Price of One Bitcoin Hits Almost $400

In April of this year, the price of one Bitcoin hit $230. At the time, Bitcoins were getting unbelievable exposure from the mainstream media, and many people quickly hopped on the bandwagon. After trading for about $11/coin for a considerable period of time, Bitcoins enjoyed a 20-fold surge in value. The main catalyst behind the crypto-currency's first surge? The Cypriot financial crisis - many people around the world started feeling nervous about their cash in the bank, and this led many to convert at least some of their "traditional" assets into Bitcoins.

After Bitcoin's unbelievable rise to $230, the mania temporarily died down. Mt. Gox, the world's largest Bitcoin exchange, ran into legal issues, and many early holders of the currency took profits. By July of 2013, the price of one Bitcoin had dipped below the $70 USD mark.

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Earlier today, the price of one Bitcoin hit $395 on the Mt. Gox exchange. Mere hours later and the price of a Bitcoin is back down to $295.

In just over a month, the price of a single Bitcoin has exploded from the low $100s to a high of nearly $400.

Interestingly, the recent surge in Bitcoins has come after "Silk Road", a major Bitcoin-driven online marketplace that offered drugs and other illegal items, was shut down by the Feds. Many people thought that this event would have a chilling effect on the price of Bitcoins - instead, the currency has gone absolutely parabolic in the months since.

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There are currently about 12 million Bitcoins in existence, which means that the total market capitalization of the Bitcoin currency is about $4 billion USD. The total number of Bitcoins that can eventually be mined is limited - unlike traditional currencies, Bitcoins can not be infinitely produced.

On November 6th, 2013, there were a total of 55,035 Bitcoin transactions. These transactions could have been for just about anything - from the purchase of a meal (some restaurants now accept Bitcoin as payment) to a transfer involving the world's first Bitcoin ATM machine.

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So why has Bitcoin spiked in recent weeks?

Many people are pointing to the surge in popularity of BTC China as the main reason behind the recent parabolic rise. According to this Forbes article, BTC China has accounted for as many as 60,000 Bitcoins changing hands in just one day. As Forbes points out, BTC China is only connected to the Chinese banking system, which means that it is Chinese residents and companies that have been launching themselves into the world of Bitcoin over the past number of months. This recent surge in activity temporarily made BTC China the world's largest Bitcoin exchange, ahead of both Mt. Gox and Bitstamp.

This has created a snowball effect, as many people are suddenly interested in Bitcoins once again, which has created another extreme rise in the price of the currency.

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Bitcoin is not a passing fad - in fact, there are many smart people who are building Bitcoin based businesses or investing heavily in them.

The big question is - where will Bitcoin go over the coming months? Will it tank as it did in the spring of this year, or will it continue higher?

Source: Historical Bitcoin Prices

Filed under: General Knowledge