Bitcoin, the digital currency, surge over $1,000 for the first time on Wednesday, continuing the trend and gaining 400% in less than a month, says a report from Reuters. Some of the experts believe that such an astonishing rise may be seen as a bubble in the asset price.
Is the rise a bubble?
Bitcoin hit a high of $1,073 on Tokyo-based exchange Mt. Gox, the best-known operator of a Bitcoin digital marketplace, compared with just below $900 the previous day.
In the beginning of the month, the digital currency, which is not supported by the government or central bank, was trading around $215. Some of the onlookers hold the view that the price of Bitcoin is overrated subjected to its limited supply and increasing demand.
Bitcoin is traded 24 hours a day, and the supply of currency, which is limited, is decided by solving math problems. At present, total Bitcoin stands at 12 million units worth about $12.9 billion.
Bitcoin is not in a physical form, but only virtual, and the value depends on the confidence in the currency. Recently, the currency got popular amongst the general public and investment community, but is still far away from being accepted as a mode of payment amongst major retailer such as Amazon.com.
Bitcoin good or bad
In the United States, the senate discussed the virtual currency, but some of the officials were concerned with the possibility that virtual currency may be used for criminal activity along with no regulatory supervision.
However, those supporting the usage of Bitcoin say that in the discussion Senate gave more backing to the Bitcoin, which in turn surged the gains.
Jinyoung Lee Englund, spokeswoman for the Bitcoin Foundation in Washington said that not only the Bitcoin supporters are saying that the currency is used for good things, but also there are many Congress and government agencies who agree to this.
Government holds the view that there are virtual currencies in the market, which do not come under any regulatory control, making it difficult to prevent any illegal activities such as money laundering.
A few weeks back, Senator Thomas Carper told the Senate Homeland Security Committee “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.”