Following a dramatic rise over $1,200 and a subsequent fall to less than half that peak value, all in less than two months, Bitcoin has once again moved back into the $1,000 range. The virtual currency gained some extra steam from Zynga’s decision to accept it as a form of payment for some online games, according to Bloomberg.
Chart courtesy of Bitcoin Charts
The appeal of cryptocurrencies like Bitcoin has grown in the wake of the NSA spying scandal and as distrust of the banking system has grown. The so-called “bail-in” in Cyprus to save banks at the compulsory expense of depositors began Bitcoin’s tremendous, if volatile, upswing. The virtual currency represented at that time a safe haven when the traditionally secure repositories (banks) proved to be unreliable. Alternative currencies like Bitcoin also represent a means of avoiding the dangers posed by central banks like the Federal Reserve, which dilute the values of national currencies through money printing and artificially low interest rates.
The precipitous decline in Bitcoin values late last year may have appeared to be the “bust” that many naysayers have been expecting, but the return to nearly all-time highs shows the currency remains resilient, although still volatile in its value. Time will tell whether Bitcoin will be a large or even lasting option for financial transactions, but it has raised many important questions about the role of money, banks, nation-states and the Internet in commerce.
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