In early February, one of Thailand’s most popular cryptocurrency exchanges, Bitkub, was ordered by the Securities and Exchange Commission to solve technical issues that lead to previous outages at times of heightened trading volumes.
It comes at a time when Bitcoin has been increasing in value very rapidly, rising from less than a dollar per coin in 2009 to US$58,000 per coin (nearly 1.8 million baht) in Feb 2021. As the price climbs ever higher, there has been an explosion of interest in getting in on the action. It was this surge in interest that caused interruption of service at Bitkub.
Yet some may be asking fundamentally what is Bitcoin and why is it so magical?
Bitcoin is a decentralized digital currency, not under the control of any government. There is a limited supply of 23 million Bitcoins, which is what causes the price to move rapidly.
Proponents of Bitcoin see it as a form of digital gold, a store of value and an inflation hedge that is made possible by its limited supply. As well, they will point to the fact that Bitcoin enables money transfers to be done much more transparently and quickly, especially international transfers, and so can be viewed as a true global currency.
As for its eventual price level they say the “sky is the limit”, and in this regard they have been proved right so far with Bitcoin smashing through target after target. With growing interest from the public, and more recently from institutional investors and large companies such as Tesla and Paypal, the price has skyrocketed due to the fact that there is limited fixed supply combined with this massively increasing demand.
Of course there are naysayers who refute all of these suggestions. As a store of value, they argue, Bitcoin is too volatile to qualify. Even though it has moved up in price strongly of late, it has also exhibited sudden drops in value too. It can easily move up or down by 15 or 20 per cent in a day and so they argue that it makes it more of a speculative gamble than a store of value.
As regards performing as a global currency it is true that international money transfers can be effective with Bitcoin, but at the same time it is unlikely that you would be buying your morning coffee with Bitcoin just yet. Regulation from governments may yet occur and these could limit the appeal of cryptocurrencies.
Then there is the eventual price of Bitcoin. Naysayers feel that the current elevated levels put it in firmly in bubble territory and that it has no intrinsic value apart from what people are prepared to pay for it. People only pay the high price because they hope they can get an even higher price later.
Bitcoin has been the flavor of the month for the last few years, but other digital currencies have also be created in a similar way. There are thousands of alternative currencies dubbed “altcoins” vying for attention, with more being created everyday by way of Initial Coin Offerings (ICO’s).
The second largest cryptocurrency is Ethereum or Ether for short. XRP Ripple and XLM Stellar are the 3rd and 4th largest cryptocurrencies by market cap respectively. Some websites such as Bitkub.com or Coindesk.com feature the top cryptocurrencies and their current ranking by market cap, which can change daily.
As people delve into the world of cryptocurrencies they will undoubtedly discover the many other altcoins. Some of these altcoins rise in value as interest grows but others fall to the wayside and become worthless. Maybe one of these will become the next big thing.