Saturday , November 23, 2024

Bitcoin Value Rallies As the Digital Currency Closes out a Promising Year

By John Stewart

The Bitcoin digital currency is surging again. Factors ranging from the collapse of the Chinese yuan to the supposed unmasking of Bitcoin’s inventor have helped push the controversial currency’s price up 15% in the past week, to a close at $415.25 on Thursday, according to data compiled by Bitcoin data service CoinDesk. The price as of mid-morning Central time Friday stood at $433.16.

Bitcoin is ending the year with a strong rally after beginning it with a stunning collapse that saw the currency sink to a low of $176 by mid-January. It remained in the dumps most of the year until starting a steady climb earlier this fall. Daily trading volume has also reached all-time highs and is consistently exceeding 2 million coins total across all Bitcoin exchanges.

Observers are crediting a number of underlying reasons for Bitcoin’s surge this week. One factor is the weakening yuan, which is used in 80% of all purchases of Bitcoin, though within China Bitcoin accounts have been banned. The benchmark Chinese currency’s value has dropped 4% against the U.S. dollar so far this year, leading some investors to seek refuge in Bitcoin, according to CoinDesk. Real-estate and commodity prices have also gone down in China, reinforcing the trend.

Some observers also credit the simple fact that Bitcoin has been prominent in the news lately. The latest headlines for the currency have to do with the contention by some technology-news sites that an Australian information-security expert named Craig Wright is the elusive Satoshi Nakomoto, the name used by the person or persons credited with inventing Bitcoin and introducing it as a digital currency early in 2009. This week, police raided Wright’s house near Sydney, reportedly in connection with an inquiry by the Australian Tax Office.

Meanwhile, data published by Bargainfox.co.uk, which tracks Bitcoin, indicates the currency is steadily gaining ground in other important ways. According to these numbers, daily transaction value stands at $289 million, not far behind Square Inc. ($362 million).

More than 100,000 merchants worldwide are now accepting Bitcoin either online or in their stores, including Microsoft, Dell, Dish Network, Overstock.com, and Time Inc. Generally, processors levy a transaction fee around 1%, which is less than half the cost of accepting credit cards. Daily transaction volume has exceeded 200,000 each of the last few days, according to Bitcoin data provider blockchain.info, triple the number at the start of the year.

To be sure, Bitcoin faces a number of challenges. One is its price, which can exhibit extreme volatility. While it has rallied in recent weeks into the $400s, its all-time high is more than $1,000, achieved in 2013. And the number of Bitcoin-dispensing ATMs stands at 471 globally, a tiny number compared to the total ATM base, Bargainfox’s data indicate.

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