Bitcoin ballyhoo
Global demand has offset concerns about its use by hackers
Currency soars past $2,000,
Bitcoin, someSAN FRANCIS CO times frowned upon as a currency of the underworld, is fast gaining currency in the financial world.
The crypto-currency soared past $2,000 for the first time over the weekend as investors increasingly treat it as a new gold standard and countries such as Japan and China integrate it into their banking systems. On Monday, it traded 6% higher at $2,182.74, according to CoinDesk.
“It will continue to rise in price as inflation goes higher and there is world turmoil,” says Jonathan Johnson, president of Medici Ventures, a wholly-owned subsidiary of Overstock.com that focuses on blockchain, the technology that underlies digital assets such as bitcoin, allowing it to be tracked and secure.
Johnson was instrumental in the decision by e-commerce company Overstock to begin accepting bitcoin in January 2014.
“Bitcoin is a safe investment,” Johnson says.
There have been plenty of skeptics about bitcoin during its popular but volatile rise, from former Federal Reserve chairman Ben Bernanke to J.P. Morgan Chase CEO Jamie Dimon, to users who were burned by the bankruptcy of bitcoin exchange Mount Gox and the ensuing plunge in prices.
The predilection among criminals to use the peer-to-peer currency, as well as its place outside traditional banking systems and regulations, has stymied some of its advocates’ best-laid plans. In March, the Securities and Exchange Commission rejected a proposal for the first exchangetraded fund that would track bitcoin’s price, citing the currency’s unregulated market.
But global demand has offset those concerns.
After Japanese regulators introduced rules this spring that recognize bitcoin as a legal method of payment, investors flocked to swap yen for bitcoin in a frenzy of trading activity.
In China, analysts attribute a spike in bitcoin sales to a significant drop in the difference in bitcoin prices between U.S. and Chinese exchanges.
Companies and governments are embracing the currency for several reasons: It’s easy to trans- fer overseas without high surcharges; it offers simple, anonymous transactions online; and it is supported by a secure digital infrastructure.
“It doesn’t surprise me at all that the price of bitcoin has been bid up,” says Perianne Boring, president of the Chamber of Digital Commerce. “(Crypto-currencies) Ethereum and Ripple are also surging strongly.”
“The run-up in value isn’t what’s important — it’s the fact that it has the potential to be a whole new kind of currency on the planet,” says Mark Johnson, a longtime bitcoin investor who is CEO of Descartes Labs, which analyzes complex satellite images.
Much of the attention around bitcoin has centered on its use by criminal enterprises, the latest being the demand of ransom — via bitcoin payment — from WannaCry, the group behind the worldwide hack that reached 150 countries this month.
That may be changing as the price of bitcoin continues its ascent, validating Web browser pioneer and venture capitalist Marc Andreessen’s prediction in 2014 that blockchain had the potential to become a multibillion-dollar technological breakthrough.
Boost VC was the first fund to back a bitcoin-related start-up, Coinbase, in 2012, says Adam Draper, managing director of Boost.
Today it backs more than 60 blockchain- and bitcoin-related start-ups “because I trust bitcoin more than I trust my bank,” Draper says.
“It will continue to rise in price as inflation goes higher and there is world turmoil.” Jonathan Johnson, president of Medici Ventures