For years now we have been talking about a new currency, or rather, a cryptocurrency and a worldwide payment system created in 2009. It is Bitcoin, which does not refer to central entities or sophisticated financial mechanisms, and whose value varies depending on supply and demand. Thanks to the Bitcoin network, it is possible to transfer coins anonymously and use your smartphone or computer as a wallet, saving the necessary data there to be able to use your bitcoins.
The bitcoin economy is still small and limited, yet it is a currency we hear about often, also raising controversial issues. Only in 2017 did Bitcoin reach its maximum value of 20,000 USD, compared to the lower values of previous years. This year, there is a prospect that the coin could be worth 100,000 USD and reach 1,000,000 USD in 2037, but these are mere assumptions that are colliding with less encouraging data in recent days.
In mid-February, Bitcoin had hit 58,000 USD, while last Friday it experienced a drop below $ 45,000, with the largest weekly drop since the second week of March 2020. Now we need to understand what the cause was. The sharp decline in cryptocurrency could be due to the increase in bond yields, as well as losses experienced in global equity markets. The decline that has occurred has also provoked a series of criticisms from politicians and business leaders. For example, Janet Yelle, the new US Treasury secretary, defined Bitcoin as “highly speculative”, “inefficient” for transactions and used for “illicit”, also showing some concern about the possible losses that investors could suffer.
But there are also those who strongly support the potential of cryptocurrency, such as Elon Musk, the founder of Tesla, who claims to have made a profit of one billion dollars thanks to the investment in bitcoin. Incidentally, since Musk himself argued that the currency’s current levels are actually high, many investors have been more inclined to sell.
At the same time, other people of a certain financial depth have shown themselves to be more reluctant, inviting people to be cautious in investing in Bitcoin. They are Charlie Munger, Warren Buffett’s right-hand man, and Bill Gates, the third richest person in the world. The latter, in an interview with Bloomberg, was keen to specify that investing in this type of economic system involves a series of risks that small investors cannot afford: “Elon Musk has tons of money and is a very sophisticated investor, so he doesn’t care if Bitcoin will rise or fall randomly.” Gates explained. “I think people get caught up in these manias, they might not have as much money to spare. My general thought would be that if you have less money than Elon, you should probably watch out”.