The value of electronic money has tripled in value since the start of the year, leading some observers to worry about the risk of a financial bubble
After an unprecedented dizzying multi-week surge, the price of bitcoin crossed a symbolic $10,000 threshold, or $10,058, on Wednesday, Nov. 29, on the first exchanges in Asia. As of January 1, 2017, when a unit of e-money is worth 998 EUR, its value has been multiplied by 10. Prices from $8,000 to $10,000 (from €6,700 to €8,400 won’t take 10 days approx)!
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The surge in recent days has been partly due to the spotlight on bitcoin, which is bought and sold on dedicated online platforms as it is worth more than $8,000. Online digital currency exchange Coinbase registered 300,000 new users over the U.S. Thanksgiving weekend, according to Alistair Milne, a fund manager at the Monaco-based Altana Digital Currency Fund. According to data from various platforms, the total market capitalization of Bitcoin today is over $150 billion.
Growing interest in investment funds
Interest in Bitcoin continues to grow as a currency that is not controlled by central banks and states and whose issuance is controlled by computer algorithms. When it was created in 2009, its use was limited to a limited circle of enthusiasts. But individuals, especially investment funds, have been buying them in bulk since the start of the year.
CME Group, the world’s largest futures market, is preparing to launch electronic money-based financial products (futures contracts) soon. Enough to encourage still-cautious traditional investors to take the plunge. On Wednesday, Nov. 22, Paris-based asset manager Tobam also announced the launch of a bitcoin-invested mutual fund, the first of its kind in Europe.
In addition to this, there has been a surge in fundraising via Bitcoin or Ethereum (another cryptocurrency), and startups are beginning to embrace the “blockchain” technology on which electronic money is based. The latter is equivalent to a public database that allows tracking of all transactions made in Bitcoin (or otherwise). Its application could disrupt payment methods and even ultimately disrupt the functioning of the banking system. Blockchain makes it possible to simplify transactions while making them tamper-proof.
Still, many observers, including financial regulators, remain skeptical of Bitcoin and its little brother. Some worry about the risk of a financial bubble, which could destroy unwitting individuals investing in electronic money. “It’s a scam,” JPMorgan Chase CEO Jamie Dimon said in September. “It’s not a currency, it’s a speculative tool,” slammed ECB vice president Vitor Constancio a few days later.