According to one of the virtual currency’s foremost exchanges, MTGox, a single Bitcoin’s value has surpassed $1,000 (£613). In the wake of a US Senate committee hearing held earlier this month, the currency’s value has been steadily rising. In the hearing, legislators described the Bitcoin and other virtual currencies as a “legitimate financial service.”
Confidence in the currency plummeted last month when Silk Road, a website selling illegal drugs, was shut down. Since Bitcoin transactions are difficult to trace, they are often used in illegal activity online. The crackdown caused uncertainty in the market and many users of the currency worried its value would nose-dive. However, confidence is growing again due to news that regulators will not seek to ban the currency.
Enthusiasts promote the currency as an efficient way to handle global money transfers. “For Bitcoin to go from zero to $1,000 in just five years has been amazing to watch,” says Bitcoin developer, Mike Hearn. “It’s easy to forget that Bitcoin’s true value is not in an arbitrary exchange rate, but in its ability to enable new applications and services which aren’t possible with today’s payment networks.”
Hence, the government interest in both the positive and negative aspects of the currency. The hearing was prompted by the closure of the Silk Road. “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us,” chairperson to the committee, Senator Thomas Carper, said in opening remarks.
At the hearing, representatives from the Securities and Exchange Commission and the Department of Justice provided their views and submissions were received from the US Federal Reserve and FBI. In a letter to the committee, the FBI recognized virtual currencies as “legitimate financial services” but warned they could be “exploited by malicious actors.” Officials from President Barack Obama’s administration also gave their stamp of approval, comparing its merits with those of the Internet.
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