Virtual currency Bitcoin has hit a record high of $6,307.73 on the back of strong trading in recent days – and the price could go higher.
The drivers seem to be traders in the US, South Korea and Japan.
The price is up 500% year-to-year against the US dollar and seems to keep on rising.
Bitcoin is a cryptocurrency that only lives online which is now worth three times as much as an ounce of gold.
Ever since Bitcoin burst on the markets in 2009, the struggle has been to legitimise the virtual currency.
Out of control
At first, Bitcoin was badmouthed as the chosen currency of drug dealers, criminals and terrorists.
With transactions shrouded in secrecy taking place in the netherworld of the internet, Bitcoin’s reputation was sullied.
Since then, Bitcoin has bounced back as the most mainstream virtual currency but has lacked the support of a central bank or government. And therein lies the weakness.
Bitcoin is not the master of its own fate. If governments decide to opt for their own digital currencies and continue to view Bitcoin on the same basis as South African krugerrands – as investments and not serious money – Bitcoin will surely remain an interloper among the pounds, dollars, yuan and yen of the world.
Pretenders are also lurking in the background, like ethereum. The strength of cryptocurrencies is the blockchain, which makes the technology that runs digital currencies more valuable than the currencies themselves.
Unlikely to live long and prosper
Bitcoin, ethereum and ripple, the third largest virtual currency have a market capitalisation of just $110 billion. It sounds a lot, but, it’s the value of one of the world’s top footballers or the money Amazon’s Jeff Bezos has in the bank.
Governments are already acting to strip virtual currencies of their anonymity.
Japan is legislating to make Bitcoin exchanges turn over customer lists. China, the USA and Britain have banned coin offerings after a series of frauds.
Meanwhile, behind the scenes, the big banks are replicating the Bitcoin blockchain as a tamper-proof way of completing online transactions.
Unfortunately, it seems Bitcoin is unlikely to live long and prosper.