LONDON: Bitcoin climbed to a new all-time high of $6,450 on Wednesday, boosted by bets the cryptocurrency could enter the financial mainstream after the world’s largest derivatives exchange operator said on Tuesday it would launch bitcoin futures.
He said it would provide a regulated trading venue for the cryptocurrency market and would launch the new derivatives in the fourth quarter of 2017.
Bitcoin has had a bumper year with a more than sixfold increase in price, and has more than doubled in price since mid-September alone.
Where does it come from?
Bitcoin was launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto.
Last year secretive Australian entrepreneur Craig Wright said he was the creator of Bitcoin, but some have raised doubts over his claim.
Hundreds of other digital currencies followed but Bitcoin is by far the most popular, with an increasing number of merchants accepting digital currencies for payments.
Transactions happen when heavily encrypted codes are passed across a computer network. The network as a whole monitor and verifies the transaction in a process that is intended to ensure no single Bitcoin can be spent in more than one place simultaneously.
Users can “mine” Bitcoins — bring new ones into being — by having their computers run complicated and increasingly difficult processes.
However, the model is limited and only 21 million units will ever be created.
What’s it worth?
Like any other currency, it fluctuates. But unlike most real-world units, Bitcoin’s value has swung wildly in a short period.
When it first came into existence it was worth a few US cents. Several years later Bitcoin topped $1,000. It’s now worth more than $2,300, with commentators suggesting some are buying it as an alternative bet in times of global economic uncertainty.
The chaotic withdrawal of high-value notes in India and Chinese controls on the purchase of foreign currency have also been cited for its meteoric rise.
There are presently more than 16 million units in circulation. Some economists say the limited number of Bitcoins means its price will increase over the long run, making it less useful as a currency and more a vehicle to store value, like gold.
But detractors point to Bitcoin’s volatility, security issues and other weaknesses as flaws that will eventually undermine it. – Agencies
