It is of little doubt that Bitcoin is currently the most popular and prominent virtual currency.
Since its conception in 2009 as a virtual form of decentralized peer-to-peer (P2P) means of exchange, the cryptocurrency has consistently forged ahead of digital and fiat currencies alike in terms of price development as well as market capitalization.
Bitcoin has been the best performing currency in 2016, clinching the award two years in a row.
It closed at US$968 at the end of 2016 thus warranting the award for the best performing currency of the year in terms of increase in value.
It was also the leading cryptocurrency in terms of market capitalization with an increase of 236% from the beginning of the year.
According to CoinDesk, the value of the Bitcoin increased by 125% in 2016 alone, making it the top gainer in global currency trading and could possibly reach its all-time 2013 high of US$1,163.
As financial markets opened this year, Bitcoin reached an impressive USD $1,027. It is the second instance that Bitcoin has surpassed the USD $1,000 mark.
It can be said that Bitcoin has had too short of a history to conclusively speculate on its place on global currency market in the long term, mainly due to the fact that the Bitcoin has been subject to extreme fluctuations.
Its all-time high in 2013 was after a 5400% increase in value, and it proceeded to be the worst performing currency in 2014 following a series of crashes.
However, commenters have pointed out that in recent times Bitcoin seems to be becoming more stable. There are several reasons that have been forwarded for this observation. The most feasible is that the Bitcoin is seemingly the better option in a world of macroeconomic and political uncertainty.
This is due to the fact that Bitcoin is decentralized and lacks ties to any institutions, governments or countries making it insensitive to political happenings.
As such, the rise in not only the Bitcoin, as other cryptocurrencies show that decentralized virtual currencies are gradually gaining a safe haven status, much like gold.
This can be supported by the fact that all of the top cryptocurrencies including Ethereum, Ripple, Lightcoin, Monero and Dash, made significant gains in 2016.
Additionally, Bitcoin and other digital currencies are proving to be more flexible than regulated conventional currencies – thus driving the demand.
The virtual currency Bitcoin has been able to achieve this despite its negative association with enabling trading of illegal products and services such as drugs and weapons via dark web platforms.
Its increasing adoption in the mainstream by some organizations is also evident.
However, some parties are justifiably weary of the impressive gains. As it has shown in Bitcoins’ brief history, extreme gains are often followed by a series of crashes resulting from the bubble.
Nonetheless, Bitcoin is still making headway and 2017 may well be just as great as the previous two years.