May has already seen major financial institutions warn against buying bitcoin, but that hasn’t stopped the cryptocurrency’s value from skyrocketing.
Financial institutions across the world are fighting to get ahead in the race to fully embrace blockchain.
But, despite the thirst for an accurate, sustainable ledger system to underpin tomorrow’s financial landscape, the technology’s best-known product remains a taboo in parts.
Beware of bitcoin?
Earlier this month, German officials warned against investing in the cryptocurrency as its price soared. Carl-Ludwig Thiele, a director of the Deutsche Bundesbank, said: “Bitcoin is a means of exchange which is not issued by a central bank, but by unidentified actors. I do not see it as a currency.”
“If you think [it] would be as safe as the euro or the dollar, you have to take responsibility for it. We can only warn people not to use the bitcoin to preserve purchasing power.”
That advice has not been heeded, at least internationally.
On Wednesday (24 May), bitcoin’s valuation surged above $2,400, a new record, having only surpassed the $1,000 mark in January for the first time in several years.
In the months that followed, this figure continued to grow and, at the start of May, it had jumped again to $1,500.
There has been significant innovation around the currency this year. Blockchain – the confusingly named maker of the world’s most popular bitcoin wallet – revealed its latest ‘Project Thunder’, which enables users to make off-chain bitcoin payments in seconds.
Blockchain said that Thunder has the ability to unleash the power of microtransactions and allow the bitcoin network to handle heavy loads and increase user privacy.
Start them up
Reuters suggests that the latest avalanche of interest comes on the back of the creation of new tokens to raise funding for start-ups using blockchain technology.
More than 40 blockchain start-ups are understood to be leading the cryptocurrency’s growth through ‘initial coin offerings’ – similar to IPOs – allowing them to sell bitcoin tokens to raise capital through public auctions.
Arthur Hayes, chief executive of bitcoin trading platform BitMEX, said: “For the first time in financial history, founders can access capital from both large and small investors, armed with nothing more than a slick website.”
Bitcoin remains the dominant cryptocurrency for various reasons. It’s established, as much as any cryptocurrency could be, and it’s also bigger than any of its rivals. Several times bigger, in many instances.
Bitcoin up 100% in under 2 months. Shanghai down almost 10% same timeframe, compared to most global stocks up. Probably not a coincidence!
— Jeffrey Gundlach (@TruthGundlach) May 23, 2017