For the first time ever, the value of a Bitcoin has exceeded the value of an ounce of gold. Earlier this month, the markets recorded the value of a unit of Bitcoin at $1,268 compared to a troy ounce of gold at $1,233.
So what is a Bitcoin and how has it surpassed a precious metal?
Bitcoin is a digital web-based currency that operates without the need for central banks and uses a highly secure encryption (AKA a crypto-currency) to regulate the currency units and to verify the transfer of funds. Although the internet can be a dangerous place to transfer money, thankfully Bitcoin uses ‘Blockchain’ technology, an open and programmable technology that can be used to record transactions for pretty much anything of value that can be converted to code.
To put things into perspective, there are approximately 15 million Bitcoins in existence, and in order to receive a Bitcoin you must hold a Bitcoin address consisting of a string of 27-34 letters and numbers. This acts like a virtual post-box which the Bitcoins are sent to and from.
Bitcoin has many benefits as a currency for users trying to transfer payments across continents and time-zones easily, quickly and anonymously.
Why’s Bitcoin suddenly hit the market?
As quite a newly introduced model of currency, it has taken some time to gain popularity; and it’s not been plain sailing either. After a tenfold increase in value in only two months and a value surge to $1,163 back in 2013, Bitcoin has taken it’s time to settle down.
Predictions of its potential downfall and a plunge in the value of Bitcoin were stimulated by its collapse on the MtGox exchange in Japan back in 2014 as a result of a hack.
Despite a crack-down on Bitcoin trading enforced by Chinese authorities who feared that it was being used to carry money out of the country illegally, Bitcoin has surged to reach new heights.
In January this year, the value of 1 Bitcoin received a 2.5% boost and jumped above $1,000 (£815) for the first time in 3 years. Bitcoin’s recent boost in value means that its total worth of $16 billion is around the same value as that of a FTSE 100 company.
What does this mean for businesses?
Bitcoin has many attractive advantages including the speed and ease with which transactions can take place due to the lack of a central bank and traditional currency control.
Using Bitcoin also means that cross-border and global trading is simpler and faster and the ‘crypto’ aspect of the currency makes it secure. Bitcoin’s decrease in volatility in recent times, plus the widening of popularity and potential uses for its underlying technology ‘Blockchain’ mean that Bitcoin looks increasingly attractive to businesses and governments in 2017.