The digital age has changed the way people think about shopping, communications, entertainment, news reporting, and now, even currency.
What was viewed once as only a speculative experiment has now proven to be a cultural and economic phenomenon. Bitcoin is the most well-known digital currency in existence by the technical definition, and it has provided an alternative to government-backed and central-bank-owned currencies around the world.
Though some scoffed at the currency early on, claiming it was nothing more than a piece of digital data floating in cyberspace, Bitcoin has continued to rebound from all slumps and keeps breaking records.
On Wednesday, the currency blasted past $11,000, reaching a record high and going up over $1,000 in half-a-day.
A trend has emerged with Bitcoin, as every major boom is signaled by critics as a sign the currency has peaked. But despite fears about the bubble bursting, the currency has continued to enjoy success throughout the past several years.
In 2011, it was on parity with the US dollar and the Euro. When Bitcoin Central was licensed as a bank, it signaled a big jump for the currency. The crackdown on Silk Road and Mt. Gox security breach brought concerns, but the currency continued to find success. Even when China banned Bitcoin bank transactions, PayPal moved to allow merchants to accept it for transactions.
At $1,000, $2,000, and even $5,000, investors said the rise was nothing more than a fad. But critics continue to be silenced, and markets continue to react to what may be the most curious and promising development of the digital age.
Bitcoin, and cryptocurrency in general, remains largely mysterious. Many people are working hard to understand the technology, what it offers, and how it could change things in the world of banking and finance.
The mystery surrounding crypto may come from misunderstandings about the nature of money in general. Government currencies, though still largely used in paper form, are digital credits themselves. Their use by entire nations forms a trust of sorts, establishing a mutual line of credit. The drawback of this is that the amount of credit can be expanded, as no store-value resource is used to prevent value degeneration from inflation.
The amount of Bitcoins in existence can expand as well, but safeguards are in place to control the rate of expansion. Cryptocurrency is also affiliated with blockchain technology. The distributed ledger complements the digital money nicely, providing the possibility of a transparent system of smart-contract enforcement, where identity management and distributed ledgers can be used to authenticate transactions and streamline standard business dealings.
Bitcoin may not remain over this mark forever, but it may also soar even higher. Just as the widespread use of national currencies provides some added value to their use, the growing popularity of Bitcoin will drive up the demand further.
Even industries are seeing the advantage of cryptocurrency and blockchain technology. The options it provides for smoother transactions and streamlined operations make it a good long-term investment for companies.