 |
https://www.pexels.com/photo/business-charts-commerce-computer-265087/
|
The stratospheric rise in Bitcoin, which recently saw the
value of the cryptocurrency being offered for almost $20,000, has captivated
the financial press and investors worldwide.
Since being launched in 2009, Bitcoin transactions have been
verified through a network of nodes and recorded in a publicly distributed
record called a blockchain. Its
uptake worldwide has been a modest affair with a number of high profile
setbacks, such as Silk Road, having a negative effect on
people’s image of the cryptocurrency. While Bitcoin’s advocates continue
to argue it is a private, more secure and more viable, alternative to the
world’s major reserve currencies.
Unsurprisingly
there were plenty of interested observers when Bitcoin made its debut on major
exchanges on December 10th.
 |
http://www.xe.com/currencycharts/?from=XBT&to=USD&view=1Y
|
It
is believed that the recent rise in value is being driven predominantly by
investor confidence and digital currency speculators looking to cash in the on
the volatile nature of the trades involving the cryptocurrency. This has been
highlighted by the fact that the value of one Bitcoin has previously risen by as much as 52% in a single day.
But what does the future hold for Bitcoin in 2018?
Fears
The global economy has enjoyed a steady resurgence in 2017, partially
spurred on by low interest rates and investment. However, it has been suggested
by Torsten Slok, Deutsche Bank’s Chief International Economist, that one of the
major risks to the global economy in 2018 is a Bitcoin crash.
"It's mainly because it (Bitcoin
price volatility) is something that I think financial markets so far have been
discounting as a small issue," Slok said. "We do worry a bit that it
could become more systemic, in particular, if the current trends continue into
2018.”
Torsten Slok
He is not alone, as the world’s largest banks as well as the Future Industry Association are
pushing back on the introduction of Bitcoin futures.
Many economists have been using financial planning software to
ensure that accurate data and models are being generated on the new phenomenon.
The general concern coming from these models is that the current system is ill-prepared
for the large-scale introduction and interest in the currency. Historic
comparison data from similar sudden rises indicate the signs of a classic
financial bubble bursting.
Meanwhile, the UK and EU governments will attempt to crackdown on cryptocurrencies due to growing
concerns that they are being used for money laundering and tax evasions
purposes. By bringing the currency into line with anti-money laundering and counter
terrorism financial legislation, it is likely to have a negative impact on
demand.
Hopes
The interesting subplot to Bitcoin’s growth is that even with
a significant body of evidence to suggest that there is an impending collapse and
the fact Bitcoin is not backed by many of the world’s financial institutions,
it continues to flourish.
Experts have been pointing to the fact that as it is not
legal tender in any nation, nor is it issued, stored or insured by any
government or institution may give a clue as to its success.
A recent study by the London Block Exchange suggests that
millennials are turning to cryptocurrencies because they feel left behind by
more traditional investments. This is particularly prominent when you consider
the current property and pensions markets.
Some have gone as far as to suggest that is the ‘faith based asset for a populist era’. This
theory ties in well with the anti-government appeal of the currency, although
it could be largely argued does not just apply to populism.
In 2017 there have been many social and political influences
affecting assets, such as Brexit, US inflation rates and a potential housing
bubble in Sweden or Norway. The fact that Bitcoin is a non-fiat connected
asset, which is currently not prone to any inflationary pressure or market fluctuations
brought on by internal monetary manipulation, makes it hugely appealing
prospect for many investors.
To Invest
Whether it is because of its volatility, their inability to
control and manipulate it or lack of experience dealing with it, banks,
governments and financial institutions are concerned by the rise of Bitcoin and
other cryptocurrencies.
It will continue to be seen as the anti-trust money that is
the antidote to all things wrong with the current financial system. After all,
the value of something is simply the amount of someone is willing to give for
it.
It has a long way to go against the backdrop of established
and steady investments, but if Bitcoin continues to gather followers at the
rate it has, there is will be many questioning if it will be the currency that
causes the traditional banking methods bubble to burst.
Comments
Post a Comment