Cryptocurrency and a payment system, Bitcoin, has for the first time surpassed the value of an ounce of gold, according to a BBC News report.
On Thursday, Bitcoin closed at $1,268, while a gold ounce stood at $1,233.
The record high is not as significant as it may seem, however, according to experts including Adrian Ash, head of research at Bullion Vault. Ash reportedly told CNBC via email, "Price is just a number, and overtaking one ounce of gold doesn't in itself mean much. More important is that bitcoin is making new highs. That signals both a growing appetite for alternative assets and also that crypto currency is finding new, perhaps unwary, buyers.”
The price movement is being attributed to increasing demand in China, as well as falling gold prices, which includes a 2 percent decrease this week. Meanwhile, bitcoin’s price has increased by more than 7 percent this week. Contributing to the rise, is the speculation surrounding the U.S. Securities and Exchange Commission’s imminent decision of whether or not it will approve a bitcoin-based exchange traded fund (ETF).
The upward movement over the past month is major turn-around for the digital currency, its value having plummeted in 2014, with the collapse of the largest exchange. Bitcoin’s value, however, has been volatile since it first launched, leaving many experts questioning whether or not the cryptocurrency will last.
In an attempt to stop the illegal flow of money out of the country, earlier this year authorities in China cracked down on Bitcoin trading. Beijing’s increased scrutiny, however, only succeeded in lowering the currency briefly. Since then, Bitcoin recorded record highs in January and continues to experience a steady rise in value.
No country owns what is described as the first decentralized digital currency, which was created anonymously online and released as open-source software in 2009. It is known as the most popular and best-known digital currency despite not being recognized as "legal tender" by any government. Some users find the use of bitcoin attractive due to its anonymity and lack of government control. Like all currencies, the value of bitcoin is determined by just how much people are willing to exchange it for. In terms of total market value, bitcoin is the largest of its kind.
A procedure referred to as “mining” must occur in order to process bitcoin transactions. The complicated process involves users utilizing their computing prowess to verify and record bitcoin transactions, much like puzzles, into a public ledger or blockchain. A valid transaction must have at least one input. Newly created bitcoins and transaction fees are rewarded to successful miners. In addition to mining, bitcoins can be obtained through exchanges for other currencies, services, and products. Transaction fees are optional and miners can pick and choose the transaction they wish to process based on which ones pay higher fees.
The puzzle’s difficulty is adjusted accordingly to compensate for the increasing power of computer chips. The adjustment ensures the production of a steady stream of new bitcoins each day. Currently, there are approximately 15 million bitcoins in existence, according to the report.
In order to receive a bitcoin to use at Bitcoin casinos, a user must possess a Bitcoin address. The address consists of a string of between 27 to 34 letters and numbers, which serves as a kind of virtual postbox from which bitcoins are sent to and from. Since funds are tied to bitcoin addresses rather than any real-world entity, bitcoin is pseudonymous.
Bitcoin was created anonymously under the name of Satoshi Nakamoto, however, in May last year, Australian computer scientist Craig Wright made global headlines when he claimed that he was Nakamoto. According to a recent Reuters report, Wright is teaming up with fugitive online gambling entrepreneur and Canada’s Bodog founder, Calvin Ayre, to file international patents on the cryptocurrency.
