The digital currency Bitcoin, which began as an idea in 1998, but truly took on a working form in 2009, has hit a major milestone. It is now worth $1 billion in total value.
The Atlantic Wire reported that the exchange rate Thursday exceeded $95 per Bitcoin – that’s a 152 percent increase for the month. Or, as the Wire put it, if you purchased $500 worth of Bitcoins a year ago, the currency would be worth close to $10,000 now.
When TheBlaze reported earlier this week about the first house on the market for sale of Bitcoins only, we included the recent uptick of the digital currency that seems to have spawned with the issues experienced in Cyprus. Apps for Bitcoin were being downloaded more frequently in some European countries of late.
Late last week, before the $1 billion milestone, marketing strategist Nicholas Colas with ConvergEx Group, a financial tech company, shared a few thoughts about the recent growth of Bitcoin popularity (via CNET):
- Using Google Trends, we can see how many users are searching for the term “bitcoin” around the world. What it shows is that the actual peak for “bitcoin” searches was in July 2011, during a spate of hacks. Searches for the term are solidly on the rise now, but still not close to that old high.
- Searches for “Bitcoin” in Spain are ramping up quickly, and about 25% away from the July 2011 highs. Interest over the last 15 months has increased fourfold.
- In Greece, Google searches for the term “Bitcoin” are back to the old July 2011 highs and 5x the level of 15 months ago.
- In terms of national interest, Russia leads the pack in terms of Google searches for ‘Bitcoin.’Finland and Belarus place and show, with the U.S, just out of the medals. In terms of cities where the search is inordinately common, it is Moscow in first, then Berlin and Melbourne. New York comes in at #4.
“Here is an online currency, less than 5 years old, where the people buying the product wouldn’t likely understand 5 percent of what the people running the system might say about it,” Colas wrote. “And yet this dynamic has created a base of capital – real, spendable, useable capital – of close to $1 billion in value. And most of that in the last three months.”
Colas acknowledges, as many might be thinking, that such bubbles happened frequently — and it could be the case with Bitcoins. In fact, according to Bitcoin’s own website, it experienced a bubble in 2011 that deflated in the later part of that year. Still, the value had since been steadily climbing.
As we mentioned earlier, the history of Bitcoin began as an idea in 1998, but it was truly started by Satoshi Nakamoto, a pseudonym in 2009. According to the Bitcoin website’s about section, the currency has a hard limit of 21 million Bitcoins.
These are its technical details:
- Bitcoins can be transferred between arbitrary nodes on the network.
- Transactions are irreversible.
- Double spending is prevented by using a block chain.
- Transactions are broadcast within seconds and verified within 10 to 60 minutes.
- Transaction processing and money issuance are carried out collectively through mining.
- Transactions can be received at any time regardless of whether your computer is turned on or off.
Watch this Fox Business report with John Stossel and Reason Magazine’s Katherine Mangu-Ward with more information about bitcoins, their use and their pros and cons:
FinCen last week clarified its position about the regulation of Bitcoin, or rather “decentralized digital currency.” These guidelines, TechCrunch said help establish trust in the credibility of Bitcoin. Even still though, TechCrunch calls it a “tenuous place, policy-wise”:
There’s a good chance that a decentralized, unregulated market is going to scare the pants off the government once it’s fully cognizant that Bitcoin is a billion-dollar market — and growing. “It’s the easiest ‘this funds terrorism’ scare argument the government will ever try to make, so a big battle within the next year or two is pretty much guaranteed,” [Greg Kumparak] said.
If nothing else though, do as TechCrunch suggests and take a moment to marvel in how Bitcoin seems to be — at least for the moment — “a crazy idea that’s actually working.”