Cryptocurrency: Gold of the Digital Age
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Monday May 22nd/2017 Bitcoin hit a new record high. Bitcoin is now trading at 1 Bitcoin = $2579.29 USD.
If you had bought $100 of bitcoin in 2010 it would be worth $80 million today.
A big driver for the recent increase is due to the Japanese government allowing bitcoin to become a means of legal payment in the country. But bitcoin is not without its concerns. Bitcoin has a scalability issue where it’s limited in the number of transactions it can process. This creates a problem in how far and wide the currency can be adopted. That said governments allowing a cryptocurrency to be a method payment speaks to the future of currency globalization and connectivity.
Global currencies like the dollar and euro are controlled by both fiscal and monetary policy via supply and demand and interest rates. This control helps control inflation and a country’s growth prospects. Cryptocurrency, like gold, is not controlled by such measures. Value for this digital currency is derived from free market transactions. Moreover, what makes gold valuable is the fact buyers and sellers trust it as a medium of exchange. As cryptocurrency, like Bitcoin, is more widely accepted it may become the gold of the digital age.