The price of online currency the Bitcoin (BTC),
which surged in the aftermath of the Cyprus banks crisis
to peak at US$266 in April this year, has shown renewed signs of strength this month.
In the two weeks to 21 October, the value of one BTC rose by almost $60 and on 15 October hit a high of $197.40 at the largest exchange, Mt Gox.
An estimate of the current price taking a broader spectrum of exchanges into account shows it at $182.74.
The price of BTC swiftly fell from US$266 to US$50 after its April peak and had remained below US$170 until last week. The renewed demand appears to belie predictions that demand for the currency would decline following the recent shutdown of the online drugs marketplace Silk Road. A paper from 2012 estimated that almost one BTC in 20 was spent on the site, and economist Jeffrey Cook of World’s First currency brokers warned that investors were “scrabbling for the exit”.
However Emily Spaven, editor of the digital currency news website CoinDeskBut, told UK daily
: “If anything, the fall of Silk Road has done Bitcoin a favour. Hopefully now that the website no longer exists, people will start to see it in a more positive light and appreciate the numerous benefits it offers.”
The latter prediction seems to have been borne out. The price drop caused by the closure of Silk Road was reversed in less than two weeks, and the value of a BTC has subsequently seen near-continuous growth.
Nonetheless a new virus, CryptoLocker, is reinforcing the link between the BTC and criminality. The virus encrypts victim’s files, and then demands payment – currently either US$300 or two BTCs – within three days in order to unlock them. Unlike similar ‘ransomware’ viruses, CryptoLocker follows up on its threat.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
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