Bitcoin, the popular cryptocurrency, has recently been the centre of a storm of news articles all discussing its future. This is because, throughout January, Bitcoin dropped significantly in value, damaging its reputation and causing further drops. While mid-December saw a high point of over 18,000 USD per bitcoin, early February saw a new low point at one-third of December’s value. Here, we’re going to clarify the big mess that is the discussion surrounding Bitcoin, as things are much better than headlines would have you believe.
What is Bitcoin?
Bitcoin is a cryptocurrency and worldwide payment system which operates without a central bank or single administrative authority. It is an electronic currency, produced by “mining”, and each coin is retained as an individual asset through a series of communicating computer nodes, which record the transactions of each individual coin.
Why all this talk of Bitcoin as an Investment?
Bitcoin is used as a currency, but it is also employed as an investment. Many individuals purchase Bitcoins at low prices and try to sell at higher prices, often utilising brokers that assist with the process. These brokers utilise techniques like sell stops and limit orders to ensure their investments are a success. But what is sell stop and how does it work? Sell stops are a type of order that the customer places to instruct the broker to stop trading if the commodity reaches a certain level, preserving current stock until it rises in value. In practice, it can mean that a broker has been instructed to stop selling a trader’s Bitcoins if their price falls below 8,000USD, for instance.
As for using it as a means of payment, companies from Subway and Microsoft to OkCupid and Wikipedia all accept Bitcoin as a viable currency. So, it offers a chance to invest in a growing system while paying for your sandwiches in the process.
What happened to Bitcoin price recently?
From January to December of 2017, Bitcoin rose sixteen-fold in value, with news outlets heralding this as the ‘Bitcoin boom’ and the exaggeration of these headlines prompted the counterpart term ‘Bitcoin bust’ when values fell. Many theories have appeared explaining the ‘crash’, but it can mostly be equated to a mix of worries about a regulatory crackdown from administrative officials in the United States, South Korea and several other countries. As this ‘crash’ continued, consumer and investor fears sparked a further fall in the cryptocurrency’s price.
However, since early February, the price of a single bitcoin has been steadily rising with is now being worth roughly 11,000USD, which caused news outlets to report Bitcoin is ‘bouncing back’. While it may not be bouncing as much as steadily rising, this is a very good sign. This it has been caused by fears of regulatory crackdown being quashed, as South Korea and the USA have both presented they want to nurture Bitcoin with proactive and positive regulation instead.
So where do we stand? Outlets have thoroughly enjoyed covering it in recent history, but we thoroughly expect all the dramatic headlines to die down as the worlds most popular cryptocurrency continues to recover and rise. Too, this slightly more stable progression is a welcome change as it better suits its role as a borderless currency, and we expect this positive rise to continue.