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The most popular cryptocurrency, Bitcoin, surpassed the $12,000-mark on Wednesday for the first time since January 2018, showing a 9.55 per cent jump to $12,246 over a 24-hour period. Sputnik discussed the cryptocurrency with Paul Levy, a senior researcher in Innovation Management at the University of Brighton.
Sputnik: Bitcoin ended yesterday’s session with its eighth consecutive day in the green, ending just below $13,000. The streak is a record for 2019, passing the rally between June 12 to June 17 as the only other significant run of multi-day gains. How significant are these gains and what do they mean for the currency?
Paul Levy: I think part of the significance for this one is the kind of bamboozlement that a lot of commentators are going through. No one can quite explain it and there a lot of people speculating what’s going on, but no one has a definitive answer about why it’s shooting up at the moment. So I think that’s the most interesting thing.
Sputnik: Are these movements just another flash in the pan for Bitcoin’s value, similar to the ones we saw around winter this year, or could it represent bigger things for the currency?
Paul Levy: Yeah, I mean, some of the predictions and some of the comments are more interesting. One, of course, is that this was bound to happen – it hit rock bottom, Bitcoin is still there, and it will go up.
Another view might be that the uncertainty in the other parts of the financial system means that people are becoming interested in Bitcoin again and that particularly links to things like Dubai, who have really got very friendly with Bitcoin in terms of regulation.
Some Bitcoin investors and companies are locating now where the legislation of regulation is helpful, so there’s more confidence there.
Another view also could be simply about Bitcoin is a way of spreading risk that in an uncertain environment at the moment, combined with more confidence in Bitcoin, despite the fact that there were some acting stories, because they still were, it was way more disastrous than it’s been in other parts of the financial sector in terms of hacking, so people are spreading, which they were investing in traditional parts of the economy, but they’re also investing in Bitcoin. And that could be one of the reasons.
Sputnik: Looking to the future, what challenges does Bitcoin need to overcome to effectively establish itself not just as a commodity for traders but also as a method of currency of the future?
Paul Levy: Bitcoin will have to address its perceived link to the dark web and illegal activity. That’s one thing. The second thing will be, if there are bigger hacks then the security of Bitcoin and block chain will still have to prove itself. And it’s volatile.
One view, which is a bit of a conspiracy theory, is that lots of people investing in Bitcoin are there to push the price up and then watch it fall again, then the bubble burst, despite some analysts suggesting it will hit 20,000 by a couple of weeks’ time, possibly 100,000 in the longer term. It hasn’t yet proved itself to be a viable long term, stable thing and you need to know that when you get into it.
Sputnik: For it to be a long-term stable currency, what does Bitcoin need? What does it need to do to really establish itself going forward?
Paul Levy: Well, it has a paradox in that the people that created it were very much against the Dow and very much against the lack of privacy.
There’s an irony now that we’re hearing about Facebook launching its own cryptocurrency, which ironically may well have made people interested in things like Bitcoin again and buying Bitcoin, but Bitcoin will have to decide and not quite be in the background of secret inventors and the people running it.
The views and opinions expressed in this article are solely those of the speaker and do not necessarily reflect those of Sputnik.