Bit­coin price soars above $5,000 to record high

The Guardian Australia - - Technology - Ju­lia Kollewe

The price of bit­coin, the world’s best­known cryp­tocur­rency, has smashed through $5,000 to a new all-time high.

Bit­coin is now trad­ing at $5,186 com­pared with $966 at the start of the year. The dig­i­tal cur­rency has soared 750% in the past year, and is now worth four times as much as an ounce of gold.

But the price has been volatile. Bit­coin plum­meted be­low $3,000 in mid-Septem­ber af­ter Chi­nese au­thor­i­ties an­nounced a crack­down on the dig­i­tal cur­rency. Bei­jing or­dered cryp­tocur­rency ex­changes to stop trad­ing and block new reg­is­tra­tions, due to fears that in­creas­ing num­ber of con­sumers pil­ing into the mar­ket could prompt wider fi­nan­cial prob­lems.

Us­ing bit­coin al­lows peo­ple to by­pass banks and tra­di­tional pay­ment pro­cesses to pay for goods and ser­vices di­rectly. Banks and other fi­nan­cial in­sti­tu­tions have been con­cerned about bit­coin’s as­so­ci­a­tions with money laun­der­ing and on­line crime.

The soar­ing value of bit­coin and other cryp­tocur­ren­cies comes de­spite grow­ing warn­ings over a price bub­ble.

The stark­est warn­ing came from JP Mor­gan boss Jamie Di­mon, who said bit­coin was a fraud that will ul­ti­mately blow up. He said last month there was only a lim­ited mar­ket for the dig­i­tal cur­rency, ar­gu­ing it was only fit for use by drug deal­ers, mur­der­ers and peo­ple liv­ing in coun­tries such as North Korea.

Ken­neth Ro­goff, pro­fes­sor of eco­nom­ics and pub­lic pol­icy at Har­vard Univer­sity and a for­mer IMF chief econ­o­mist, has pre­dicted that the tech­nol­ogy be­hind cryp­tocur­ren­cies will thrive but that the price of bit­coin will col­lapse.

Ro­goff wrote in the Guardian this week: “It is folly to think that bit­coin will ever be al­lowed to sup­plant cen­tral-bank-is­sued money.

“It is one thing for gov­ern­ments to al­low small anony­mous trans­ac­tions with vir­tual currencies; in­deed, this would be de­sir­able. But it is an en­tirely dif­fer­ent mat­ter for gov­ern­ments to al­low large-scale anony­mous pay­ments, which would make it ex­tremely dif­fi­cult to col­lect taxes or counter crim­i­nal ac­tiv­ity.”

De­spite the warn­ings, Ja­pan’s gov­ern­ment has im­ple­mented rules that recog­nise bit­coin as a pay­ment method, and In­dia and Swe­den are con­sid­er­ing their own vir­tual currencies. Celebri­ties have also got in­volved, with the boxer Floyd May­weather, the so­cialite Paris Hil­ton and the ac­tor Jamie Foxx pro­mot­ing coin of­fer­ings.

Bit­coin cryp­tocur­rency sou­venir coins Pho­to­graph: Ar­tyom Koro­tayev/TASS

Bit­coin price Pho­to­graph: Reuters

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