The digital cryptocurrency known as Bitcoin has exceeded the value of gold for the first time since the introduction of the payment method in 2009.
Demand for the digital currency has skyrocketed in recent times,particularly in China. Its stock price closed today at a base value of US$1268, with an ounce of gold trailing it at US$1233, according to CoinDesk’s Bitcoin Price Index.
The currency has been volatile since its introduction to the international marketplace, mainly due to its lack of official government support or regulation. It allows anonymous trading and payments on an international scale, and is now accepted by major companies such as Microsoft and Dell in lieu of physical payment.
Bitcoin’s per-unit price has risen more than 25% as opposed to gold’s 7% since the beginning of the year. Experts have suggested that the weakening of the Chinese yuan is behind the increased demand for the currency. Since it enables traders to evade currency controls, people utilising Bitcoins as a more profitable alternative to traditional methods of trade.
The head of US-based digital currency exchange GDAX, Adam White, says that user demand is driving up the currency’s price, following a doubling in the size of the Bitcoin user network.
“You can’t walk into a Starbucks today and carve off a little bit of gold to buy your cup of coffee, but you can pay for it with Bitcoin,” said White. “It has inherent benefits over gold that gold can’t compete with.”
However, the Bitcoin revolution is being treated with caution by many in the international community. The CEO of Euro Pacific Capital, Peter Schiff, branded the currency as “a digital fool’s gold” and expressed scepticism over the long-term viability of Bitcoin.
“Today’s Bitcoin could be tomorrow’s Beanie Babies,” he said.