With the news that Bitcoin reached its almost all-time high on Tuesday, after hitting $19,000 for the first time in nearly three years, the frenzy for cryptocurrency is back.
The world’s most popular cryptocurrency surged to a high of $19,272.2 on Tuesday, bringing Bitcoin just a hair below its all-time high of $19,783 reached in December 2017 – just before the great cryptocurrency crash of 2018.
Cryptocurrencies have been hitting the headlines in recent weeks as companies and traditional investors increasingly accept them as currency. Cryptocurrencies were also given a confidence boost when the payments giant PayPal announced four weeks ago it would soon let its users buy and sell cryptocurrencies. With Bitcoin appearing to be back - for now - here is all you need to know about it, and whether now is the time to invest.
What is Bitcoin?
Cryptocurrency, broadly defined, is completely virtual or digital money that takes the form of tokens or ‘coin’ - basically like an online version of cash. With Bitcoin, each ‘coin’ is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain which makes it possible to trace the history of Bitcoins. This prevents people from spending coins they do not own, making copies or undoing transactions.
How do you buy Bitcoin?
To buy bitcoin, the first step is to download a bitcoin wallet, which is where your bitcoins will be stored for future spending or trading. Traditional payment methods such as a credit card, bank transfer (ACH), or debit cards will allow you to buy bitcoins on exchanges that you can then send to your wallet. You can also gain Bitcoins by letting people pay you for services or products using the cryptocurrency.
Is it safe?
Every transaction is recorded publicly so it is very difficult to copy Bitcoins, make fake ones or spend ones you don’t own.
What is Bitcoin’s pricing history?
Launched in 2009, the price of one bitcoin remained a few dollars for the first few years. By November 2013, the value of a single Bitcoin reached parity with an ounce of gold, over $1000. After peaked and troughs, Bitcoin rocketed and reaching a peak of $19,783 per bitcoin in late-2017. It was short-lived. By the end of December 2017, the price of Bitcoin slumped back down to the $13,000 mark, then $10,000 the following month.
It has since fluctuated, averaging at about $7,000, until hitting $19,000 for the first time in nearly three years this week.
Is now the time to invest?
People are still wary following the bursting of the bitcoin price bubble at the end of 2017, but it has surged in popularity due to its safe-haven status, alongside gold, with both being bought by investors as a hedge against further deterioration of the global economy in the backdrop of COVID-19 and its devastating financial fallout.
Jamie Lear, a UAE resident and trader in Dubai, has spent years investing in cryptocurrency.
“In my opinion, Bitcoin and cryptocurrency is a natural hedge against bad things; bad things have happened this year - 2020 has been a bad year - but a good year for cryptocurrency given the weakening dollars, rise in inflation and little yield elsewhere - even property is slowing.
“In times of economic crisis have traditionally invested in gold and other precious metals - cryptocurrency has now joined that group.
“In the trading world we have a saying, ‘the trend is your friend’. So, I always go with the trend - and I will be investing more, even though I had my fingers badly burnt three years ago.”
What are Bitcoin’s main competitors?
The field of cryptocurrencies has expanded dramatically since Bitcoin was launched over a decade ago. While Bitcoin continues to lead the pack, other options are Ethereum, Litecoin, Ripple, and Tether, among others.
Is Cryptocurrency the future?
The jury is still out. Deutsche Bank predicts that the number of cryptocurrency users will quadruple in the next ten years, reaching 200 million. In the “Imagine 2030” report, Deutsche Bank suggests that digital currency could eventually replace cash one day, as demand for anonymity and a more decentralized means of payment grows.
As the conversation around blockchain and cryptoassets continues at virtually every level in the private and public sector, their broader adoption looks likely.