In the last week alone, the Bitcoin world has been bedeviled by a major theft, a bankruptcy tied to a member of the Bitcoin Foundation as well as a $4 million scam that suckered 1,000 Chinese investors. How has the market reacted? By taking off like never before.
On Friday, the virtual currency blew through $300 for the first time and now it looks set to smash the $400 mark. Here’s two screenshots. The first shows Bitcoin rates in US dollars at various exchanges, and the second shows the currency’s trajectory over the last three months on the Bitstamp exchange (Mt. Gox is already over $400 but trades there come with a premium due to liquidity worries):
So what does all this mean? It’s hard to say. Even by the roller-coaster standards of Bitcoin speculation, this type of jump is unprecedented.
The currency’s rise despite the series of negative news items shows that, more than ever, it is less susceptible to one-off incidents that, in the past, might have called into question its entire legitimacy. Meanwhile, Bitcoin is being hailed by serious investor and technology experts as not just a currency but a permanent protocol too.
On the other hand, Bitcoin suffered a spectacular crash in April that saw its value fall by around 75 percent to $50, and there’s no reason that couldn’t happen again.