Increasing Popularity of Cryptocurrencies
http://mashable.com/2017/05/22/bitcoin-price-surge/#ccukywg2lmqh
Cryptocurrency has been becoming very popular recently with soaring prices for Bitcoin and Ethereum. In this Mashable article published in May 2017, the price of Bitcoin was approximately $2,200 USD. Bitcoin currently is valued at approximately $8,000 USD. This immense growth is because of network effects.
As discussed in class, information cascades are when the first person makes a decision, and the second person makes a decision with the knowledge of the first person’s decision and the second person’s information. If the first and second decisions are similar, then the third will follow the decisions regardless of his/her information. This is applicable to the current state of cryptocurrencies. When Bitcoin (BTC) was first created in 2009, it was worth $0.08 USD. It was a type of currency that no one really knew about. Therefore, people didn’t know whether to invest in BTC or not. Then, there were more people talking about the rise of decentralized currency and using P2P networks for money. As few people decided to take risks and invest in BTC, so did other people. As these people started to invest in it, the price of BTC started to rise. With rising prices in BTC, there was more media coverage and conversations about cryptocurrencies and whether it was a scam. However, with constant rising prices in BTC, more people bought BTC and now it hit an all time high of $8,000 USD. Since then, there has been wallets and marketplaces for people to trade BTC, Ethereum (ETH) and other cryptocurrencies. This growing support from society and acceptance has increased the popularity.