This should be the best performing asset so far, coming from around 1000 USD per Bitcoin to a intraday high of 2780 USD per Bitcoin last week. Having read through some of the asset bubbles in history, this blitzy rise seems like a bubble in the making. Now that it is appearing in the news so much, i went to read up a bit more about it.
The technology is Blockchain and the currency is Bitcoin. Blockchain is a decentralized database, which in this case is like a ledger. Similar to traditional accounting, transactions go into the ledger (blockchain) as blocks which needs to be verified by nodes. Miners are special nodes that works on a kind of mathematical problem which sets the transactions into a block that becomes part of the chain. They then get some Bitcoins for their Proof of Work.
I may have gotten some details wrong, but that's pretty close to what Bitcoin really is.
There are also alternative cryptocurrency and platforms available which adopts blockchain technology such as Ether and Litecoin. All of them have seen impressive rise together with Bitcoin. And the rise could be explained by several regulatory reasons in Japan and China.
But when you have assets that increases in valuation in this manner, there are bound to be herhistory have shown how it is likely to end. Now, Bitcoin might see more positive regulation and structural changes to become more mainstream. So is this still early in the bubble?
Sit around with me and watch this drama unfold.
Check this Investopedia page out for quick highlights of historical asset bubbles.
