The value of Bitcoin soared to more than US$900 as a United States senate committee discussed its “promises and risks” yesterday (Monday).
Bitcoin, a borderless digital currency which is not regulated or controlled by any central bank or government, is viewed with suspicion by many authorities who see it predominantly as a tool to carry out illegal payments or money laundering on the internet.
HumanIPO reported in August Germany had officially recognised Bitcoin as an official currency, while around the world, including in South Africa, an increasing number of online retailers are beginning to accept it as payment for goods and services.
The value of a Bitcoin peaked on Mt Gox at just over US$900, before falling back to around US$502 during the last 48 hours, in part affected by a Senate hearing exploring the currency in wake of the Silk Road closure at the start of October.
Silk Road, which used Bitcoin as its primary method of payment, was an online marketplace peddling drugs and other illegal products and services.
During the opening remarks of the hearing, chair of the committee Senator Thomas Carper said: “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”
A letter from the FBI, which was published by the committee on Sunday, said while Bitcoin did offer “legitimate financial services”, it could be “exploited by malicious actors”.
Shortly after the Silk Road closure, the value of Bitcoin dropped to around US$130, but South African mobile money and banking expert Duncan Arthur told HumanIPO at the time it just proved it was behaving “like a real currency”.