An ounce of gold valued less than a single bitcoin as the latter recorded its highest price surge for the first time.
On Thursday, a unit of Bitcoin closed at $1,268 while that of a troy ounce of gold constantly remained to be $1,233.
At the moment, the Bitcoin value is being attributed to rising demand in China, where the warning has been issued by the officials regarding the use of Bitcoins in channeling money out of China.
The previous months’ surge is regarded to be a key reversal for Bitcoin, which tumbled in the value after the fall of the largest exchange in the year 2014.
Since the year 2009 when it was launched, the value of Bitcoin has been very unstable, and most experts doubted whether this crypto-currency will put up with the other currencies, reports Consumer Affairs.
Previously in this year, Chinese officials cracked down on Bitcoin trading with the aim of preventing illegal flow of money from the country to the other countries.
But the currency was briefly sent lower by the closer assessment from Beijing. Bitcoin has gained its steady rise in value after it had soared to record high in the month of January.
Could bitcoin eventually replace gold?
According to Paul Mladjenovic, a stock market analyst, investor should approach the digital currency with caution.
His warning was issued to the Marketwatch via a Facebook Live Q&A, where he said that bitcoin is digital money and just like any digital stuff, a slight error could lead to an instant evaporation.
“Many people have looked at it as a proxy to gold and silver, with bitcoins, they try to minimise the quantity of it because that’s what makes money valuable, that there’s a sense of rarity,” he said.
How Bitcoin Works
Bitcoin is the most recent type of currency. Just like any other currencies, the value of Bitcoin is determined by how much the customers are willing to exchange it for.
In order to perform a transaction using Bitcoins, “Mining” must take place. In this case, mining is a procedure involving a computer performing difficult mathematical operation with a 64-digit solution.
A block of Bitcoins is processed for each successful operation performed. In addition to this, the miner gets new Bitcoins as a reward.
For a steady stream of new Bitcoins to be produced daily, the difficulty of the puzzles is adjusted. This helps in compensating for the growing power of the computer chips.
Currently, there exist approximately 15 million Bitcoins.
In order to receive a Bitcoin, the user is required to have a Bitcoin address (a string made up of 27 to 34 characters or numbers which is used as a virtual post-box which is used for sending and receiving Bitcoins.
Since these addresses lack registers, individual can make use of them in protecting their anonymity when they are performing their transactions.
In order to manage savings, these addresses are stored in a Bitcoin wallet