
What is Bitcoin?
Here we will assess Bitcoin in the light of three fundamental properties of money.
Digital currencies such as Bitcoin have increased in price to an extraordinary degree in 2020 and early 2021.
Bitcoin has risen by over 350% since September, rising to an astonishing level of over US$47,000 per unit after Tesla announced that it had invested in Bitcoin and was considering accepting payment for its cars in Bitcoin.
Similarly, Ethereum (another digital currency) increased in price by almost 500%.
This has left many investors scratching their heads; what has caused these incredible price increases, and more fundamentally, how should investors value these digital currencies?
More institutional investors are starting to increase their allocation to digital currencies in a move which seems to validate these digital assets.
Unfortunately, the market remains relatively illiquid, with around 2% of accounts owning over 90% of all Bitcoins in existence.
There are three fundamental questions to ask when assessing the place of digital currencies within a portfolio:
We answer these questions in the following articles. Click on one of the articles below to begin the series.
Here we will assess Bitcoin in the light of three fundamental properties of money.
The Bitcoin generation algorithm defines, in advance, how currency will be created and at what rate.
Find out more about the main attractions of Bitcoin.