Bitcoin To The Moon?!

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What's going on?

Bitcoins move higher continued over the weekend as it broke through the $2,000 mark for another record high! (tweet this)

What does this mean?

Bitcoin, the worlds primary cryptocurrency, has more than doubled in value since the beginning of the year, and its price has accelerated even higher in recent weeks its up more than 50% in the past month alone! It appears that more people buying bitcoin in Japan has been a major driver of the price move, after a Japanese government decision allowed bitcoin to become a means of legal payment within the country.


Previously, high demand for bitcoin was coming from China, where people were buying it (at least partly) to swap out of the yuan (Chinese citizens are subject to strict limits on the amount of yuan they can sell). There are, of course, additional arguments for bitcoins rise.

Why should I care?

For markets: Bitcoin has a scalability issue but its potential resolution may also be boosting its price.

So far, the growth of bitcoin has been somewhat limited by, essentially, the speed at which it can process transactions (click here for a detailed explanation). Some argue that the progress being made towards solving this scalability issue and therefore, in theory, making bitcoin much more widely applicable is the real driving force behind its price appreciation this year.


The bigger picture: Is Bitcoin a new gold or a new bubble?

Gold is a unique type of currency. Unlike other currencies, it does not have a government standing behind it to control its availability and influence its value via interest rates and other policies. Instead, its value is set purely by the worth placed on it by others. This value is given credibility by the fact that it has been an important medium of exchange for centuries. Now, bitcoin could be widely adopted and become the gold of the digital age. Or, perhaps, it will be like many other fads that have derived value simply from the worth placed on them by others and ultimately crashed in price (like tulips, for example).

Originally posted as part of the Finimize daily email.

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