At nearly $50,000 a coin, bitcoin is proving to be a new kind of “gold.” It was only a few weeks ago that the cryptocurrency passed $40,000.
Yet, here we are approaching a new milestone.
Is Bitcoin the New Gold? Institutional Investors Want “In”
Like gold, bitcoin has no intrinsic value. It is still too volatile to be used as a real currency (after all, why would you buy a new car or boat with bitcoin if there’s a chance your bitcoin could appreciate 20% in the next month?) and, yet — everyone seems to be jumping in.
From BlackRock to Mass Mutual to BNY Mellon, from Tesla to Mastercard, bitcoin is now being viewed by many institutional players as “the” commodity in which to invest.
On Sunday, the world’s largest cryptocurrency surged more than 5% to $49,726 as investors welcomed the idea of major institutions getting into the currency.
Of course, it’s rather ironic that the crypto is being so heavily embraced by the establishment, given that bitcoin was designed to be an anti-establishment currency.
The Anti-Establishment Crypto
Bitcoin is believed to have been started by a group of computer engineers, going under the alias Satoshi Nakamoto, beginning in the year 2007. Nakamoto allegedly hid a finite number of coins on the internet. Sophisticated mathmatetical algorithms are performed by computers in order to “mine” these coins. The mathematical equations increasingly become more and more sophisticated as the supply dwindles, thereby making the coin that much more scare.
Bitcoin transactions are almost anonymous (though not entirely) through the blockchain technology that governs the crypto, and for that reason, bitcoin has increasingly caught the attention of governments worldwide. The Federal Reserve has expressed concerns about the inability to easily track the exchange of funds between individuals, or even countries and countries around the world have warned investors that their investments may not be safe.
Bitcoin has no Central Bank controlling its value and is based entirely on the value the peer-to-peer community is willing to assign.
Since 2020, the price of bitcoin has jumped 60% which bulls speculating that it’s the new gold and here to stay. Bears, however, stress that it may be the biggest bubble in recent history on par with the tulip mania of the Netherlands in the mid 1600s.
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