After strong gains in 2020, Bitcoin is also going up steeply this year.
The rally of the digital currency Bitcoin, which was accompanied by violent price fluctuations, continued on Thursday. In early trading, the price on the Bitstamp trading platform rose to $ 37,785 (30,625 euros). The cryptocurrency, which is by far the largest in terms of market share, could not quite maintain the level, but it was recently quoted at around $ 37,500, almost two percent above the level on Wednesday, when Bitcoin had once again reached record levels.
Bitcoin gained a little more than $ 8,000 or almost 30 percent in the young year alone and thus continued the soaring from 2020.
Bitcoin has been setting new records for some time. Over the year, its course has increased fivefold. Last year, the digital currency, invented a good decade ago, was one of the investments with the world's largest price gains.
Opinions on Bitcoin continue to differ widely. Followers see digital currencies like Bitcoin not only as pioneering technologies, but also use the Internet currencies as an object of speculation and increasingly as a hedge against fluctuations in the exchange rate of other financial investments. Critics, on the other hand, see a financial bubble and complain, among other things, of the sometimes extreme price fluctuations of Bitcoin and other crypto currencies.
Bitcoin's image has improved over the past year. It was a kind of accolade that the large payment service PayPal made it possible for its US customers to trade in crypto currencies. This year, transactions in Bitcoin and other digital currencies, of which there are now thousands, should also be possible.
Not only PayPal, but also large financial investors are showing a greater interest in digital currencies. For example, the large asset manager Fidelity launched a fund last year that invests in Bitcoin. Bitcoin is also increasingly being used as an alternative investment, because some investors expect higher inflation in the future due to the sharp rise in national debt during the corona crisis. Conventional currencies usually suffer from high inflation and lose value through their exchange rate.
The question now arises whether Bitcoin can benefit from these developments in the long term. Because key points of criticism remain: Bitcoin is largely unsuitable as a means of payment. Its exchange rate fluctuations are too strong, the energy consumption in production (mining) is too high, and transaction processing is too lengthy and expensive. The core idea of the Bitcoin inventor, who to this day is only known under a pseudonym, was precisely the creation of a new means of payment.
Bitcoin remains controversial not only as a means of payment, but also as a financial investment. The main point of criticism is its sometimes violent price fluctuations. The digital currency has often reacted to strong increases in value with sharp price drops. So also recently, when the course broke away several times. In the eyes of many critics, this fickleness calls into question the potential of Bitcoin as an investment.
The future of Bitcoin is thus on a shaky foundation. You don't have to go as far as the Dekabank experts who speak of “speculative madness”. But as a financial investment and especially as a means of payment, the crypto currency is highly controversial. The fact that many central banks are adopting the Bitcoin approach and aiming for their own digital currencies does nothing to change this.
Rather, the opposite is likely to be the case: Should the idea of digital central bank money prevail, there would be strong competition for Bitcoin and Co. One more reason to be careful about investing in Bitcoin and other digital money.
