Bitcoin’s value is at a three-year high. This week, for the first time since December 2017, the notoriously volatile cryptocurrency’s price officially surpassed US$18,000, boosting its market capitalisation to an all-time record of $US336 billion.The digital token’s highest ever price was recorded in December 2017, at US$19,783—but according to Deutsche Bank analysts, there have only been five other days in history when its price has closed above $US17,000. Now many analysts are projecting that Bitcoin’s price could top $US20,000, and at least one major U.S. bank is claiming the bull run could reach as high as US$318,000 by the end of 2021. Advertisem*nt
For anyone who doesn’t usually pay attention to financial trends and decentralised peer-to-peer cryptocurrencies, this might all seem a bit sudden. For those who jumped off the Bitcoin bandwagon following the crash of early 2018, it’s likely to be galling. And for those who held their nerve, stuck it out through hell and high water and three-year lows and are now riding the wave back to the top, it must be incredibly satisfying.In any case, it’s fair to say there are some questions around the Bitcoin boom. Here’s what you need to know.Why is this happening?According to Barney Tan, Associate Professor of Business Information Systems at the University of Sydney’s Business School, there are two main drivers for Bitcoin’s recent surge.One is an announcement made by PayPal in October, when the platform revealed that it would allow its users to to buy, sell, and hold the token and engage in Bitcoin transactions.“The fact that a platform of PayPal’s stature is doing this gives Bitcoin a massive credibility and legitimacy boost,” says Professor Tan, “and even more so given that PayPal has a strong reputation for protecting its users and being comparatively prudent.”
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The second factor is what’s known as “network effects”: that is, the idea that a cryptocurrency’s value increases as more people buy, own and use it. Like any stock, the more people on the bandwagon the more valuable that bandwagon is. And according to Professor Tan, Bitcoin’s recent surge could indicate that it’s starting to be taken seriously again. Advertisem*nt
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“Bitcoin is a digital form of gold which means there is a finite supply of it—and we know there is a finite supply because we can cryptographically verify ownership,” Dr Dev explained to VICE World News over email. “Bitcoin is approaching its 2017 all-time high because demand for this cryptocurrency is outweighing supply … more people know about it and a lot of innovation is occurring that utilises Bitcoin and cryptocurrencies. Advertisem*nt
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The only Bitcoin Daniel has ever spent is to pay for flights around the world to different Bitcoin conferences, and to gamble online. Looking back, he says he must have lost what would currently amount to over US$150,000 worth of cryptocurrency playing online poker. But he insists that he always has a stash of Bitcoin tucked away. Advertisem*nt
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