Bitcoin price soars in buying frenzy
do.
With the currency’s tremendous runup in price in recent days, it could become a target for those who doubt that it deserves its current value.
The Futures Industry Association, which represents Wall Street's biggest banks and clearinghouses, sent a letter to the Commodities Futures Trading Commission, saying that as the guarantors of customers' trades, they should have been consulted before trading in bitcoin futures was approved. They expressed concern that the extreme volatility tied into bitcoin could leave clearinghouses exposed when the futures move too violently.
The frenzy of interest and the rapid rise in the price of bitcoin has put significant strain on the major bitcoin exchanges.
Coinbase, the largest bitcoin exchange, at one point tweeted that record-high traffic had caused interruptions to its service. Bitfinex, which trades several digital currencies including Bitcoin, tweeted out that it had suffered an unusual surge in traffic the last few days.
Bitcoin is the world’s most popular virtual currency. Such currencies are not tied to a bank or government and allow to near impossible to users to spend money anonymously. They are basically lines of computer code that are digitally signed each time they are traded.
A debate is raging on the merits of such currencies. Some say they serve merely to facilitate money laundering and illicit, anonymous payments. Others say they can be helpful methods of payment, such as in crisis situations where national currencies have collapsed.
Miners of bitcoins and other virtual currencies help keep the systems honest by having their computers keep a global running tally of transactions. That prevents cheaters from spending the same digital coin twice.
Online security is a vital concern for such dealings.
In Japan, following the failure of a bitcoin exchange called Mt. Gox, new laws were enacted to regulate bitcoin and other virtual currencies. Mt. Gox shut down in February 2014, saying it lost about 850,000 bitcoins, possibly to hackers.
Earlier Thursday, NiceHash, a company that mines bitcoins on behalf of customers, said it is investigating a breach that may have resulted in the theft of about $70 million worth of bitcoin.