Over­com­ing road­blocks, bit­coin takes flight again

The Korea Times - - WORLD BUSINESS -

PARIS (AFP) — Bit­coin may be in for a sus­tained record run as it over­comes key ob­sta­cles, ex­perts said Thurs­day af­ter the cryp­tocur­rency set a new record high.

Even bit­coin fans were plagued by doubts over the sum­mer when Chi­nese reg­u­la­tors cracked down on ex­changes trad­ing the vir­tual cur­rency and a dis­pute among de­vel­op­ers gave birth to a new ver­sion, split­ting the mar­ket of the bud­ding cur­rency.

In Septem­ber, bank­ing reg­u­la­tors in Bei­jing and Shang­hai or­dered lo­cal cryp­tocur­rency ex­changes to shut down.

But ob­servers say they are now de­tect­ing a re­think by the Chi­nese au­thor­i­ties, caus­ing bit­coin on Thurs­day to surge past the $5,000 level for the first time since its launch eight years ago.

Around 1530 GMT its value based on a bas­ket of trad­ing ex­changes cal­cu­lated by Bloomberg was $5,247.02, up from $4,829.29 late Wed­nes­day.

This rep­re­sents a rise of 400 per­cent this year alone.

Un­cer­tainty didn’t last

Should ru­mors re­ported in state me­dia be con­firmed, then what is by far the most well-known and traded of more than 1,000 so-called cryp­tocur­ren­cies could soar to even greater heights, ex­perts pre­dict.

“There has been a pe­riod of un­cer­tainty but that has not lasted. China rep­re­sents more than 60 per­cent of trad­ing and the ques­tion of their reg­u­la­tion, as ev­ery­where, has made a big­ger im­pact,” said Greg Revenu, of Bryan, Garnier &Co.

The vir­tual cur­rency is cre­ated through blockchain tech­nol­ogy, which pub­licly records trans­ac­tion de­tails in­clud­ing the unique al­phanu­meric strings that iden­tify buy­ers and sell­ers — tech­nol­ogy which is gain­ing in­creas­ing cur­rency among banks and com­pa­nies. “Min­ing” the coins is a very prof­itable but long, ex­pen­sive, and en­ergy-in­ten­sive process re­quir­ing pow­er­ful servers.

Be­tween 60 and 70 per­cent of new bit­coins are mined in China, where the lo­cal leader Bit­main has im­pos­ing in­fra­struc­ture.

The bit­coin sup­ply is capped at 21 million units, some 17 million of which have al­ready been mined.

Bei­jing’s crack­down saw bit­coin’s price plunge some 40 per­cent be­fore re­cov­er­ing, the lat­est move in its roller­coaster ex­is­tence which be­gan in 2009, when it was worth just a hand­ful of cents. Even at the start of this year it was worth ’only’ $966.

Its volatil­ity has led many fi­nan­cial ob­servers to sug­gest the cur­rent bull run is another spec­u­la­tive bub­ble which could well lead to a cor­rec­tive sell­off.

Two Chi­nese trad­ing plat­forms, Okcoin and BTC China, con­trol about 22 per­cent of the global bit­coin mar­ket.

Bit­coin is not gen­er­ally rec­og­nized as a cur­rency — lack­ing a home coun­try, cen­tral bank or treasury — although its real world use is con­stantly in­creas­ing.

Another key player in the crypto cur­rency is Rus­sia, where Pres­i­dent Vladimir Putin on Wed­nes­day spoke of a “risk” that vir­tual cur­ren­cies — of­ten as­so­ci­ated with so-called anony­mous ‘dark web’ deal­ings — could rep­re­sent.

AFP-Yon­hap

This file photo shows an im­age of Bit­coin and U.S. cur­ren­cies dis­played on a screen.

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