Cryptocurrency Bitcoin on Monday rose to an all-time high of USD 9,721 and is now worth more than seven times an ounce of gold.
Cryptocurrency Bitcoin on Monday rose to an all-time high of USD 9,721 and is now worth more than seven times an ounce of gold.
According to The Guardian, Bitcoin is now close to reaching five figures even as market analysts warn of 'a huge bubble'.
The cryptocurrency, which started the year at USD 1,000, had reached USD 5,000 by October.
However, experts believe that the currency is now more volatile than ever.
"Rather than a commodity or currency, bitcoin is like owning stock in a company that will only ever issue 21m shares and never pay a penny in dividends," said senior market analyst, ETX Capital, Neil Wilson.
"The only way it has value is if the next guy is willing to pay you more for it ? the greater fool. With no intrinsic value to bitcoin, it?s hard to see this as anything other than a giant speculative bubble," Wilson added.
Bitcoin is a virtual currency that emerged in the aftermath of a financial crisis and allows people to bypass banks and traditional payment processes to pay for goods and services.
However, banks and other financial institutions have been concerned about the early associations of the currency with money laundering and online crime, and it has not been adopted by any government so far.
But if you are among those who still fail to understand the mania regarding the cryptocurrency and confused about its future prospects, let us take you to the basics.
what is cryptocurrency?
Cryptocurrencies, including Bitcoin, are virtual money, which don’t have any physical backing like other currencies. If you want to buy something through Bitcoin, you have to just transfer a code to the seller’s wallet account online. Each coin can be further split to ease transactions.
Bitcoin has a payment network which is managed through a closed group of computer network. Those backing it claim it is transparent and all Bitcoin transactions can be monitored any time by anyone. The only hitch: You can’t find the owner’s identity. It’s decentralised and is not tied to a bank or government and allows users to spend money anonymously.
The records of the Bitcoin transactions are stored on thousands of computers across the globe. The price of Bitcoin depends on demand and supply of users.
(With inputs from agencies)
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