According to cryptocurrency data tracker Coindesk, Bitcoin has traded at its highest value in 3 years at the beginning of December. As at the beginning of the month, it has traded at $19,383.56, quickly approaching the $20,000 mark. This is a 170% increase in value since the start of the year. Many online businesses such as merchants and casinos are now considering accepting cryptocurrency as one of their preferred payments methods among existing ones such as those highlighted in this online casino. While it remains volatile, it is seen as a safe haven asset for investors, especially in terms of uncertainties such as those caused by the coronavirus pandemic.
Factors contributing to the rise of Bitcoin
One of the factors that have resulted in the rise of Bitcoin is the decision by PayPal in October to allow trading of virtual coins. Users can then use their virtual currencies to trade with sellers using PayPal as a transaction option. Other cryptocurrency methods allowed at PayPal are Litecoin, Bitcoin cash and Etrhereum. Another factor influencing its meteoric rise is the decision by top firms such as Guggenheim Partners showing interest in investing in Bitcoin trusts. While the cryptocurrency market is still relatively small, it is starting to catch the attention of many people. The coronavirus pandemic has also pushed people to consider cryptocurrency as an alternative. As governments deal with resuscitating their economies, their efforts will likely result in inflation. However, since only a limited number of Bitcoins can ever be created, with 18.6 million out of 21 million bitcoins already produced, investors considering cryptocurrencies it as an alternative. However, there is a risk that it could suddenly drop in value since some traders may start selling when it reaches the $20,000 mark. This is why investors are urged to exercise caution when investing in Bitcoin or cryptocurrencies due to their high volatility.
How Bitcoin works
Bitcoin is a digital currency that can be created and used independently of governments or national banks. They can be thought of as being virtual tokens. Just like other types of currencies, its value depends on how much people are willing to transact for it. Bitcoin transactions are through a process referred to as ‘mining.’ This involves using a computer to find a 64-digit solution to a complex mathematical problem. For each problem that is successfully solved, the miner gets rewarded with Bitcoins. Users can then trade or invest in these Bitcoins. This acts as an incentive for users to provide the processing power required to create Bitcoins. To earn Bitcoins, users are required to have a virtual Bitcoin address which usually consists of numbers and letters to make them anonymous. These addresses store Bitcoin wallets that a user earns and are used to manage savings. They can be considered a type of privately run bank account. An advantage of using Bitcoin is that the entry threshold is really low. For example, if you only have $10 in a bank, it can’t make money for you. However, anyone with a computer can start creating and earning from Bitcoins.