The pound is falling in value over worry that the Brexit vote will take the United Kingdom out of the EU. The dollar is wavering over worry about whether the Fed will hike the interest rates or not… but Bitcoin is hitting two-year highs.
Bitcoin is a kind of electronic currency that was created in 2009. It is not regulated by any government or entity, and allows people to make purchases anonymously.
It has been on the rise since its creation and has gained even more prominence lately, since its mysterious founder, who went under the alias of Satoshi Nakamoto, has allegedly revealed himself as Craig Wright, an Australian entrepreneur. While many believe that Wright doesn’t provide enough proof to show himself as the creator of Bitcoin, it has raised more interest than ever in the electronic currency.
We live in a world where government produced currency is often unstable, prone to whims of the market and politicians, and mistrust of banking systems controlled by governments, like the Federal Reserve, is high.
But now we have a currency that doesn’t act according to a government’s whims. Bitcoin is hitting highs of $700, jumping over 21% over the past month. It hasn’t traded this high since 2014, and this time last year, wasn’t trading higher than $230. There was a time when Bitcoin was trading at prices close to gold, and if prices keep rising, we could be heading that way again.
Part of this price jump is due to a unique process to Bitcoin called halving. When it was released, it had a cap in its software, that no more than 21 million bitcoins would ever be produced.
Furthermore, every four years or so the amount of reward you get for mining bitcoin is cut in half. In 2012 it went from 50 to 25. Soon it will go from 25 to 12.5. This means supply will go down, and demand will stay constant or go up, which will continue to raise the value of the currency.
With other electronic currency systems on the rise, and the demand for security and anonymity, electronic currency like Bitcoin could well be our future.
To continue reading more about bitcoin’s high prices, read the Wall Street Journal article.