BY CADE METZ
The value of a bitcoin has topped $1,000, a mere 11 months after the fledgling digital currency was worth little more than a $10 bill.
As of 7:25 a.m. Pacific time this morning, bitcoins were trading at $1,041 on Mt. Gox, the world’s most prominent bitcoin exchange, a place where you can swap federal monies, such as dollars and yen, for the digital currency.
The price of a bitcoin has surged in recent weeks, likely driven by heavy demand in China and by public statements from U.S. financial authorities that seemed to endorse the digital currency — at least in part. Bitcoin prices topped $1,000 on a Chinese exchange last week, before hitting that mark on Mt. Gox, which is based in Japan but is used worldwide, including here in the U.S.
“China is still driving overall demand,” says Dan Held, who runs ZeroBlock, a site that tracks bitcoin market data. “However, I think there has been a paradigm shift in how people think about Bitcoin in the U.S
“Over the last few days, my friends, parents friends, and people that I never thought would buy bitcoin have contact me, not asking ‘what is bitcoin,’ but ‘how do I get bitcoin?’”
Mt. Gox and other bitcoin operations are still struggling to meet the requirements of American financial regulators, and this has somewhat slowed adoption of the digital currency in the States, but it seems that the digital currency can eventually flourish here well.
Last week, as part of Congressional hearings related to the demise of The Silk Road — an online illicit drug marketplace that made use of bitcoin — regulators said that, while it can be used for illegal operations, bitcoin is also innovative way of driving legitimate operations, and their unexpectedly rosy view of the currency marked a turning point for bitcoin.
Bitcoin is not just a digital currency, like the dollar or the yen or the euro. It’s also a payment system, like PayPal or the Visa credit card network. The system runs on thousands of machines across the globe, and it is controlled not by a central authority but by the worldwide community of people who run those machines. In some ways, it seeks to replace both federal currencies and a world of payment systems, but it must also play nicely with existing financial systems.