When bitcoin arrived on the scene in 2008, it gained a slow, but steady following. Prices rose, while other investment options stuttered in the post-recession malaise, and over the course of five years, values increased from nothing to $200. Then something strange happened, and it soared to more than $1,000 before crashing back down to $400.
Since then, the bitcoin price has seen steady and sustained, if unspectacular, growth. Until, that is, this year. In the past few months, the price has skyrocketed again, putting bitcoin prices almost on a par with gold. Is this just another crash waiting to happen? Or is something different happening this time? To attempt to answer these questions, let’s take a look at some of the key drivers behind the surge.
In its fledgling years, few outside the alternative investment and cryptocurrency industries even knew what bitcoin was. But over the past year or two, usage and acceptance has increased. From a sandwich in Subway to renewing your Office 360 subscription with Microsoft, there are hundreds of thousands of businesses that now accept bitcoin payments.
Yet this is only part of the story. The relationship between bitcoin and casinos has always been a tantalising one, particularly for US-based gamblers. Federal regulations prohibit US banks from processing payments to online casinos, meaning that while using them is not actually illegal for US citizens, getting funds into them is practically impossible. The rise of bitcoin casinos has opened up the online casino market to Americans, and those in other countries with similar regulations, like never before.
Bitcoin is generated by a process called mining, whereby a computer solves complex mathematical problems and receives the cryptocurrency in reward. As processors have improved, the ability to mine for bitcoins has become more viable.
The other aspect of technology that has promoted bitcoin is that of security. It has, so far, proved 100 percent safe against hacking. Cautious speculators have observed this, and gradually emerged from their shells to join the party.
As we mentioned earlier, bitcoin has always been considered as an option for those in the investment markets, but take up has been modest. However, as the above two factors have started to play out, speculation in the cryptocurrency has increased dramatically, reaching record levels this year.
The high profile introduction of some other cryptocurrencies, most notably etherium, has raised the profile of the overall sector and had a positive influence on the value of other virtual currencies – as the most famous one of all, bitcoin has seen the greatest benefit.
Sustained growth or crash and burn?
So what do these factors tell us about the future of bitcoin? Will it sustain today’s high rates, or is another 2013 crash on the horizon? Of course, nothing is certain – if it was, we would all be millionaires, but the predominant view is that bitcoin has now attained a critical mass, and will continue to grow. The best could be yet to come.