcoin gained status during 2016 as a stable and safe currency. It is one of those unexpected situations where it gained ground because of failures in some of the worlds leading economies.
2017 will be an interesting year for bitcoin and the likleyhood is that it will be boosted further. Add to that the scenario whereby increasing number of businesses are accepting payment in bitcoin and you have a recipe for continued growth.
Another interesting factor is that the supply of bitcoin is limited due to a low mining rate. Only 12.5 are added to the blockchain every 10 minutes so that will limit availablity. Currently, although there are around 16 million bitcoins in circulation mining will be capped at 21 million. According to my calculations no new bitcoins will be mined after 2024. So, after the limit is reached what will happen to the price? If demand still exists the price can only go up.
Trading in Bitcoin for investment can be regarded as high risk. However at the moment, many are jumping on the bandwagon because they see no viable alternative.
Probably the biggest risk is that someone will be able to hack into the bitcoin cyberworld, it has been tried once but the virtual currency quickly recovered.
Transactions made are recorded on a blockchain and shared on millions of computers around the world. It works by way of a peer-to-peer collaboration using cryptography based on mathematical formulae for integrity and security. The security is inherent from the way the blockchains are stored. In order for a hacker to compromise the system they would need to simultaneously hack every computer on the chain.
Other Articles in the Bitcoin Series
Disclaimer: This article only represents the author’s opinion and should not be taken as investment advice.
Update: 1st July 2017 this is history now because Bitcoin reached a trading value $2,500.