Bitcoin Surges Past $16K: Will the Bubble Burst?
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Cryptocurrency bitcoin soared to US$16,777 on Thursday, reaching a market capitalization of $274 billion, according to Bloomberg’s composite of exchanges. That was up from just $10,000 last week, and up some 1,500 percent from the beginning of 2017.
The latest price increases have come as bitcoin increasingly has been recognized as a legitimate form of currency.
The Commodity Futures Trading Commission (CFTC) last week announced that it would allow the trading of bitcoin derivatives on the CME Group and CBOE Global Market exchanges.
The CFTC’s move makes it easier for investors to buy and sell bitcoins at a future date at a pre-agreed rate.
However, investors should be aware of a potentially high level of volatility with the currency, the agency warned.
Bitcoin was introduced as a decentralized digital currency in early 2009. Its system works without a central repository or single administrator; transactions between users take place directly through the use of a cryptography. Transactions are verified on network nodes and recorded in a public ledger, or blockchain.
Bitcoin’s exact origin is still somewhat mysterious. It was invented by an unknown person, known only as “Satoshi Nakamoto,” and released as an open source platform.
A True Market Cap
Bitcoins are generated via digital mining, which utilizes complex computer algorithms. Each and every bitcoin is tracked via the network’s shared transaction ledger. In total, there can be only 21 million bitcoins in the entire world. As of Dec. 5, 16.7 million have been mined.
Even with each bitcoin valued at roughly $16,000, the currency represents just a small drop in the bucket of the world’s wealth.
“We have $200 trillion in the world right now in stocks, cash, bonds and gold — and all of it is overvalued,” said Ronnie Moas, founder of Standpoint Research.
That is roughly $25,000 for every man, woman and child in the world.
“If 2 percent of that ends up in a cryptocurrency, that is just $4 trillion of the total world wealth,” Moas told the E-Commerce Times.
Given that there is a…
