In yet another month that’s seen Bitcoin break its own price record, topping the $1,600 ceiling last week, it’s more than interesting that the altcoins are doing pretty well, too. In a scenario that bucks the previous trend of coins trading fortunes, something is pushing prices pretty much across the board. Bitcoin’s main rival Ethereum also broke its price ceiling, jumping a massive $25 in just 24 hours to more than $100. Litecoin and Ripple are also drawing attention, and while Bitcoin is suffering its lowest market share to date, its market cap hasn’t suffered at all. With more coins to choose from, investors are better able to hedge their trades. It’s never been a better time to be a cryptocoin. So what’s driving this surge? Are we in a bubble? And what does it mean for Bitcoin?
Black gold vs binary
It’s possible that historians will look back on this week as the true beginning of the information age. Economists have revealed that data is now the most valuable resource on earth, surpassing oil for the first time. While this may seem unrelated on the surface, I think it’s fair to say that if data is the new oil, then bitcoin (or another information based currency) will invariably emerge as the digital dollar. In fact, one BTC was worth more than an ounce of gold once again last week. How long until this is a permanent state of affairs? If you’ve considered selling your gold in light of this, you might not be alone – and maybe these details are what’s bringing bitcoin out of the dark web and into portfolios the world over.
Hotter than property
One of the more plausible arguments for the surge in interest in cryptocurrencies is the growing unreliability of traditional investments. If bitcoin and its friends are delivering higher returns than gold and real estate (among others), it makes sense that the money will follow. Add to that the unstable political climate, and investments safe from prying governments, regulators, inflation and taxes become significantly more attractive – in spite of their lack of backing with real-life value. In this new age of information supremacy, maybe the value will prove to be in the data potential of the blockchains themselves. Are financiers finally waking and smelling the developers’ coffee?
Blockchains in the mainstream
None of these projects can operate without a blockchain – it’s the other side of the (bit) coin if you will. And blockchains are about to hit the mainstream. With behemoths such as JP Morgan and Bank of America developing projects built on Ethereum, it’s not only the financial sector that’s getting in on the action. Microsoft has attracted partnership from Amazon, FedEx, Target and 10 other large corporations for its blockchain project, and many other trials are taking place all the time across a wide range of sectors. Since investors are about as news hungry as you can get, it’s probable that they’ve noticed the emerging trend, and like all gamblers, they know that early adopters yield the highest returns. Add to this the news that the SEC has agreed to reconsider the ETF proposal, including a bid by Ethereum to get in on the action, and it’s a strong case to argue. If data is the new gold, then the goldrush looks about to begin in earnest.
With the 10 most valuable coins all making gains at the same time, what’s in store for Bitcoin? While our market share has dropped from 82% to under 60% in a single year, our value has risen from $450 to $1,600 over the same period! Pundits reactions have ranged from “the FOMO (fear of missing out) effect” to “WTF” - not very helpful, I know. My own personal feeling is that the altcoins are gaining ground mainly because of Bitcoin’s future. Being the most established and valuable coin, it seems unlikely that it will be displaced, although there’s probably room for 2-3 other popular coins long term. The most likely scenario is that bitcoin investors are taking advantage of a groundswell in altcoin value to make more money to buy bitcoins. When the bubble bursts, it will likely be accompanied by a Bitcoin surge. I know where I’m keeping my money – do you?
This article represents the personal opinion of the author and is not a recommendation to buy or sell Bitcoins.