Overcoming roadblocks, bitcoin takes flight again
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.