Bitcoin continues its upward price graph this year as the price of one unit of the online currency topped $1,000, a 78% increase from the price it had in the beginning of 2013. According to currency specialists, its price has surged on the hope that it will eventually be a legitimate international currency. Prices hit $ 1,044 during early trading past Wednesday. In January, one bitcoin was valued at $13.
Bitcoin, which trades at online markets like the Mt. Gox exchange, is observed to be very volatile. The price rose to $900 earlier on November and then slipped back to $500, all in a 28 hour span. The online currency has considerable demand from China, where the country's biggest search engine, Baidu, has begun accepting bitcoin for a few services.
Regulation and Legitimacy
Lawmakers in the United States are scrutinizing potential regulations for the bitcoin, the preferred currency of a few drug cartels and other illicit businessmen operating a grey online marketplace. Federal authorities have clamped down on Silk Road, the online drug market, in the past month. A newer version of the market has cropped up a few weeks after the incident.
Bitcoin has a gained a new support platform from the Federal Reserve, notably from Ben Bernanke, its chairman, when he said that the currency held long term promise as a component of the global payment system.
This federal recognition, however, has received a mixed response. A few proponents of the online currency has said that such a governmental backing could lead to a wider adoption of the currency, while others say that decentralization is the nature of bitcoin and governments should not have anything to do with the currency.
Not Investment Grade
Bitcoin is extremely speculative, and as per investor recommendations, should not exceed 1% of the total value of a retail investor's portfolio. It is compared to a valid lottery ticket, which is worth huge money-or nothing at all.
Prices of bitcoin increased dramatically in April after the banking system of Cyprus was bailed out by the EU. This incident led to concerns relating to European banking system stability and also about the euro. Price of bitcoins dropped sharply in May and the value traipsed around $100 during the summer before the present rally began in October.
An increasing number of businesses, however, have begun to accept bitcoins as payment. These range from a few Subway sandwich outlets to the purchase of commercial space travel tickets sold by Virgin Atlantic.