If you had invested $10,000 in gold in July of 2010 your investment would be worth ~$9981 … In contrast, if you had invested $10,000 in Bitcoin, at the same time, your investment would have grown to over $200,000.
Bitcoin hit all-time highs this week. I saw a chart that caught my interest. Bitcoin's value seems closely correlated with the number of searches for it on Google.
DataIsBeautiful via Reddit
From a behavioral economics perspective, this makes sense. Google searches can be a good indicator of public sentiment, interest, demand, or public sentiment.
Bitcoin is a digital currency decentralized over a peer-to-peer network. The more people are willing to accept it as a medium of exchange, the more valuable it becomes.
It's decentralization provides it safety from censorship and government interference – meaning it has value as an international currency, and as a currency for black-market transactions.
However, the worth of a bitcoin clearly isn't just based on sentiment (on one hand, there are desires to avoid fiat currency vagaries, government interventions and scrutiny, while having a fair price discovery method, etc. … on the other hand, there are also the costs to mine a bitcoin, transaction fees, etc.).
Compared to a reserve currency – whose worth is primarily influenced by trade value and other macroeconomic factors – watching Bitcoin's volatility can be scary.
That being said, Bitcoin is in a relatively unique position, and as the internet grows and our world becomes more interconnected, it's entirely possible that Bitcoin will continue to legitimize.