The crypto-currency Bitcoin is continues to reach record highs this year, as the value of one bitcoin has surpassed the $10,000 (£7,493) milestone for the first time.
The currency is still climbing though, with one bitcoin currently worth over £8,000. The total value every single bitcoin in existence is now over £167bn, and seemingly climbing.
The virtual currency has soared in value in the last week, as it increased by over $1,000 dollars in value over the weekend alone. Speculation is that the spike in value is due to the CME, which is the largest derivatives exchange in the world, recently announcing plans to offer trading in Bitcoin in the future. The promise of involvement by the CME has raised confidence in the crypto-currency, driving the price ever higher.
Jameel Ahmad from market analysts FXTM said “this rise appears to have been triggered by hopes the CME move will bring in investment from hedge funds and other major investors and move Bitcoin into the mainstream.”
Crypto-currencies like Bitcoin are made possible by blockchain technology. The blockchain is an online ledger of every single transaction carried out using the currency, and it is maintained by the combined processing power of a network of computers, in a process known as mining. Contributing processing power to the mining process sees miners rewarded with crypto-currency. Blockchains are decentralised, meaning that the value of crypto-currencies are not upheld by any single government or bank.
The virtual currency is now worth over ten times what it was at the beginning of the year, which is a remarkable rise, and some experts predict that it still has much further to go, seeing the blockchain technology which underpins the currency as the future of finance. Banks are increasingly exploring options for using blockchain tech to facilitate carrying out more secure transactions.
Former Fortress hedge fund manager Michael Novogratz, who predicted that Bitcoin would surpass the $10,000 mark back on the 10th of October, believes that the potential of this technology means that “Bitcoin could be at $40,000 at the end of 2018. It easily could.”
However, other experts dismiss the potential for blockchain, and say that the explosion in the value of crypto-currencies represents nothing more than the latest speculative bubble. One of the naysayers is JP Morgan Chase’s chief executive, Jamie Dimon, who described Bitcoin as “a fraud. It’s just not a real thing,” before predicting that “eventually it will be closed”
The anonymity granted by the blockchain means that as it stands, virtual currencies are largely unregulated. European Central Bank policymaker Ewald Nowotny told Reuters that Bitcoin “could easily blow up, and central banks could then be accused of not doing anything. So we’re trying to understand whether bank activity in relation to crypto-currency trading needs to be better regulated.”
Countries such China and South Korea have acted to ban new virtual currency launches and have been blocking exchanges on which they are traded. The currencies are outside of the control of any one single government though, meaning that these government actions have little wider international impact on the usage and trading of crypto-currencies. In spite of any attempts to impose regulations on the technology, for now crypto-currencies seem to be experiencing unstoppable growth.