Love it or hate it, Bitcoin’s accomplishments are unprecedented
Whether you’re a fan of cryptocurrencies or not, you cannot deny Bitcoin’s continued success. From just $1.00 per coin in 2011 to over $5,000 in 2017 (and up over 390% in 2017 alone), Bitcoin’s achievement is a feat in and of itself. And although many Bitcoin cheerleaders think that the world’s most expensive cryptocurrency is just getting started, others believe that it’s nothing more than a bubble waiting to burst along with the hopes and dreams of the Bitcoin buffs.
A Bit of Background
Bitcoin was originally invented by an anonymous party who went by the alias ‘Satoshi Nakamoto’. The coin was created as an alternative to the regulated fiat (cash) currency we’re all familiar with and a means to enable peer-to-peer monetary transactions without government or central bank intervention. The digital asset uses blockchain technology to record all monetary transactions. The transactions are then recorded in a digital ledger that cannot be edited, erased, inflated or altered in any way shape or form. Additionally, the blockchain technology is also used to regulate the output of Bitcoins, as only a finite amount of the cryptocurrency can be released into circulation on a yearly basis. To obtain a bitcoin, one can either purchase them on an exchange, mine them using a supercomputer that dedicates its time to solving highly complicated mathematical problems, or you can trade them in CFD form. The blockchain technology is also used by other cryptocurrencies including Ethereum, Litecoin and Ripple.
Although Bitcoin is a widely used medium of exchange utilized by private civilians worldwide, some national governments have different attitudes toward the cryptocurrency than others. For example, Russia’s finance minister, Anton Siluanov, has stated that Bitcoin (and other cryptocurrencies for that matter) are a “fact of life” adding that they have to be monitored but also “accepted and regulated”. Far from indicating that the Kremlin will take any initiative, Siluanov also admitted that he is analyzing the experience of other countries, including Japan, Europe and the U.S.
And although Russia – at least on the face of it – appears to be embracing cryptocurrencies like Bitcoin with open arms, other countries aren’t so keen on the concept. The Chinese government for example, has instituted a blanket ban on cryptocurrency trading. Weighing in on the phenomenon, they claim the activity is a “top choice” for underground economies, while also stating that they will regulate the cryptocurrency market through a licensing program and strict AML systems. However, China may have bit off more than she can chew. That’s because after banning cryptocurrency trading, the Chinese people simply continued trading cryptocurrencies on platforms outside the reach of Chinese authorities, which many are speculating could force Beijing to make an about-face.
Although Russia and China appear to have completely different attitudes towards Bitcoin, they both seem to share the same end goal; oversight and regulation of cryptocurrency trading. How they’ll actually implement the regulation is another question altogether.
Many of the early Bitcoin investors have spent their days laughing all the way to the bank. Among them is Erik Finman, an Idaho native who became a millionaire at the age of 18 by buying and selling Bitcoin. In an interview with CNBC, Finman made the bold prediction that “bitcoin is going to be worth a couple hundred thousand to a million dollars a coin,”. Another young bitcoin millionaire named Jeremy Gardner echoed Finman’s sentiments telling Business Insider that “bitcoin will reach a value of $10,000 per coin in the next five to 10 years”.
But not everyone is so optimistic. World renowned economist Peter Schiff calls Bitcoin a ‘bubble’ likening it to Pets.com, a once promising dot.com era online pet supply company whose stock enjoyed a post-IPO valuation of $290 million before going bankrupt about a month later. Another ‘Bitcoin pessimist’ is none other than JPMorgan Chase chairman and chief executive Jamie Dimon who anticipates that governments worldwide will “crush” bitcoin adding that its only value is for criminal activity and money laundering. Echoing his statements was Larry Fink, chairman and chief executive of BlackRock, the world’s largest asset manager, who compared bitcoin’s ever-increasing value to a ‘money laundering index’.
As with any successful yet controversial entity, the two opposing perspectives surrounding bitcoin have never been more contrasting in nature. That’s because, on the one hand, bitcoin enthusiasts see an innovative, secure alternative to fiat currency whose best days are still ahead of it. On the other hand, the bitcoin bears see a bubble and/or a tool for criminals that will eventually be regulated into oblivion. Either way, one thing’s for sure: bitcoin is the most loved and hated phenomenon in the financial world today, one which everyone seems to have an opinion about.
Remember, when trading bitcoin CFDs, you can always choose to short or long your position, potentially taking advantage of price change in any direction – up or down. Want to know more? Drop by our education center.
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