The idea that bitcoin will become the preferred safe-haven investment instead of gold is almost laughable.
There has been a surge in Bitcoin mining in Venezuela as inflation hits the economy. Bitcoin miners can earn about $500 a month according to The Atlantic.
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It’s quite possible you could go through the remainder of your life without seeing the type of gains that cryptocurrencies have delivered for investors in 2017. Ethereum has rallied by more than 3,000% since the year began, while bitcoin, the largest cryptocurrency by market cap, has returned close to 300% year to date, and nearly 1,400% since hitting its lows from two years ago.
Two major reasons cryptocurrencies have soared in 2017
There are a plethora of factors that have lit a fire under cryptocurrencies. Most notably, investors are really excited about the blockchain technology that underlies most digital currencies. Blockchain is nothing more than the digital and decentralized ledger that records transactions without the need for a financial intermediary. Blockchain is believed to be especially secure, and since it’s a relatively open network, it would make altering data without anyone else knowing practically impossible. Blockchain could have wide-ranging application from the financial industry to energy trading platforms, and its uses could stretch from business-to-business transactions all the way down to peer-to-peer.
Blockchain is in its infancy. Industry pundits have suggested that ethereum’s blockchain may be preferred by businesses, and the more than 150 worldwide organizations that have joined the Enterprise Ethereum Alliance to test out a version of the ethereum blockchain suggests that could be the case. However, the recent SegWit2x upgrade for bitcoin should allow it faster transaction settlements, lower transaction fees, and increased capacity, which could appeal to more businesses.
The other pretty notable catalyst for cryptocurrencies, but more specifically bitcoin, is the falling U.S. dollar, which hit more than a two-year low against the euro recently. A falling dollar is great news for President Trump, who’s looking to drum up U.S. exports and the manufacturing sector. However, it’s not great news for investors who are seeing their dollars devalue. Usually when the dollar drops, investors seek the safety of gold as a store of value, but lately there’s been speculation that they’re choosing bitcoin…