A SURGE IN VALUE FOR BITCOIN AND SIMILAR CURRENCIES
c.2013 New York Times News Service
This has been quite the week for the peer-to-peer digital currencies. Exactly seven days ago, Bitcoin, the digital cryptocurrency, was trading at about $615, but early Wednesday morning it had passed $1,000 on Mt.Gox, the leading Bitcoin exchange, setting a new high. This pushed Bitcoin’s market capitalization to more than $11 billion.
Not bad for something that came out of thin air.
But the rise of Bitcoin is not happening in a vacuum. It seems the value of almost all cryptocurrencies (and there are several dozen of them) has been growing rapidly over the last week.
According to coinmarketcap.com, which monitors cryptocurrencies, Litecoin, a similar but more easily created currency, has risen 60 percent in 24 hours, bringing its market capitalization to $644 million. Another currency called PeerCoin is up 30 percent since Tuesday, now worth more than $75 million.
Namecoin, Feathercoin, Megacoin, Infinitecoin and others are all up double-digit percentage points, too.
The rise in pricing is most likely happening concurrently with the rise in attention. There are now more than 1.6 million references to Bitcoin in Google News, which monitors major news outlets around the world.
According to Google Trends, which tracks search terms online, references to Bitcoin hit a record this week. And last week Bitcoin took a major step toward the mainstream as federal authorities signaled their willingness to accept it as a legitimate payment alternative.
Bitcoin is also growing as it is becoming a more acceptable currency online.
A number of Bitcoin investors and cryptocurrency enthusiasts have teamed up to create a “Bitcoin Black Friday,” where hundreds of retailers and charities, including OkCupid, an online dating service; City Wine Cellar; Reddit; and GOOD Magazine, which promotes progress, will accept the currency on Black Friday.
These other currencies are all vying to become the next Bitcoin, racing to be seen as a viable online alternative to cash.
But not everyone is bullish on these currencies.
Edward Hadas, economics editor at Reuters Breakingviews, says he thinks that Bitcoin, and, by proxy, other similar token-based denominations, will fail.
“Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith,” Hadas wrote. And even if Bitcoin were to succeed, “governments would either ban it or take over the system.”