The value of bitcoin, the digital currency created less than a decade ago, is very volatile — but this is nothing new.
Bitcoin has extended its record-breaking upward trajectory in recent months and is now nearing $20,000 per bitcoin. This was all but unimaginable less than a year ago and the relatively unregulated cryptocurrency is still stirring up excitement and unease among investors and governments in equal measure.[visualizer id=”139720″]
But what is it that’s pushing bitcoin higher? As it’s certainly not people using to buy online or in stores.
Economist Robert Shiller has said the main driving force behind bitcoin is a motivating story that people like to get behind and when this happens, “big things” follow.
While adoption as a means of payment remains low people are increasingly interested in using virtual currencies and wallets — and contactless cards and mobile payments are a common sight in many cities.
Cash is now the preferred method of payment for just 43 percent of people around the world, according to a recent GlobalData survey.
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Meanwhile, two-thirds of people globally use smartphone apps and the like to manage their spending habits.
Where to splash the virtual cash
There are a number of businesses in the UK (predominantly in London) which accept bitcoin either in store or online. Though for most of them it is for the novelty of it.
The Pembury Tavern in Hackney became London’s first Bitcoin pub back in 2013 but there are questions surrounding bitcoin’s instability and cost and many are questioning bitcoin’s ability to revolutionise anything unless it sort out its issues.
Bitcoin’s soaring value has meant fees people pay for transactions rising along with it. As a result PC gaming platform, Steam, has ditched bitcoin payments citing high transaction fees.
Bitcoin could change the way people use money and store value, causing a shock to the financial system that would dwarf the 2008 global financial crisis.
However, retailers and core users will begin to desert bitcoin as a payment method unless current scaling problems are fixed.
Bitcoin’s decentralised and anti-regulation nature means that it is not going to be simple to overcome these issues and will need to bitcoin community to work together to make it happen. While they’re all celebrating their new found wealth this is unlikely to happen.
But if they don’t, that wealth will prove fleeting.