BITCOIN’S value is surging towards £10,000 boosted by Facebook’s decision to launch a cryptocurrency next year.
The digital currency’s value had been steadily falling following its high of nearly $20,000 (£15,638) reached back in December 2017.
2 Bitcoin’s value (pictured in US Dollars) had crashed spectacularly but it’s now making a comebackCredit: eToro
It dropped to just over $3,200 (£2,496) in December 2018 but the past few months it’s begun climbing, and in the last few weeks it’s experienced a meteoric resurgence.
Bitcoin’s value climbed to hit $12,682 this morning, which is just shy of £10,000 at £9,912.
It’s the first time the volatile online currency has hit this level since January 2018 and experts reckon Facebook’s announcement has given the cryptocurrency a boost.
The social media platform revealed plans earlier this month to launch a new cryptocurrnecy called Libra.
2 Bitcoin’s value (pictured in US Dollars) has been rising rapidly ever since Facebook announced the launch of its own cryptocurrencyCredit: eToro
Facebook will operate its own digital wallet for people to spend Libra, known as the Calibra Wallet, which will be available in WhatsApp, Facebook Messenger and as a standalone app.
Users will be able to send money to each other initially, at low to no cost.
Gary McFarlane, a cryptocurrency analyst at investment platform Interactive Investor, said: “Bitcoin’s decisive break above the psychologically important $10,000 mark is being driven by institutional investors [large companies] and the afterglow from Facebook’s Libra news.
“Expectations in the marketplace of more crypto moves by big tech firms and other companies is also adding to confidence, despite the prospect of regulators and politicians stalling Facebook’s Libra crypto efforts.”
What is Bitcoin?Bitcoin got you baffled? Here’s what you need to know:
Bitcoin is a virtual currency
It’s traded between people without the help of a bank
Every transaction is recorded in a public ledger, or ‘blockchain’
Bitcoin is created by mining
Mining involves solving difficult maths problems using computer processors
Bitcoin can be traded anonymously, which makes it a popular way of funding illegal activities
The value of Bitcoin fluctuates wildly
Bitcoin is one of many different cryptocurrencies, but by far the most popular
And Mr McFarlane reckons Bitcoin’s value could continue to rise, although he points out that whenever Bitcoin rises, a crash is inevitable.
He said: “Talk is now turning to the possibility of a rise in the Bitcoin price beyond the previous all-time high at $20,000 in December 2017.
“With end of year targets of $40,000 from Wall Street analyst Thomas Lee of Fundstrat Global Advisors and commodity trader Peter Brandt saying $100,000 for next year is a possibility, it is starting to feel like 2017 all over again.
“That might sound fanciful but on past form it is a possibility – and so is a crash from wherever any potential new all-time high might form.
“Also adding fuel to the buying pressure today are rumours that Russia is set to legalise crypto trading, which would bring yet more potential buyers into the market.”
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That said experts have raised concerns about Facebook’s new currency saying it could be used to spy on what you’re buying and will be used to harvest your data.
But Facebook reckons Libra will be less volatile than other cryptocurrencies and will be more similar to the pound or euro.
This is because it will be backed by what it calls a “reserve” of cash pooled from investors and Libra users.
This reserve will then be invested in bank deposits and government securities in currencies from “stable and reputable” central banks.
However, this can have its downsides as senior analyst Aurelie L’Hostis from research firm Forrester explains: “The Libra – unlike the Bitcoin – will be pegged to a basket of currencies such as the dollar and the euro.
“It will therefore be less volatile than Bitcoin, but this also means that it won’t offer the same level of investment opportunity either, and currently cryptocurrencies are primarily used as digital assets to invest in.”
Mr McFarlane added: “It will be “safe” in the sense that the price tracks against the underlying asset, unlike Bitcoin where the price is determined by demand and supply from buyers and sellers.
“However, “safe” in terms of volatility is different again from safe in terms of whether a wallet holding the currency can be hacked.”
Check out our Bitcoin and cryptocurrencies homepage for all the latest news on cryptocurrencies and what these alternative currencies actually are.
And before you invest a penny do your research – as with all investments your cash can go down as well as up and you could end up losing all of your money.
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