You can track the latest Bitcoin prices using our Bitcoin price tracker here.
Believe it or not, a single bitcoin is now worth over $5,000. The virtual currency has been on a very real tear, gaining 70% over just the past month. A year ago it was trading at less than $650.
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What is Bitcoin?
Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verifying other users’ transactions. They receive bitcoins in exchange.
The coins also can be bought and sold on exchanges with U.S. dollars and other currencies. Their value has fluctuated over time.
Because the currency isn’t formally regulated, its legality is a bit fuzzy. The currency has also drawn the ire of many in law enforcement and cybersecurity because it’s difficult to trace, making it a currency of choice for hackers behind ransomware attacks. But in September, New York state regulators approved their first license for a company dealing in bitcoin.
HOW BITCOIN CAME TO BE
It’s a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesn’t matter: The currency obeys its own internal logic.
Oct 12: Bitcoin surges above $5,000 to new record high
The first is speculation that trading of the currency could soon resume in China following a crackdown on domestic exchanges.
A second theory is that investor confidence was boosted when Bitcoin successfully split into two earlier this year, resulting in the creation of a cheaper offshoot called Bitcoin Cash.
Bitcoin buyers may also have taken heart from reports that Goldman Sachs was looking at how it might trade the currency. Goldman CEO Lloyd Blankfein, however, says that no final decision has been made.
Sept. 29: IMF chief tells central bankers to not dismiss bitcoin
Christine Lagarde, the head of the International Monetary Fund, has a message for the world’s central bankers: Don’t be Luddites.
Addressing a conference in London on Friday, Lagarde said virtual currencies, which are created and exchanged without the involvement of banks or government, could in time be embraced by countries with unstable currencies or weak domestic institutions.
“In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money,” she said. “The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”
The most high-profile of these digital currencies is bitcoin, which like others can be converted to cash when deposited into accounts at prices set in online trading. Its price has been volatile, soaring over recent years but falling sharply earlier this month on reports that China will order all bitcoin exchanges to close and one of the world’s most high-profile investment bankers said bitcoin was a fraud.
For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are “too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable.”
High-profile hacks have also not helped, she noted. One notable failure was that of the Mt. Gox exchange in Japan in February 2014, in which about 850,000 bitcoins were lost, possibly to hackers. Following that, Japan enacted new laws to regulate bitcoins and other cryptocurrencies.
But in time, she argued, technological innovations could address some of the issues that have kept a lid on the appeal of digital currencies.
“Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays, so I think it may not be wise to dismiss virtual currencies,” Lagarde said.
Lagarde’s comments appear at odds with the views of JPMorgan Chase CEO Jamie Dimon, who this month described bitcoin as a fraud and said he’d fire any of his traders if they caught dealing in the digital currency.
In a speech laying out the potential changes wrought by financial innovations, Lagarde also said that over the next generation, “machines will almost certainly play a larger role” in helping policymakers, offering real-time forecasts, spotting bubbles, and uncovering complex financial linkages.
“As one of your fellow Londoners — Mary Poppins — might have said: bring along a pinch of imagination!”
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