The cryptocurrency market has added more than $5 billion to its market capitalisation this week. What is pushing these digital assets so furiously?
Bitcoin
Since its inception in 2009, Bitcoin allows its users to move the digital currency form one place to another, like a banking system, only decentralised.
Bitcoin broke through $2100 for the first time on Saturday. The cryptocurrency is driven by global political uncertainty and major developments within the cryptocurrency market.
Thanks to increased demand from Japanese and Chinese investors, the digital currency rose more than 4.5%.
Japan is placing most of these bullish bets. Japanese investors accounted for 55% of the overall trading volume, inching up from 40% on Thursday.
Anticipation is rife that Bitcoin will soon be easily converted into US dollars, underpinning the recent rally. Additionally, that the difference between US and Chinese exchanges for the cryptocurrency has narrowed significantly – from 20% to 5% in just a week.
You could argue that Bitcoin has become somewhat of a safe-haven asset. The digital currency advanced amid reports of possible scandals in the US and Brazil.
Ethereum
Moved by its ability to transform how businesses work by using blockchain technology, Ethereum has jumped 33% today thanks to Toyota Motor Corp., State Street Corp (NYSE:STT). and other companies joining industry group Enterprise Ethereum Alliance.
In an effort to cut costs, these companies have joined the likes of Microsoft Corp (NASDAQ:MSFT). and JPMorgan Chase & Co (NYSE:JPM)., to establish a shared database on Ethereum’s blockchain.
When compared with Bitcoin, Ethereum’s blockchain allows for much more sophisticated actions to be carried out in a shared and decentralised manner.
While Ethereum moves currency from one holder to another, its ledger does much more. It stores computer programs known as ‘smart contracts’ on its blockchain and can be programmed to carry out complex exercises. For example, transfer payment to party A on date 22.06.2017 if party A completes its task.