Bitcoin Reaches the Price of Gold

The digital currency known as bitcoin continues to attract attention as its price soars and dips. On Friday, a bitcoin reached a new record price of $1,242, touching the price of an ounce of gold. It later dropped back to $1,155, a substantial increase on the unprecedented price of $1,000 it hit on Wednesday.

The exact price varies according to the bitcoin exchange reporting the value. For instance, the Mt. Gox exchange in Tokyo said the price on Wednesday was $1,061, while Bitstamp in Slovenia posted $965 and the CoinDesk Bitcoin Price index showed $950.

Nevertheless, the virtual currency is undergoing a boom, given that each one was worth about 4 cents in the beginning months of 2010. In January, a bitcoin was valued at about $13, and about $125 in September.

The Price of Gold

The Winklevoss twins, made famous by their encounter with Mark Zuckerberg over Facebook, have described bitcoin as EUgold 2.0EU because its value is not impacted by inflation. The twins are currently developing a bitcoin exchange-traded fund and have predicted that the digital coins could hit $10,000 each.

One of the drivers of the rapid rise in the value of bitcoin is demand in China. The top search engine in that country, Baida, has begun accepting bitcoin as payment for certain kinds of services.

Earlier this month, the U.S. Senate Committee on Homeland Security and Government Affairs began receiving statements about whether the currency needed to be better regulated, and if it posed a threat to existing financial markets.

Additionally, bitcoin is being examined because of its popularity as hard-to-track currency for criminal operations. Users can exchange the currency via coded keys and digital wallets without actual names. In March, the U.S. Department of the Treasury said that any organization involved in bitcoin exchanges must be registered with the...

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