Instability in government-backed currencies has spiked Bitcoin, the cryptocurrency that is anchored by an army of computers that some like to refer to as “digital gold”.
The price of Bitcoin had actually increased compared to the previous year shortly before the Bexit vote. it had hit $ 750, followed by a weekly low of $ 550. But when it was found that the UK was not in Europe and the pound began to fall, Bitcoin soared to $ 650. At the time of going to press, it was trading at $ 681.
Bitcoin is a small ecosystem compared to fiat currencies and therefore reacts violently and can be driven up or down by price feedback loops. But if, for example, the Bank of England is forced to come out and say that £ 250bn has been made available, so don’t panic, Bitcoin’s safe haven status will be invoked.
In the past few months, there has been a time when Bitcoin’s prices have been remarkably stable. In May / June, Bitcoin had a 28-day period that was less volatile than gold. But we have to be honest here – volatility is a given with Bitcoin and other cryptocurrencies, which is why a lot of people like to trade them.
Some Bitcoin start-ups reflected the Bitcoin Brexit surge and the statements about cryptocurrency it contained. Andrew Lee, CEO of Purse.io., Which has over $ 1 million per month in sales on Amazon for discounted Bitcoin users, told IBTimes: “Chinese exchanges traditionally drove bitcoin prices up, including the most recent Soaring to $ 780. GBP / BTC leads the way. Bitcoin is the new gold. It’s easier to store, transfer and trade. “
Lee was less optimistic about Europe: “The instability with government-backed currencies is forcing the world to look for alternatives. Bitcoin’s popularity will increase as the European Union collapses: Brexit, Grexit, Spexit, etc.”
Gene Kavner, CEO of Bitcoin wallet provider iPayYou, went into greater detail on the level of security associated with a fixed currency supply, as is the case with Bitcoin.
He said: “Governments have traditionally responded to major economic changes by manipulating the value of their currency and, in many cases, damaging it (by printing more of it).
“Bitcoin, on the other hand, is immune to any government involvement. It is certainly predictable, its supply is known, and the rate at which it is increasing will be halved. This contrast, the stability and security of Bitcoin provides investors with the confidence and ability to trust him to withstand the profound changes we face.
Events like Brexit and the earlier Grexit threat promote Bitcoin as a presumed safe haven. However, this should be qualified. They cannot be stable and volatile at the same time. In all cases, Kavner placed less emphasis on Bitcoin as the standard safe haven.
Pointing out that cryptocurrencies are predictable in their offerings, he said the “democratization of safe havens” will mature Bitcoin as a dependable store of value over the coming decades.
“There’s still quite a way for Bitcoin to really get to that haven. The real value and genius of Bitcoin is still waiting to be discovered by the world. It has to be for those unfamiliar with virtual currencies are to be easier to use. As Bitcoin expands that recognition, it is sure to become a powerful alternative to traditional safe havens like gold and other precious metals, “said Kavner.
However, some cryptonomic experts argue that “predictable in their offerings” is actually the root of the volatility problem for cryptocurrencies like Bitcoin that has stood in the way of its introduction as an exchange of value.
Robert Sams, CEO of Clearmatics, a decentralized trading system that uses distributed ledgers, has described Bitcoin’s deterministic offering as an “error rather than a feature”.
This is Sam on an Epicenter Bitcoin broadcast a few years ago that is still worth quoting: “If you have a steady supply you will never get stability in the purchasing power of the coin. On the one hand, you want the coin to be taken over. If it gains momentum in the early days of a cryptocurrency, expect coin demand to increase dramatically and hyperbolic growth to accelerate.
“But the mere expectation of this growth creates a separate type of demand, a speculative demand that anticipates future transaction demand. And that speculative demand creates the volatility. But the volatility itself is exactly what drives the demand away from people who want it use as a medium of exchange.
“So you have the paradoxical consequence that the optimism that the coin will be accepted by many people actually stands in the way of acceptance.”
However, Darin Stanchfield, CEO of KeepKey, a hardware wallet used to secure Bitcoin and digital assets, believes that in times of trouble it can be seen as a safe haven in tough times to create positive feedback loops and attract investors.
He told IBTimes, “Bitcoin is still a much smaller market than other currencies. Changes in investor psychology regarding marginal safe havens will affect the Bitcoin market. This creates a feedback loop where investors see how Earlier events affect the Bitcoin price and decide to seek some exposure to Bitcoin, which in turn drives the price up.
“We saw the first signs of this as early as 2013 when we feared the US government would shut down, and then again last summer during the referendum on bailing out Greece. Over time, the perception becomes a reality.”
Solving the stability problems of cryptocurrencies is a growing interest in projects like stable coin, the Fedcoin proposal, and more recent announcements from Colu about a hybrid approach.
Ned Scott, CEO of Steemit, a growing cryptocurrency with a market cap of $ 16 million, said the British should consider converting some of their assets into bitcoin given the uncertainty.
He said, “People may wake up to the realities of fiat currencies and debt economies. Centralized, debt-based economies and their currencies harbor risks like bail-ins and bail-outs that digital currencies protect consumers from.”