Economy

Another record for bitcoin, which was worth just over $ 35,000: what’s going on there?

1. What is that again, that bitcoin?

Bitcoin is a virtual currency, a piece of computer code to which value is attached. The big difference with a traditional currency, such as the euro, is that it is not controlled by a central bank or government. No intermediary, such as a bank, is therefore needed to exchange bitcoins.

The management of the bitcoins is done through an ingenious technology called “blockchain”, which keeps track of all transactions and must secure them. There is also an agreed limit on the number of bitcoins: in total there will never be more than 20,999,849.9769 bitcoins.

What is a bitcoin? This video explains it in 1 minute:

2. So now 1 bitcoin is worth around $ 35,000? Hadn’t that course slumped recently?

That’s right, that morning’s value was – again – a record for that virtual currency (which, by the way, is only one of the many digital coins that exist today). In the past year, bitcoin’s value has already quadrupled. And the increase has accelerated in recent weeks, explains financial journalist Michaël Van Droogenbroeck in “The Inspector” on Radio 2.

“A month ago it was only worth $ 20,000. So that pace is insane. But it is a roller coaster, because we also saw a significant decline on Monday. We have noticed that more often in recent years: sometimes top prices, but then suddenly. only half or a quarter of that value. “

3. Why the sharp increase?

Much has to do with speculation. For example, there is the hope that crypto coins such as bitcoin will really break through with the general public. The fact that the customers of payment service provider PayPal can pay with bitcoins fuels that hope.

There is also an evolution among bankers and asset managers, Van Droogenbroeck sees. “They have started to look at it differently. You notice that, where it was said in the beginning that you should stay away from it, it is now viewed as a kind of investment.”

(Read more below the photo)

Archive image for illustrative purposes only.


Copyright © 2018, Mykhailo Polenok, licensed through EyeEm Mobile GmbH

This is also related to the current corona crisis and the economic support that is now being set up by governments and central banks. Investors are now feverishly looking for places where their money cannot yield anything.

“Why is gold popular when stocks are struggling?” Van Droogenbroeck compares. “Because that is something you can always fall back on, it is also scarce. In that, bitcoin is in any case similar to gold: it is also scarce. The maximum number of bitcoins cannot increase. That is the big difference with money in times of crisis: central Banks are printing money, so some fear that this will reduce the value of that money. “

4. Does that mean that bitcoins will be here to stay, like stocks?

The comparison is not entirely valid, says Van Droogenbroeck. “Fortunately for investors, the average stock does not fluctuate at this rate. A stock represents a company that you know what makes it, what it does, what the results are.”

With bitcoin it is still very black or white for the time being, he says. “Bitcoin can have potential, but it can’t. It’s 1 or 0. Investing at such a high rate now can also go wrong. If you want to do that, you have to think about it. You can’t forbid anyone to gambling, but then you also know that things can go wrong. “

Listen here to the conversation with Michaël Van Droogenbroeck in “The inspector” on Radio 2:

“If you want to do that, you have to look for a platform where you can buy those bitcoins. Technically it works. But again: I would be very careful.”

Van Droogenbroeck is not the only one who urges caution. Many other experts do that too. “There is no guarantee that you will buy something with a bitcoin, so you do not know what it could still be worth,” said KBC financial economist Tom Simonts last month.

It is generally used as a rule of thumb: if you want to buy bitcoins, you should do so with money that he or she can afford to lose without any problems.

5. What do stock market watchdog FSMA and the National Bank say about bitcoins?

They have been warning against the use of virtual coins for much longer than today. “There are no rules”, the FSMA says. “Virtual currencies are not legal tender. Nobody is required to accept a payment in a virtual currency. Virtual currency is not legally protected. The government does not control transactions with virtual currencies.”

“Trading in virtual currencies is subject to strong exchange rate fluctuations, which can lead to severe financial losses. Owners of virtual currencies can lose their money by hacking trading platforms.” In summary, don’t say you weren’t warned.

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