As earlier reported, corporate institutions have started hoarding Bitcoin to pay ransoms in the event of cyber criminal attacks which could lead to ‘hodling’ - or holding onto - the top digital currency, it is not clear if this trend is having a strengthening effect on the value and price of Bitcoin.
For quite some time, buying and stocking Bitcoin for use as a store of value has been the best option to increase its market value or to encourage the frequent use of the currency, freely and on a regular basis, has been a subject of debate with varying perspectives to it.
The best way to increase the price of Bitcoin is to buy and hold it, says a comment I came across on a discussion forum.
One of the forum members says ‘hodling’ is by far the best way to improve Bitcoin’s value though spending is great too when you can basically strongarm a merchant to start accepting the currency.
The argument from another member is that ‘hodling’ takes Bitcoin off the market, reduces the supply available to everyone else, and increases the price as a result. It could also mean signalling to whoever heeds that you value the asset enough to want to hold it, which in its own interpretation, could warrant keen interest from those who are yet to go into it.
Not to hold
An opposing view says spending Bitcoin helps to increase its value as it helps gain merchant adoption, which in turn, makes its acceptance possible in lots of places and Bitcoin will so gain more value in the process.
A non-use will stop even merchants that have adopted Bitcoin payments, since not many people are spending it just as reducing its supply in the market will create a huge barrier as the cost increases.
If no one wanted to hold Bitcoin, there would be many sellers and no buyers, and the price would be zero. If everyone wanted to hold it, there would more buyers that sellers, and the price would rise. Reality falls somewhere in between.
Rise in price
In the face of these arguments, remember the other established reason that may have prompted a user to hold on to Bitcoin: the speculation of a rise in its prices.
Lately, there has been a rise in the price of Bitcoin. The rise was attributed to the weakening yuan at first, then the other report says it must be as a result to the disruption in the operations of PayPal due to an attack by hackers. Later, there was a suggestion that the initiation and the ongoing negotiation between Bitfinex and the hacker who stole about $65 mln worth of Bitcoin in August brought about the rise. Whichever way, no one would like to part with their Bitcoin at a time like that unless it is the best thing to do.
While you dilate on your stance on which factor you think has been working well for the top digital currency, consider what cryptocurrency enthusiast Willy Woo had to say having looked closer at the question of which is better - to invest in between Bitcoin or a subset of upcoming cryptocurrencies.
He ran a set of price performance simulations of an index of Altcoins versus the Bitcoin and, according to his findings, putting your money into the largest and most prominent digital currency Bitcoin, is still the way forward.