Bitcoin, the online currency (sometimes called a cryptocurrency), recently reached an all-time-high closing value of almost $800, having started the year under $20. The price even spiked to $900 at one point, but it has since fallen below $500, suggesting that speculation is leading to a boom-bust cycle (not unlike what is currently plaguing equity markets). The currency also saw a dramatic rise to almost $250 in April, followed by a similar bust before evening out in value between about $100 and $150 for much of the summer and fall. Mid-October saw the beginning of a major upward trend leading to the recent highs for Bitcoin.
Bitcoin was the focus of a recent Senate hearing, which was surprisingly positive, according to The Washington Post. Likely, as long as the currency is no threat to dollar hegemony and the U.S. government is able to get a bite of the action, Bitcoin may largely avoid significant intervention. Other, non-digital currencies, however, have fared less well thanks to the government’s prosecution of those who attempt to create alternative forms of “legal tender.” After all, the Federal Reserve can’t print an unlimited amount of anything but paper to fund the soaring national debt. Bitcoin falls into something of a grey area: although it has a theoretical maximum circulation amount, it is ultimately still backed by nothing with a fundamentally limited amount (such as gold or silver).
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