The surge in bitcoin’s price is showing no signs of slowing down, and is within striking distance of the $US10,000 mark.
- Bitcoin is a digital currency known as a cryptocurrency
- The peer-to-peer technology underpinning it is known as the blockchain — a public ledger of all transactions
- Bitcoins can be stored in a digital wallet and used to buy other currencies or real world goods
At 11:05am (AEDT), one bitcoin was worth $US9,733 ($12,793).
The digital currency has seen an eye-watering tenfold increase in its value since the start of the year and has more than doubled in value since the beginning of October.
Bitcoin’s price has been helped in recent months by the announcement that the world’s biggest derivatives exchange operator CME Group would start offering bitcoin futures.
The company said last week the futures would launch by the end of the year, though no precise date had been set.
So far, institutional investors have largely stayed away from the market, viewing it as a bubble — too volatile, risky and complex to invest other people’s money into.
But some say the launch of the CME futures could lure in more mainstream investors.
“Promises of bitcoin futures opening the door to institutional money are supercharging the price,” said Charles Hayter, founder of cryptocurrency data analysis website Cryptocompare.
Bigger than Wal-Mart
The latest price surge brought bitcoin’s market capitalisation — its price multiplied by the number of coins that have been released into the system — to more than $214 billion, according to industry website Coinmarketcap.
Meanwhile, the total estimated value of all cryptocurrencies surged to $401.9 billion.
That was even higher than US retail giant Wal-Mart’s market cap by $22.5 billion, which topped the Fortune 500 list of biggest companies in 2017.
The staggering price increases seen in the crypto-market have led to multiple warnings from central bankers, investment bankers and other investors that it had reached bubble territory.
Some say it could prompt regulators in the West to crack down on the market in a similar fashion to China, where bitcoin exchanges were shut down earlier this year .
“Regulators know the rewards of cryptocurrency and blockchain could be huge but [they] have more than one eye on the catastrophic ramifications if good governance, stability and control are not preserved,” said David Futter, a fintech partner at law firm Ashurst, in London.
Bitcoin’s biggest rival, Ethereum, has seen even more stratospheric gains this year, up more than 6,000 per cent.
Each Ethereum unit is worth $633.41, with its market cap around $60.7 billion.
Post-Mugabe Zimbabwe’s bitcoin surge
While the western world is yet to celebrate bitcoin’s $US10,000 ($13,150) milestone, the digital currency is worth almost twice as much in Zimbabwe.
Bitcoin in Zimbabwe soared to about $23,659 on the local exchange on Tuesday, as investors continued to seek a safe haven for their money trapped in the banks.
Ousted president Robert Mugabe’s 37-year rule left the country with a worthless currency , massive debts, and an estimated unemployment rate of more than 80 per cent.
In the grip of acute shortages of US dollars, Zimbabweans are piling into anything they think might retain value.
In contrast, bitcoin is seen as a volatile and highly speculative bet for most investors around the world, and many countries have dealt with it differently under their laws.
China and South Korea has banned fundraising through token launches (also known as initial coin offerings), whereby a new cryptocurrency is sold to finance a product development.
Russia’s central bank said it would block websites selling bitcoin and its rival cryptocurrencies.
The European Central Bank told EU lawmakers last year, “they should not seek … to promote the use of virtual currencies” because these could, “in principle affect the central banks’ control over the supply of money” and inflation.
Yet Japan in April recognised bitcoin as legal tender and approved several companies as operators of cryptocurrency exchanges but required them to register with the Government.
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