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Bitcoin Virtual Currency Booms

posted 28 Nov 2013, 08:50 by Mpelembe   [ updated 28 Nov 2013, 08:50 ]


Reuters Business  Report - You can't see it or hold it but it's almost as valuable now as an ounce of gold

The bitcoin or virtual currency has topped a $1,000 for the first time.

Last year one unit was worth just $13 dollars.

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Mike Ingram BGC Partners.

Mike Ingram, senior strategist, BGC

"One of the reasons why bitcoin is getting a lot of interest at the moment is any number of people are worried that governments are letting their own currencies run out of control. We're in an environment where the US federal reserve balance sheet is approaching $4 trillion."

But there's a dark side to the virtual currency.

It was the payment of choice for internet black market site Silk Road

Buyers used them to purchase illegal drugs and guns anonymously.

The site has since been shut down sending the value of bitcoin soaring.

It received a further boost after the US Senate described the currency as a 'legitimate financial service'.

But it's volatile and subject to wild fluctuations.

Mike Ingram, senior strategist, BGC

"We certainly need to see the value of a bitcoin showing a great deal more stability before it can gain broad acceptance. That of course would mean it would tend to drive up the price of a bitcoin so it's a little bit of a chicken and egg situation."

Bitcoins are not backed by central banks.

They're created electronically through a computer program and can be converted into cash after being deposited into virtual wallets.

This Vancouver coffee shop is home to one of the first bitcoin ATMs.

Last year more than $16 million dollars worth were created or 'mined' worldwide.

It's a tiny stock of money but growing fast.