Bitcoin is being compared to gold
The cryptocurrency’s price smashed through the $11,000 ceiling for the first time this week, just days after soaring to a previous record of $10,000.
And despite the US President causing a worldwide storm by retweeting Britain First and attacking Prime Minister Theresa May, Mr Trump fell behind the surging digital asset as searches for ‘Bitcoin’ exceeded those for ‘Trump’.
Bitcoin has hit headlines this week for two very different but significant reasons.
Over the past year the average monthly search has been 5.44 million but that has spiked considerably when Bitcoin began November’s $7,000 to $11,000 surge.
The rise of the coin from less than a British penny in in 2010, to over £8,000 ($11,000) on November 29 marks the staggering rise of a genuine social, cultural and computer-science phenomena.
President Trump’s golden elevator
A single Bitcoin transaction consumes energy equivalent to powering a US household for one week!
Perhaps more importantly however is the move towards industry investment and the news US exchange giant Nasdaq has told selected market participants it plans to launch a Bitcoin future at some point in 2018.
Nasdaq’s news follows on from CME Group, the world’s largest derivatives exchange, and CBOE Holdings, have both said they plan to launch futures products based on Bitcoin this year, pending regulatory approval.
Nicholas Gregory, CEO of CommerceBlock told Express.co.uk: “This is a huge stamp of approval for Bitcoin and the next big step on the road to its global adoption.”
But not everyone is convinced.
More people are getting interested in Bitcoin
The most well-circulated comment came from JP Morgan CEO Jamie Dimon, who said the digital currency was only fit for use by drug dealers, murderers and people living in places such as North Korea.
Similarly the governor of France’s central bank, François Villeroy de Galhau, is not a fan. He said: “Those who invest in Bitcoin do it entirely at their own risk.
“There must be no ambiguity – the Bitcoin is not a currency, or even a cryptocurrency.”
Jeff Currie, global head of commodities research at Goldman Sachs, said Bitcoin is a commodity with many similarities to gold, and the volatility that has sparked investor concern stems mainly from its lack of liquidity.
Mr Currie said in an interview with Bloomberg TV: “I don’t see why there is all this hostility to it.”
Trump won headlines this week, but not as many as Bitcoin
As Bitcoin is better understood and its price settles, it could be used as a security investment like gold.
Bitcoin is not all that different to gold because it doesn’t have liability attached to it by definition, like a security, Mr Currie said.
Alessandra Sollberger, investor and founder of health and nutrition company Evermore, who worked in venture capital for Goldman Sachs and Blackstone, said that Bitcoin has similarities and differences to gold.
Ms Sollberger told Express.co.uk: “They’re both decentralised, offer anonymity and can be converted into fiat. However, Bitcoin is digital, based on rapidly changing protocols and its entire ecosystem is nascent – there’s plenty of issues with it.
“A single Bitcoin transaction consumes energy equivalent to powering a US household for one week!”
Mrs Sollberger says alternative cryptocurrencies like ethereum have developer communities that are trying to solve such issues, and they may end up being a better “gold alternative” in the long run.
The forthcoming entry of Nasdaq’s futures contracts “brings a whole new game to town”, Mrs Sollberger said.
She added: “Let’s put it this way – if trading there was already active, I think the current Bitcoin rally wouldn’t have lasted this long. Traders will be able to short the currency and speculate on drops.
“In a way, this will help normalising the cycles of bull and bear in Bitcoin, which might make it slightly more predictable.”