Online crypto-currency Bitcoin has surged to over $900 USD in value after advisors in the United States Senate described the virtual currency as a ‘legitimate financial service’ with risks and benefits similar to those offered by other online finance and payment systems.
Since last October, the online crypto-currency has trebled in value. A single Bitcoin is now worth over $900 USD – a valuation that investors are concerned is the result of a short-term speculation bubble. Others believe that the value of Bitcoin is likely to continue increasing as investors search for a secure, anonymous currency.
The Senate hearing into Bitcoin was prompted by the recent shutdown and arrests of the founder of Silk Road – an online drug trading website that used the currency as a form of anonymous, secure online payment. The website was recently closed by the FBI, with the owner arrested and awaiting trial.
After the shutdown of the illicit marketplace, investors voiced their concern that the currency could be seen as a choice for illegal payments. Users of Silk Road could pay for their transactions using Bitcoin only, with other currencies described as too easy for investigators and law enforcement to trace and track down.
In a letter to the Senate committee, the FBI claimed that Bitcoin and other crypto-currencies could be used for ‘legitimate financial services’ but also voiced concerns that they could be used for illegal dealings and ‘exploited by malicious actors.’ The Justice Department’s Mythili Raman claims that virtual currencies such as Bitcoin are increasingly being used ‘by drug dealers, traffickers of child pornography, and perpetrators of large-scale fraud schemes.’
While the online currency has just a fraction of the trading volume of other global currencies, it has grown immensely popular over the past three years. There are over 12 million Bitcoins in circulation currently, with more being created through ‘mining’ efforts by investors.
