Gold and Bitcoin have one thing in common: They are not an official means of payment and their amount is not controlled by a central bank. During the financial crisis, both were in demand as parallel currencies that cannot be increased at will. Possibly too much in demand. Bitcoins’ prices had increased almost twenty-fold since the beginning of the year alone, and even forty-fold over the year. Things weren’t quite as fast for precious metals, but gold had also increased more than sevenfold from its low of $ 255.
On Wednesday afternoon, the price of the Internet currency had reached a historic high at over $ 260. But in the evening a wave of sales suddenly set in, and things have been falling rapidly ever since. The prices fell to around $ 75 by Friday afternoon, their lowest level since the end of March. Bitcoin was one of the hottest objects of speculation until Wednesday, fueled by hype in the social networks and scared investors who moved their money to a parallel universe that cannot be manipulated by the state after the expropriation of Cyprus. In March, a hedge fund was founded that speculates specifically on the digital currency.
This huge demand of exchange tutorials met limited supply. Bitcoins cannot be generated arbitrarily, an algorithm severely limits the number of newly created units. The maximum volume is limited to 21 million Bitcoin. Currently, a maximum of 3600 units are added per day. But the closer the limit gets, the fewer new bitcoins are created.
Risk of speculative bubbles
There are currently around ten million digital arithmetic units in total. Even in the best of times, the value of all digital “coins” was just over two billion dollars, hardly higher than the economic output of the …
