Bitcoin, the cryptocurrency invented by an unknown person or group in 2008, is now valued at more than $50,000. Bitcoin and other computer-generated cryptocurrencies derive their supposed value from finite numbers that can be computed. As the demand for these cryptocurrencies increases, Bitcoins can act as a store of value in the future, just like a digital version of gold.
However, regulators and investors have warned against these currencies because their value can fluctuate very fast, both upwards and downwards. Bitcoin saw a sharp rise in its value this year, i.e. 72 percent. Much of the gains that Bitcoin received this year came after Elon Musk’s Tesla bought $1.5 billion of them. He said that the Bitcoins will be accepted as payments for the cars.
“If BTC meets gold’s market cap, then that would be at least $500,000 per bitcoin,” says John Wu, president at blockchain company Ava Labs.
Over the years, estimating the proper value of Bitcoin has been tough because it can’t be used for anything; it is merely bought and sold. People have lost significant sums of money in sharp declines in the valuation of cryptocurrencies and hacks and schemes connected with them. Hence, Britain’s financial watchdog, the Financial Conduct Authority had issued a warning to investors last month about losing their money in case their investment value collapses.