YORK — Long off the public radar, digital payment
network bitcoin has been gaining momentum this fall,
bolstering the views of some advocates that bitcoins
will be a mainstream currency worldwide in the
value of a bitcoin surged to more than $400 last week
from its low this year of $177.28 in mid-January.
Meanwhile, the technology known as blockchain that
underlies bitcoin trading is slowly being adopted for
uses far removed from currency.
also are getting more bullish on the bitcoin system.
believe bitcoin and its associated blockchain technology
have the potential to disrupt the existing financial
infrastructure over the next several years, and believe
the value of the bitcoin currency will benefit from this
trend," Gil Luria, an analyst at Wedbush Securities
in Los Angeles, wrote in a research report last week.
the last three years, the virtual currency has struggled
with wild price fluctuations that hit more than $1,100,
a murky regulatory status and its use on the Internet’s
dark side, including drug sales.
the price had fallen since last week and hovered around
$330 on Thursday, the recent rally has renewed more
favorable attention on the virtual currency than it
faced early last year in the collapse of the biggest
bitcoin exchange, Mt. Gox.
price of a bitcoin surged passed the $400 mark last week
for the first time in more than a year before pulling
back, but it’s still up 25 percent in the last month
and more than 72 percent from its January lows. Although
the reasons for the recent rally are unclear, analysts
point to an upsurge in bitcoin trading in China as one
reason for the growing momentum, saying the surge may
reflect attempts to move money out of the country as the
economy slows and financial markets fluctuate.
said the price bump also may have been partly driven by
recent Chinese regulatory changes allowing for easier
transfer of money out of conventional bank accounts to
bitcoin exchanges. But he said deeper currents also have
been pushing up the price.
long-term price is driven by how many people use it for
actual economic applications," he said. "The
price of bitcoin has sort of caught up to the
his report, Luria said that the number of bitcoin
transactions per month has grown from about 1 million in
October 2012 to more than 4 million last month, and he
forecasted a price target of $600 a year from now. He
estimated that the market for online payments, money
transfers and other uses for bitcoin will grow from
about $8.6 billion last year to about twice that by
fluctuations that happen day-to-day don’t
matter," said Jerry Brito, executive director of
Coin Center, a nonprofit virtual currency research
center, noting that deeper trends are embedding the
currency in the economy. "It’s part of a long
march toward normalcy."
a federal court order last week, the U.S. Marshals
Service sold 44,341 bitcoins worth more than $17 million
in its fourth bitcoin auction of assets seized in the
prosecution of Ross Ulbricht, founder of the online
black market Silk Road. The government sale of bitcoins
is seen as one more mark of legitimacy for the currency
as a store of value.
in a September enforcement action against San Francisco
startup Coinflip Inc., the Commodity Futures Trading
Commission referred to bitcoin as a commodity, lending
further regulatory legitimacy to the currency, observers
prominent new players are entering the business, led by
the opening last month of Gemini, a new Bitcoin exchange
backed by Internet entrepreneurs Cameron and Tyler
be sure, Bitcoin has a long way to go. The total value
of bitcoins is still a little more than $6 billion, a
rounding error in the multitrillion-dollar currency
a decentralized digital currency that uses peer-to-peer
technology to operate without a central authority,
bitcoin potentially has a large effect on the
international money exchange and transmission business
now dominated by big banks and players such as PayPal
and Western Union.
the blockchain technology has even wider applications.
blockchain is a giant ledger, or spreadsheet, that
anyone with an Internet connection can access. However,
its entries can’t be changed, only added to, allowing
transactions to be tracked permanently and theoretically
enabling the low-cost, verified exchange of a wide range
startup, OneName, has garnered attention with technology
that aims to allow users to claim a single, secure
identity that can be used across the Internet.
year, the Nasdaq Stock Market launched a pilot ledger,
known as Nasdaq Linq, using the blockchain to keep track
of and transfer the securities of non-public companies.
Adam Ludwin, chief executive of Chain.com, which is
providing blockchain technology for the exchange, said
the idea was a natural extension to tracking and
transferring virtual money.
we’re saying is, why shouldn’t other assets function
this way?" he said.
report released Wednesday said that major banks could
start using blockchain technology to track syndicated
loans as early as next year. The report, by New York
research firm Tabb Group, said the use of the blockchain
for such complex tasks as securities trading is probably
a decade away but the potential for the technology is
consortium of major banks led by financial technology
firm R3 is developing a framework for applying
blockchain technology to capital markets. In September,
the consortium added Bank of America, Citigroup, Morgan
Stanley and Deutsche Bank, bringing membership to more
states are positioning themselves as the most hospitable
environment for bitcoin startups while protecting
consumers against blowups.
York this year issued its much-anticipated BitLicense,
but then suffered a backlash amid industry complaints
that the license’s requirements were ambiguous and
California, Assemblyman Matt Dababneh, a Democrat,
introduced a bitcoin licensing bill that has gained
widespread, if not universal, industry support. The
bill, which has passed the Assembly and made it to the
Senate floor, is expected to brought to a vote in the
spokesman for the California Department of Business
Oversight said the department is working with Dababneh
and other stakeholders on the bill.
is the natural home of bitcoin," Dababneh said.
"We want to keep it and have it flourish in our