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17:55 06.05.2017(updated 18:07 06.05.2017) Get short URL

The price ofBitcoin was soaring tonew highs duringtrading last week, amidan upsurge indemand. According tothe CoinDesk Bitcoin Price Index (BPI), it broke throughthe $1,500 barrier forthe first time onThursday; trading onSaturday has reached $1,550 so far.

Since reaching $1,000 atthe turn ofthe year, the cryptocurrency has surged inrecent months and added over20 percent ofvalue duringApril alone.

The steep rise inprice has led some analysts towonder whether Bitcoin, which was invented in2009 and broke the $100 barrier in2013, is heading fora second wave ofprice growth asnew money enters the market.

Cryptocurrencies expert Dr. Garrick Hileman, who is an Economic Historian atCambridge University and the LSE, aswell asfounder ofthe macroeconomic news website Macro Digest, told Radio Sputnik that all cryptocurrencies, not just bitcoin, are gaining inpopularity.

"Three years ago when Bitcoin crossed $1,000, there were still a lot ofother cryptocurrencies butBitcoin represented 90 percent ofthe total market capitalization ofall cryptocurrencies. Today, it's just over50 percent so there's a broader story going onbeyond Bitcoin," Hileman said.

While cryptocurrencies are being used formore and more tasks, such ascross-border payments or online transactions, financial speculation is still the source ofmost demand.

"Most people would agree that cryptocurrency today is still considered primarily a speculative instrument, a stored value. It's a bet onpeople needing cryptocurrency todo things likepower the 'internet ofthings' economy and machine tomachine transactions."

"We don't know how big that segment ofthe economy is going tobe, buta lot ofpeople think that something likeBitcoin or Ethereum or one ofthese other currencies could be the payment rail fora machine-to-machine economy," Hileman explained.

The idea ofbitcoin and other cryptocurrencies being used asa kind ofdigital gold, an alternative way ofstoring money outsideof traditional banks and currencies, is also gaining inacceptance.

Most recently, bitcoin and other virtual currencies received official recognitioninJapan last month.

"More and more people are waking upto cryptocurrency asan alternative tosomething likethe US dollar asa traditional way toopt-out ofyour national currency."

Sputnik/ Valery Titievsky

"These are incredibly volatile instruments, there's no government or central bank standing behindthem tohelp try toregulate the exchange rate."

"If cryptocurrency is really a new type ofdigital asset, if it's a new digital gold then it's really hard toknow what the price ceiling is. All the gold today is worth roughly about $7 trillion, all the cryptocurrency inthe world today is worth about $45 billion so it's a small fraction ofgold."

"Yet, cryptocurrencies likebitcoin offer a number ofadvantages overgold. They are a lot easier tostore, insome ways they are certainly easier tosend tosomeone else aroundthe world, they may be even more convenient toacquire. So, if cryptocurrency is becoming a new kind ofdigital gold, a new commodity, then really the sky could be the limit onthe price."

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The rest is here:
'Digital Gold': Cryptocurrencies Soar as Investors Swap Dollars for Bitcoins - Sputnik International