If you’ve heard anything about bitcoin the past couple of weeks, it’s probably been along the lines of:
In 2010, if you had $10,000 to invest and you put it all in gold, today your gold would be worth $9,981. But if you’d invested it in bitcoins, you’d have US $200 million worth.
It’s a bitcoin price growth example being used to show just how much the cryptocurrency has gained in value over the past couple of years.
All this talk is happening because the price of bitcoin has risen consistently since the end of March this year. According to Coindesk, a news site specializing in bitcoin and digital currencies, the bitcoin price on 24 March was US $935. It has risen to a new high every couple of days since. Today, the price of bitcoin is $1950.
The cryptocurrency crossed the $1900 mark today and this is being considered significant especially as it’s now very likely that it will hit $2,000 soon.
The total worth of bitcoins out there has also now reached US $4 billion.
What is driving the bitcoin price rise?
The price of bitcoin was just fluctuating for a number of years until one key event. In mid-March this year Japan legalized the cryptocurrency as a payment method. Russia also announced that it is seeking to regulate the cryptocurrency.
This boosted confidence in the future of bitcoin especially in Japan, but also globally. Japan has therefore seen a huge spike in bitcoin trade which has impacted the bitcoin price in Japan (at $2058 today) and the global prices have followed suit.
The increase has also been spurred by what is believed to be political uncertainty and general lack of confidence in other forms of investment, especially in the US where president Trump faces a potential political scandal.
The lack of confidence in country economics may also be at play in Zimbabwe where the current price of bitcoin is $2,170, well above the range of global prices. The high price is thanks to the high demand of bitcoin due to what looks like the need by Zimbabweans to use a cryptocurrency other than Bond Notes to transact outside Zimbabwe or to store their savings.
There might also be demand, albeit not significant, driven by ransomware attacks such as the recent WannaCry cyber-attack, which required victims to make payment using bitcoin for the files to be unlocked.
Since the situation with the shortage of forex started in Zimbabwe, Zimbabweans have had to find other means to get a currency that they can use beyond Zimbabwe’s borders. Bitcoin, it seems, is one of those currencies. The Zimbabwean government has however made it clear that they are not considering making bitcoin an official means of payment in the country.
To learn more about bitcoin, see our bitcoin for dummies page here.