How would it feel to increase your investment by 70 times its current worth in less than one month? That would be investing $1,000 and having $70,000 in just 27 days. That seems absolutely unbelievable; however it is exactly what has happened with digital currency, Bitcoin.
Bitcoin is an electronic, digital currency that is heavily invested in by the Winklevoss twins. Users have a digital wallet that they can use to pay for services and make transactions into other users wallets, just like a normal currency. The difference is that all the transactions, and the theoretical “money” exists online. One of the unique things about Bitcoin is that there is a set in stone number for what the supply of Bitcoin is, and it is set at 21 million BTC. This is different than actual currencies, where the supply is a murky number, susceptible to change in monetary policy. This theoretically makes Bitcoin a safer investment, and is one of the reasons people are referring to Bitcoin as “Gold 2.0”. It seems it will live up to that name as on November 29, the value of one Bitcoin reached a high of $1,242, topping gold’s $1,241.98 for one ounce.
Bitcoin’s rapid growth is especially insane when compared to some of the other tech startups that stunned investors with their growth. Bitcoin grew 7,135% from November 1, 2013 to November 27, 2013 hitting a high of $1,000 that day. And considering just two days later it would top the price of gold, it doesn’t seem like its hit its peak. This is compared to the next greatest tech stock increase which was Amazon. Except even Amazon’s once amazing growth pales in comparison to Bitcoin, with a paltry 1,108% growth over an entire year; and even Netflix only managed 333% growth in a year.
However, there are problems with Bitcoin, one being that it is being demanded by hackers as payment after they have shut down a computer. A new virus, called CryptoLocker, will shut down a user’s computer until the money, or Bitcoins demanded are paid to the hacker. Bitcoin’s are ideal because they are exceptionally hard to trace.
So where is Bitcoin going? Many are speculating it could become a legitimate reserve currency, or even become a more stable currency used in developing economies where the local currency is to volatile to facilitate sustained economic growth. If Bitcoin does manage to grow into something more, like an actual currency, its value is only going to strengthen, so better invest now!
Do you think Bitcoin can sustain this kind of growth? Do you think its growth is deserved? What is the potential for Bitcoin to grow into something greater than its current role?