Bitcoin Gaining Validity Fuels Rally in Virtual Currency

bitcoinCOIN20 Nov 2013 / Bloomberg – Bitcoin’s rally is accelerating as the U.S. Department of Justice’s description of the digital currency as a “legal means of exchange” bolsters the prospect of wider acceptance as an alternative payment system.

Bitcoins, which exist as software and aren’t regulated by any country or banking authority, surged to a record $744 on Bitstamp, an active Web-based exchange where they trade for dollars, euros and other currencies, after the remarks at a PC: Tomohiro Ohsumi/Bloomberg

hearing by the U.S. Senate’s Homeland Security and Governmental Affairs Committee. The gains extended an advance that has seen the price of Bitcoins quadruple in the past two months and climb 45-fold so far this year.

Growing interest from investors in China and a limited supply of Bitcoins have also been fueling the increase in price, while last month’s closing of the Silk Road Hidden Website — where people could obtain drugs, guns and other illicit goods using Bitcoins — was already spurring speculators to bet Bitcoins would gain more mainstream acceptance. Now, government agencies from the U.S. Secret Service to the Financial Crimes Enforcement Network have weighed in to say that the virtual currency that’s designed to be difficult to trace has potential benefits, as well as risks.

“These hearings mean Bitcoin is finally coming into its own; it’s a real thing and it’s not going anywhere and these hearings highlight that,” said Jerry Brito, senior research fellow at the Mercatus Center at George Mason University.

Legal Use

Introduced in 2008 by a programmer or group of programmers going under the name of Satoshi Nakamoto, Bitcoin is being used to pay for everything from Gummi bears to smartphones on the Internet. There are 12 million Bitcoins in circulation, according to Bitcoincharts, a website that tracks activity across various exchanges. Bitcoins can potentially reduce banking-transaction fees, making it an attractive tender for those seeking to trade via the Web or in stores.

Tom Carper, a Democrat from Delaware who is chairman of the Senate committee, said today that while “knowledge and expectation gaps are wide,” the government should establish rules to ensure legitimate use.

“We all recognize that virtual currencies, in and of themselves, are not illegal,” Mythili Raman, acting assistant attorney general at the Justice Department’s criminal division, said at the hearing. “We are nimble enough and aggressive enough to be able to combat the threat. We are up to the challenge.”….. Read more

http://www.bloomberg.com/news/2013-11-19/bitcoin-gaining-validity-fuels-rally-in-virtual-currency-tech.html

Follow Twitter

Exchange Rate

Cart