In 2017, Bitcoin’s value soared from $1,000 to just under $20,000 before falling down to about $13,000 in the end of the year. Ever since then, its value has improved and dropped sporadically from day to day, dragging smaller cryptocurrencies like Ether and Ripple along with it.
If you’re new to cryptocurrencies, then this type of volatility can be dizzying (and debilitating if you invest in the wrong time), but if you take a closer look it starts to make sense. Here’s why free bitcoins price keeps changing so radically, and why it may receive more stable later on.
Bitcoin Is Still Very New
Bitcoin was initially released in 2009, but it only really gained mainstream fame in 2017. The tech is still extremely new and misunderstood, and that’s a major part of why its worth is so hard to pin down.
Add to the fact that most of the Bitcoin from the world is possessed by a very small group of people. As of late 2017, roughly 95% of the cryptocurrency was possessed by just more than four percent of individuals with Bitcoin, based on one report. Meaning that one individual could decide to release huge amounts of Bitcoin to the market at any moment, fully upending its worth.
The cost of Bitcoin may also change drastically as nations and financial institutions adapt to the notion of cryptocurrency. By way of example, when among South Korea’s most important banks tested out the technology it triggered a spike in worth. On the flip side, when China announced plans to crack down on sketchy Initial Coin Offerings (ICOs) the value of Bitcoin dropped, and the exact same thing occurred when a South Korean government official said the nation might ban cryptocurrencies altogether.
Bitcoin isn’t love anything else thanks to the blockchain technology that forces it. Additionally, it is treated differently than other kinds of currencies and commodities because we’re still not certain what it’s actually for. This leads to a lot of uncertainty.
The initial pitch for Bitcoin has been a frictionless version of money that you could ship to anyone all over the world: money for the world wide web. However, because Bitcoin’s value rose so dramatically, and since each transaction requires a ton of computing power (and power) to the procedure, it does not actually work very nicely as a kind of spendable cash. That is created doubt, which contributes to rapid changes in its worth.
Contrary to other kinds of investments, like stocks or stone, Bitcoin trading never ceases, either. There aren’t any market hours. Instead, you get nonstop 24/7 trading, meaning more changes in Bitcoin’s worth and not as much stability day-to-day.
How Bitcoin Could Become More Stable
The best option for Bitcoin is that as it gets more popular and more people purchase it, these types of fluctuations in value will go down to 2 main reasons. To begin with, individual owners have less energy over the price of Bitcoin, and, secondly, it creates stability since more people have a stake in the cryptocurrency.
Another possibility is that government regulation could help stabilize Bitcoin. In the short term, that may cause its worth to drop drastically (like what happened in China and South Korea), however, in the long run, it may help calm down speculation and push out the types of sketchy Bitcoin-related business that threatens to drag down the entire concept of cryptocurrencies.