When did Bitcoin stop rising?

After Bitcoin's $ 50,000 Record: How Far Can The Journey Go?

Vienna - There was great excitement when the Bitcoin rate suddenly stood above 50,000 dollars on Tuesday. The moment can certainly be described as historic, as this brand was considered the next important milestone for the digital currency. Since then, the price has jumped between $ 49,500 and $ 50,500 every second. One thing should not be missing after such a high price: the critics who shout "bubble" and the supporters who see themselves confirmed by the development.

A sober look at the numbers shows a rapid development, because a year ago a Bitcoin cost about 5,000 dollars. A virus-related global economic crisis and an unprecedented soaring followed. There is no doubt we are in a massive bull market. But you also have to be aware that this can lead to course corrections of 20 to 30 percent at any time. If you add up all of the existing coins, the flagship of the crypto market is worth around 930 billion dollars. For comparison: Tesla has a market capitalization of around 780 billion dollars.

Course driver Elon Musk

When Tesla boss Elon Musk says something on Twitter, it often leads to financial flows worth billions around the world. On the one hand, he announced that Tesla will accept Bitcoin as a means of payment, on the other hand, he himself invested $ 1.5 billion in the cyber currency. That gave the Bitcoin course a decent boost. Of course, it's not just Musk's fault. The general acceptance is increasing, and in the past few weeks there have been reports of corporations opening up to Bitcoin. These include, for example, Mastercard or PayPal - and even BNY Mellon, the oldest financial institution in the USA, will soon hold Bitcoins for customers. Another major US bank, JP Morgen, believes the digital coin can reach a rate of up to $ 140,000.

All of this increases the pressure on the central banks and the classic monetary system. During the Corona crisis, the central banks made their monetary policy, which was already loose, much more generous. "2021 is still young, and it could be the most important year in the industry. We will experience a paradigm shift here that will further remove the younger generation from traditional banks," says the managing director of the Viennese crypto trader Bitpanda, Eric Demuth. It is only a matter of time before Bitcoin becomes the new gold and is added to the balance sheet of the central banks, he says.

Question of faith

Bitcoin is volatile, Bitcoin polarizes, but Bitcoin also takes away some people's fear of rising inflation. The states support consumers and companies with high expenditure, which increases the national debt burden sharply. This development could result in increased inflation that would devalue traditional currencies. Some investors are therefore increasingly asking for alternative investments such as digital currencies.

Depending on who you believe in, Bitcoin is the salutary alternative to the financial system, a new currency, the new gold, an electronic investment or an invitation to fraud.

Versatile criticism

Bitcoin has been criticized from many sides. In the recent past, the cryptocurrency has become popular with blackmailers due to its decentralized nature. After cyber attacks on company networks, they can be paid in Bitcoin in order to unlock the system again. Bitcoin is also a prominent currency in the Darknet. Others speak of a risky speculative object.

There has also been a lot of criticism for energy consumption. The computing processes involved in mining (producing bitcoins) are becoming more and more complex and require more and more energy. Researchers at Cambridge University recently calculated that annual Bitcoin transactions consume around twice as much electricity as Austria does in a year. That, and here comes the next point of criticism, although with Bitcoins only about seven payments per second are possible - a fraction of the capacity of conventional systems.

Slow blockchain

Bitcoin repeatedly experienced sharp price drops. After the price rally in 2017, when the $ 20,000 mark was barely cracked, things went steeply downhill. Then the technology on which everything is based, the blockchain, came to the fore. Bitcoin is a means to an end, and blockchain is crucial for the future, it said. It is used to save information not centrally but in a network.

Banks and insurance companies around the world are experimenting with the technology. Those who are not there have already lost the race for the future, it was said. The blockchain is secure and works too. But it is just as slow and inflexible, and really practical fields of application have so far hardly emerged.

Unknown inventor

In response to the financial crisis, a person or group with the pseudonym Satoshi Nakamoto developed the first cryptocurrency in 2008: Bitcoin. In contrast to traditional currencies, neither states nor central banks control the exchange rate. It is determined solely through supply and demand. What was developed as a conceived alternative could, however, be built into this system exactly. Not everyone is enthusiastic about it. For example, the head of the European Central Bank, Christine Lagarde, wants Bitcoin to be regulated worldwide, and the new US Treasury Secretary Janet Yellen also spoke out in favor of legislative amendments to prevent abuse. (Andreas Danzer, February 17, 2020)