You may be wondering whether or not you should sink any more money into Bitcoin considering it has plummeted after hitting an all-time high of almost $20,000 in December of 2017. Many people were burned after they invested in Bitcoin, as the price dropped to as low as $3,150 per coin. The price has rebounded some, but it is still trading at just below $4,000. One thing that could send the price higher is the fact that some people may start to think of Bitcoin as digital gold. Let’s look at what that means and how it might impact the price of Bitcoin.
Digital Gold
The first place we have to start with is to identify the meaning of digital gold. Bitcoin has oftentimes been referred to digital gold because it is finite. There were only so many Bitcoins created, so there will not be any more created. If you have Bitcoin you can store it similar in some respects to how you store gold and that is the reason that one leading analyst said that Bitcoin can be thought of as digital gold. If more people start to think of Bitcoin as something that should be stored and protected, then the price of Bitcoin is going to go up.
One key factor in whether or not Bitcoin rises in price could be if central banks start to build up reserves of bitcoin and other cryptocurrencies. If banks start to buy Bitcoin with the intent of simply storing it, then fewer Bitcoins will be in circulation and the price will definitely increase. Most banks don’t want anything to do with Bitcoin because of its volatility, but what if banks change their position? More than $400 billion in value was wiped out of Bitcoin after the huge run in 2017 and banks were responsible for part of the run up. Banks were making noise that they would support Bitcoin and many investors took that as a positive sign and the price soared. The investment from banks never happened and the price of Bitcoin crashed. Could it be that everyone just moved too fast? Will central banks still decide to support Bitcoin?
Many Bitcoin bulls believe that the price of Bitcoin will go higher, but so far they have been wrong. It should be noted, however, that many highly respected people are still betting on Bitcoin. Billionaire Binance chief executive Changpeng Zhao, EOS co-founder and BlockOne CEO Brendan Blumer, and the billionaire Winklevoss twins have said that they still have faith in Bitcoin. The question is whether or not their faith will be rewarded.
One thing that we do know about Bitcoin is that it is not going anywhere. The price may be volatile, but the world has stepped into the cryptocurrency age and there is no going back. Every day more and more people are using Bitcoin and other cryptocurrencies to buy goods and to transfer money. Some companies have gotten ahead of the curve and are already accepting Bitcoin for payments. Online sportsbooks have been at the forefront of accepting Bitcoin and BookMaker is one of the leaders in accepting Bitcoin deposits and withdrawals.
Two things have held back Bitcoin a little bit in terms of price and those things are technology and financial acceptance. It might sound strange to say that technology has held back Bitcoin, but the reality is that not enough businesses have the capability to accept Bitcoin payments. That is starting to change as more Bitcoin payment processors are coming online all the time. There is no question that Bitcoin will be more accepted as the technology for accepting Bitcoin becomes more widely used. The question is how long it will take for the financial industry as a whole to accept Bitcoin. The one sign you can look for is the one mentioned earlier and that is central banks starting to buy and store Bitcoin. When you read that banks are starting to store Bitcoin you will now that it is time to put more of your money into the cryptocurrency.
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