Other cryptocurrencies such as ethereum also reach records as investors hedge against inflation
Last modified on Tue 9 Nov 2021 04.01 EST
The bitcoin price has reached a new record high, breaking through $68,000 (£50,000), and analysts predict that the world’s best-known cryptocurrency will rise further in the coming weeks.
This beats the previous record high set in late October, when bitcoin reached nearly $67,700 before falling back again when investors discovered a new cryptocurrency, shiba inu. Other cryptocurrencies have also risen to record highs, such as ethereum, which soared to $4,837.
Bitcoin has always been volatile but remains the world’s largest digital currency, with a market value of more than $1.1tn. Five years ago, a single bitcoin was worth about $700. Investors are buying it because they are worried about rising inflation – as an alternative to gold, a traditional inflation hedge – and as bond yields are falling.
Wilfred Daye, the head of the trading platform Securitize Capital, said: “Inflation is a major consideration for investors today, and the younger generation of investors often favours cryptocurrency as a hedge over gold. In fact, while gold has slid throughout the year, bitcoin and ethereum have more than doubled. Retail investors have played a major role in fuelling this shift and institutional investors are increasingly following suit.”
Bitcoin is a ‘cryptocurrency’ – a decentralised tradeable digital asset. Invented in 2008, you store your bitcoins in a digital wallet, and transactions are stored in a public ledger known as the bitcoin blockchain, which prevents the digital currency being double-spent.
Cryptocurrencies can be used to send transactions between two parties via the use of private and public keys. These transfers can be done with minimal processing cost, allowing users to avoid the fees charged by traditional financial institutions – as well as the oversight and regulation that entails. The lack of any central authority oversight is one of the attractions.
This means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.
The exchange rate has been volatile, with some deeming it a risky investment. In January 2021 the UK’s Financial Conduct Authority warned consumers they should be prepared to lose all their money if they invest in schemes promising high returns from digital currencies such as bitcoin.
In practice it has been far more important for the dark economy than it has for most legitimate uses. In November 2021 it hit a record high of more than $68,000, as a growing number of investors backed it as an alternative to other assets during the Covid crisis.
Bitcoin has been criticised for the vast energy reserves and associated carbon footprint of the system. New bitcoins are created by “mining” coins, which is done by using computers to carry out complex calculations. The more bitcoins that have been “mined”, the longer it takes to mine new coin, and the more electricity is used in the process.
Another reason behind the surge in ethereum is its recent system upgrade, he said.
In January, the US investment bank JPMorgan made a bold prediction, forecasting that bitcoin could rally as high as $146,000 in the long run as it competes with gold as an alternative currency.
The latest gains come after the US tech entrepreneur Jack Dorsey, the chief executive and co-founder of the payment service Square, said he was committed to making bitcoin “the native currency of the internet” and his company had no plans to expand its offerings to other cryptocurrencies. He told analysts on an earnings call last week the firm was working on a number of initiatives, such as hardware wallets to store bitcoin, and functions to allow consumers to mine for the cryptocurrency.
However, the Bank of England deputy governor, Sir Jon Cunliffe, said last month that digital currencies such as bitcoin could trigger a financial meltdown unless governments stepped forward with tough regulations.
Chingari’s GARI token to make historic debut on 6 top crypto exchanges – Cointelegraph
Pakistani people purchase cryptocurrency worth $5 crore in six months: Reports – Times of India
Bitcoin falls 6.1 percent to $47607 – Reuters
A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken October 19, 2021. REUTERS/Edgar Su/File Photo
Dec 28 (Reuters) – Bitcoin dropped 6.13% to $47,606.92 on Tuesday, losing $3,111.19 from its previous close.
Bitcoin, the world's biggest and best-known cryptocurrency, is down 31% from the year's high of $69,000 on Nov. 10.
Ether , the coin linked to the ethereum blockchain network, dropped 5.57 % to $3,812.6 on Tuesday, losing $224.8 from its previous close.
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