Cryptocurrencies such as Bitcoin, and Ethereum saw record trading days yesterday 11/29/17, as combined trading volumes of the 2 digital currencies rose to over $11 billion.
Several of the trading websites reported record high traffic with some even having to shut down altogether while they worked on the problems caused by the rapid influx of trading. Bitcoin was created in 2009 and was the first decentralized cryptocurrency. “Bitcoin is designed to bring us back to a decentralized currency of the people,” says Andresen, a 44-year-old software developer and entrepreneur based in Amherst, Mass. “This is like better gold than gold.”
Cryptocurrencies such as bitcoin derive their value in 2 main ways, scarcity and demand. By way of “mining”, anyone can create bitcoins by downloading Bitcoin’s mining program that connects you to its network. The encryption function called a “hash” marks a set of random numbers, and coins are awarded every ten minutes to whichever miner happens to compute a number below a certain threshold. To keep the supply of Bitcoin in check, a tightly controlled lottery system controls how many Bitcoins are created. Special software has been created by the developers ensuring that there will never be more than 21 million Bitcoin in circulation. “No banker can control it. No evil dictator tyrant can print zillions and destroy the value,” says Bruce Wagner, organizer of New York’s Bitcoin developer’s meet-up.
Demand for Bitcoin is increasing everyday as its value continues to reach record highs. Bitcoins can be spent on the Internet with complete anonymity which is no accident. It’s designer, Satoshi Nakamoto, who is either a person or group of people has yet to be identified and has only been known to communicate via email.
Bitcoin’s market capitalization is less than $200 billion, and enthusiasts say the digital currency could rise dramatically if it draws even a tiny fraction of the world’s $200 trillion in traditional financial market assets. Some analysts also speculate that the currency’s value could reach as high as $100,000 per coin or even higher if demand continues to grow.
Others speculate that cryptocurrencies are just another bubble, and that we will see a spectacular burst, bringing all of its investors and speculators crashing back to earth just like when other bubbles have burst in the past. “High volume, high volatility intra-day reversals like today, following strong upside surges, are generally viewed as technical warning shots of a potential trend shift,” Fundstrat technical strategist Richard Sluymer said in an email to CNBC. “In my opinion, BTC has had a very strong surge and both investors and traders should not be surprised to see a correction/retracement develop.”