Once the preserve of basement-dwelling libertarians who hoped to upend the financial system, today bitcoin is close to becoming a mainstream investment, says The Economist.
It turned out to be poor payment option: the network can only handle a few transactions per second. Instead, the new hope is that it could emulate gold as a store of value that sits beyond the reach of government mismanagement. Younger investors appear to prefer digital wallets to the hassle of managing physical bullion. Yet fraud and theft are still rampant in the world of bitcoin trading. What's more, the cryptocurrency's price tends to move in line with stockmarkets, undermining its credibility as a safe-haven asset.
The value of bitcoin has more than tripled since October, and valuations surged past $40,000 before falling in a weekend sell-off as investors dumped holdings. On Monday alone, cryptocurrencies lost more than $150bn in value, according to data from Coin Metrics. By Thursday, bitcoin had recovered much of the lost ground, trading at over $39,000.
Commentators still stand by the guidance that Anyone who invests in cryptocurrencies should be prepared to lose their shirt or a considerable portion of it.€‰The fear is that consumers are leapfrogging stocks and bonds and going straight from cash to bitcoin, in the mistaken belief it's much the same.
Slowly but surely, though, bitcoin is being domesticated and the latest bitcoin run has felt positively staid compared to the unbridled mania of the 2017 boom and crash, when investors burnt their savings on unrealistic promises of endless revenues.
About the Author: Glen Callow
