Over the last few months, we’ve posted a couple of stories about Bitcoin’s enormous gains in 2017. First we marveled at how the cryptocurrency’s value had risen to $4,000 in August after starting the year at just $985. By November, a single Bitcoin became worth more than $7,200. Since then the cryptocurrency has climbed even higher while also experiencing some major fluctuations. Last night, for instance, Bitcoin’s value reached a record high of $17,153 before eventually falling to around $14,000. As of this writing, the cryptocurrency is worth about $15,500.
Of course, that number could be different within a matter of minutes. Bitcoin was trading at about $11,000 on Monday before experiencing a whirlwind week of price changes. While some are afraid that this could be the sign of a growing Bitcoin bubble, others simply want to know what’s causing the cryptocurrency to rise and fall so wildly. After all, Bitcoin is traded through a decentralized network of computers, meaning no single institution or government has control over it. According to the most widely accepted theory, investors are pouring money into Bitcoin as financial firms like CME Group prepare to launch new futures contracts tied to the cryptocurrency. Experts say this could be a sign that some Wall Street investors are starting to see Bitcoin as a legitimate operation.
Another theory suggests that many Bitcoin buyers are holding on to the cryptocurrency for the long term and will not sell until the price has truly skyrocketed. One analyst expects that Bitcoin could be worth more than $40,000 by the end of 2018. However, that’s chump change compared to another theory that predicts the cryptocurrency’s value will climb as high as $1 million within a few years. That’s the moment that many investors are waiting for, although there’s no telling whether or not it will actually happen. Meanwhile, the Bitcoin network has grown so huge that it now consumes as much energy annually as Denmark. How large the cryptocurrency will grow from here is anybody’s guess. (By the way, as of this sentence Bitcoin is now worth nearly $16,500. Click here to check out its current price.)
Questions:
- Why are experts unsure about the causes of Bitcoin’s skyrocketing value? What are their theories?
- Do you think cryptocurrencies like Bitcoin will be the future of money? Why or why not?
Sources: John Biggs, “Why Is Bitcoin’s Price So High?” TechCrunch, December 8, 2017; Everett Rosenfeld, “Bitcoin Plummeted Just Hours After Setting Yet Another Record,” CNBC, December 8, 2017.