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We must welcome the future, remembering that soon it will be the past, and we must respect the past, knowing that once it was all that was humanly possible.

  • Dara Madee
  • Posted Articles: 13
  • Last Posted: 2017-05-31 07:53:03
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Bitcoin Takes a Wild Ride

2017-04-04 09:22:59

Bitcoin is having a whimsical journey as of the moment. The price of the virtual currency outmatched the price of an ounce of gold for the first time. Then, the market capitalization of bitcoin surpassed the $20 billion threshold.

Several factors drive price fluctuations in the bitcoin spot rate. Whilst there is no available benchmark or tool to gauge its volatility, the price movement of the cryptocurrency can suddenly change within a short time period.

There are differing viewpoints when it comes to maintaining the value of bitcoin and its valuation method. Let us explore this aspect. A store in value is the function by which an asset can be utilized with consistency in the future. This can be kept and exchanged for a product or service. Conversely, a methodology of value transfer is any idea or item employed to move property in the form of assets from one party to another.

Bitcoin’s projected value dwindles. It can be attributed to the expected store of value relative to the fiat currency. Bitcoin and gold share certain properties. It is supervised by the developers’ design discretion to curb the production to a fixed amount, which is 21 million BTC. Investors may opt to increase or decrease its investment in the cryptocurrency depending on the current economic condition, existing rules, and other related factors.

Those who hold huge portions of the aggregate outstanding float of the currency influence the volatility of bitcoin. Let’s look at bitcoin investors with current holdings greater than $10 million. It is not certain how they would liquidate a huge holding into a fiat position without severely affecting the market movement.

Not-so-good news about bitcoin affects the adoption rate. Investors take into consideration geopolitical events around the globe, comments by governments, and other news items about the virtual currency. Take for example the Mt. Gox collapse and Silk Road drug dealings. These two incidents pushed the value of bitcoin against fiat currencies down swiftly. However, investors found the silver lining behind these events and the bitcoin’s value surged again.

Then there’s also security breaches. The digital currency tends to be erratic in the event of vulnerabilities. This is considered a natural occurrence. Bitcoin’s value moves whenever the security is put to the test or compromised.