Bitcoin trading above $1,000 for first time

Virtual currency’s price is double its level a week ago and 80 times the prevailing price at the start of the year

Bitcoin was created in 2009 by an unknown computer scientist and transfers of ownership of the currency are recorded in software stored across a network of computers. Photograph: Reuters/Stephen Lam

Bitcoin was created in 2009 by an unknown computer scientist and transfers of ownership of the currency are recorded in software stored across a network of computers. Photograph: Reuters/Stephen Lam

 

Speculators are trading Bitcoin above $1,000 for the first time, pushing the mania for the experimental virtual currency into a new phase.

The price for a single Bitcoin quoted on the Mt.Gox exchange hit $1,044 (€769) yesterday, double its level one week ago and 80 times the prevailing price at the start of the year.

The media coverage and social media debate that has stoked the buying has intensified in recent weeks, as supporters claim Bitcoin could one day become an effective alternative to government currencies or a cheap way of moving money around the world.

Even sceptics accept the price could continue to soar before flaws in the concept become apparent. “It’s a massive, multiplayer online game,” said Prof Jim Angel of Georgetown University. “If you can guess where the crowd is going to go tomorrow, you can have some fun gambling here.


Huge risk
“But as a store of value it fluctuates too much, and as an alternative to traditional payments systems it has a lot of competition. There is also huge technology risk here. All it takes is one hack and it goes down to zero.”

Bitcoin was created in 2009 by an unknown computer scientist. Transfers of ownership of the currency are recorded in software stored across a network of computers.

Increased trading in the decentralised currency has begun to attract regulators’ attention.

It is not backed by any central authority, so its value is derived only from speculators’ expectations of its future utility. A number of small businesses have begun accepting Bitcoin as payment.

Regulators in the US and China, the twin centres of Bitcoin activity, have recently shown a willingness to let the experiment continue, as long as anti-money-laundering rules are complied with. –(Copyright The Financial Times Limited 2013)