Ethereum, often thought of as Bitcoin’s little brother, has surged at an incredible pace since the start of 2017. On March 13, 2018, Ethereum traded at $696.00. Though this may be substantially lower than Bitcoin’s March 13th price of $9,272, Ethereum’s rise over the past 14 months has been much greater. At the start of 2017, Ethereum’s price was about $8. Turning an $8 investment into nearly $700 in 14 months may sound like a speculator’s pipe dream, but it happened. With returns like that, it’s no wonder so many initial coin offerings (ICOs) are coming onto the market.
Ethereum has had some difficulties, including a bug in the popular Ethereum wallet Parity, as indicated by Sean Schroeder in a writing on Mashable, Ethereum may also be a candidate for its own derivatives market. Bitcoin derivative trading opened late in 2017, driving a major surge in Bitcoin pricing.
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Bitcoin is probably the hottest topic in the world of finance and investments, especially since its meteoric rise in 2017. The question, however, appears to be whether or not this rise is indicative of true value. More and more people are justifying the investments in these Bitcoin and other cryptocurrencies as they claim they are an effective hedge due to the instability of fiat currencies. While it is true that a fiat money system has its weakness, it is the very reason why investors turn to assets such as gold as it provides a safety net for currency depreciation. Now, while Bitcoin and other cryptocurrencies have been widely successful, especially in recent years, it is very unlikely that they will be able to replace gold as the premier financial investment. Here are some of the reasons why cryptocurrencies will not replace gold.
Gold Will Always Have an Accessible Liquid Market
Gold has always been and likely will always be one of the most liquid assets in existence. You can easily convert it into cash immediately, and national borders do not hold it down. So, no matter where you travel, gold is gold, and you can exchange it for whatever the local currency is. However, when it comes to cryptocurrencies, things are much different. Yes, more and more countries abroad are beginning to accept Bitcoin and company, (Japan, in particular) it is still a long way ahead of mainstream acceptance.
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2009 saw the first development of a cryptocurrency (Bitcoin), and since then the world of digital currency has never looked back. Cryptocurrencies differ from traditional currencies comes in the sense that they have no centralized authority. So, with traditional currencies, there are banks and other financial institutions that handle the recording of transactions. However, cryptocurrency transactions occur directly between the parties. Cryptocurrencies also have their own a digital ledger called the blockchain which records all these transactions. There are currently over 1300 cryptocurrencies available right now, so it can be very difficult determining which ones to invest in. Here are some of the best cryptocurrencies to take a look at:
Bitcoin is the current leader in the world of cryptocurrency. They use a blockchain that currently is strictly for peer-to-peer financial transactions which may change in the future. 2017 was a groundbreaking year for Bitcoin. Its value was at $900 at the start of the year, and it rapidly grew to $6,300 by October. Since then, it has even surpassed the $10,000 mark and is in a healthy direction to continue its growth in 2018.
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2017 was a huge year for Bitcoin. Starting off in January valued at $778, it rose to record highs of more than $12,000 by mid-December. As we look ahead to 2018, there are many developments with the cryptocurrency that are worth paying attention, and not all of them involve it’s rising price. Obviously, Bitcoin’s price is set to increase as the year progresses. Kay Van-Petersen, who is an analyst at Saxo Bank, accurately predicted Bitcoin’s rise in 2017 and currently predicts that it could hit $100,000 this year. However, she also predicts that Ethereum could outperform Bitcoin in 2018. He said, “Ethereum came after Bitcoin, it has a more unified leadership than Bitcoin. They seem to be a bit further along the way in regards to forming the solution to scaling issues. And you can see transactions on their side eclipses transactions across other cryptos.” So, due to Ethereum having a core group of developers who control how the technology grows, experts believe that it will give it longevity and certainty which hasn’t been said the same regarding Bitcoin.
Another development in 2018 for Bitcoin comes in the possibility of mass public awareness for it and cryptocurrency in general.
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At this point, everyone is well aware of Bitcoin. However, it can be tough to distinguish Bitcoin from the blockchain technology which is where Bitcoin transactions take place. So then the question is: what is blockchain technology? It is a term that people throw around when discussing Bitcoin and other cryptocurrencies, but most are unaware of what it actually is. The blockchain is an ingenious invention, created by a person or group of people know by the pseudonym of Satoshi Nakamoto. You can think of it as a new type of internet. Intended initially for Bitcoin, the tech community has found other uses for the technology.
An easy way to understand the blockchain technology is by imagining a spreadsheet duplicated thousands of times across a network of computers. The design of this system is to update the spreadsheet regularly, and that is a basic understanding of the blockchain. Basically, information held on a blockchain lives as a shared and regularly balanced database. It is not stored in a single location, so the records kept are public and easily verifiable. There is no centralized version of the information, so it is secure from hackers. Now if one would define the blockchain, you could say that it is a “technology that offers a way for untrusted parties to reach a consensus on a common digital history. A common digital history is important because digital assets and transactions are in theory easily faked or duplicated. Blockchain technology solves this problem without using a trusted intermediary.
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Blockchain Technology is one of the most popular topics in the world right now. It is currently one of the most revolutionary technologies in recent memory. Blockchain is a decentralized database that records digital transactions. Technology continues to increase our dependence on the internet. New advancements make it easier for us to do close to everything online. The rise of digital currency (cryptocurrency) is no different. Cryptocurrencies and the blockchain technology behind it are already starting to have a significant impact on our lives.
Without Bitcoin and other cryptocurrencies, most people would stick to cash as their means of exchange. However, it would be risky to walk around with large amounts of cash on your person. These digital currencies provide a level of security and privacy that you do not see with the basic credit card. Each time you swipe your card, you enter your personal information into various databases. Unfortunately, these databases are not secure enough to protect from data breaches. There are also people who outsource their security and payment processing. This also inadvertently compromises privacy in the event the someone tampers with the vendors. Cryptocurrencies like Dash can help as they focus specifically on confidentiality and blurring user data.
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In 2011, the value of Bitcoin was less than two dollars. In the last six years, its value increased by over 4000%. Jordan Hiscott says this rapid growth is a sign of the shifting paradigms in the world of finance. According to Hiscott, “we are in an age where technology is changing the dynamic of the business world.”
So, what is behind bitcoin’s upward trajectory?
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