Bitcoin tops $1,000 for first time in three years as 2017 trading begins

Digital currency outperformed all its central-bank-issued counterparts in 2016 with 125% rise in value

Bitcoin has started 2017 with a bang, with its value hitting a three-year high of more than $1,000 (£815).

The nascent digital currency, which has been criticised as a vehicle for a range of nefarious characters from drug dealers to tax evaders to operate, outperformed all its central-bank-issued counterparts with a 125% climb in value in 2016.

Market watchers have suggested that the soaring value may have been boosted in the past year by increased demand in China on the back of a 7% fall in the value of the yuan; this was the Chinese currency’s weakest annual performance in more than 20 years. Data show most bitcoin trading is done in China, according to Reuters.

The currency is used to move money across the globe quickly and anonymously and is free of control from any central bank or government, making it attractive to those who want to get around capital controls.

It is also may appeal to those worried about a shortage of cash, as in India where the prime minister, Narendra Modi, removed high-denomination banknotes from circulation in November.

“The growing war on cash and capital controls is making bitcoin look like a viable, if high-risk, alternative,” said Paul Gordon, a board member of the UK Digital Currency Association and co-founder of Quantave, a firm that seeks to make it easier for institutional investors to access digital currency exchanges.

Bitcoin is still some way off its all-time high of $1,163 reached on the Bitstamp exchange in late 2013, but there are now many more bitcoins in circulation: 12.5 are added to the system every 10 minutes. Its total worth is at a record high of more than $16bn, putting its value at around the same as that of an average FTSE 100 company.

During its last surge in 2013, bitcoin boomed as users and speculators rushed to invest in a currency that was supposedly about to become a platform for a disruptive new financial services industry. Its value increased tenfold in two months in late 2013, but after a hack on the Tokyo-based Mt Gox bitcoin exchange it plunged to less than $400 in the following weeks.

Contributor

Simon Goodley and agencies

The GuardianTramp

Related Content

Article image
ECB official backs bitcoin clampdown
Yves Mersch joins growing list of experts calling for ban of cryptocurrencies

Julia Kollewe

08, Feb, 2018 @1:23 PM

Article image
Bitcoin bubble warnings issued as futures trading opens in Chicago
First contract on a regulated exchange is seen as step towards legitimacy for the cryptocurrency but volume traded is tiny

Jill Treanor

11, Dec, 2017 @6:37 PM

Article image
Bitcoin: is it a bubble waiting to burst or a good investment?
Disciples of the cryptocurrency plan to hold on for dear life but traditional finance is getting twitchy

Richard Partington Economics correspondent

02, Dec, 2017 @7:00 AM

Article image
Bitcoin nears $10,000 mark as hedge funds plough in
Cryptocurrency now worth seven times an ounce of gold, with market cap higher than IBM, McDonald’s or Disney – but analysts warn of ‘a huge bubble’

Julia Kollewe

27, Nov, 2017 @3:00 PM

Article image
Time to regulate bitcoin, says Treasury committee report
MPs in UK say ‘wild west’ cryptocurrency industry is leaving investors vulnerable

Angela Monaghan

19, Sep, 2018 @5:01 AM

Article image
Bitcoin is a vehicle for fraudsters, warns Goldman Sachs boss
CEO Lloyd Blankfein attacks cryptocurrency after value dives 20% in a day, saying bank will not get involved until it becomes less volatile

Angela Monaghan

30, Nov, 2017 @6:25 PM

Article image
Bitcoin falls $1,000 after South Korea promises crackdown on trading
Move comes less than two weeks after high-profile digital currency exchange in Seoul was hacked and went bankrupt

Richard Partington Economics correpondent

28, Dec, 2017 @12:51 PM

Article image
Bitcoin: after 10 wild years, what next for cryptocurrencies?
From next to no value in 2009, it rose to $20,000 and crashed back to $3,000 within a decade

Richard Partington

04, Jan, 2019 @4:30 PM

Article image
Why bitcoin and its digital cousins are under increasing scrutiny
Cryptocurrencies are still more investments than way to pay, but their mainstream acceptability continues to grow, proper regulation will follow

Phillip Inman

31, Jul, 2017 @3:54 PM

Article image
Bitcoin will survive despite MtGox debacle

Phillip Inman: Despite the Japanese exchange going offline and rumours of millions in theft, the digital currency will continue to evolve

Phillip Inman, economics correspondent

25, Feb, 2014 @5:18 PM