Bitcoin: Price v hype
13 December 2013 | By Vanessa Barford | bbc.co.uk
Virtual currency Bitcoin has attracted increasing media attention over the past year. Its also soaring in value, with a single bitcoin surpassing $1,000 (Â£613) for the first time in November. So has the media hype driven the price hike?
To the average man in the street, Bitcoin is a complicated concept.
You might grasp what a typical currency is. The pound is influenced by a central bank “ the Bank of England. When it puts up interests rates, or its expected to, the value of the pound might subsequently go up.
If the Bank of England prints more money, or there is speculation that it will, the values probably going to go down. Ultimately, the values determined between buyers and sellers on the international markets.
Bitcoins a bit different. Theres no central bank. Its stateless. And the supply of Bitcoin is determined by an algorithm that allows computers around the world to œmine the currency at a set rate per day. Theres a limit “ about 21m “ to how many can ever be mined and no way to issue a flood of new Bitcoins and devalue those already in circulation.
The currencys value “ according to about 60 exchanges around the world where Bitcoins are bought and sold “ is volatile. Unlike with the dollar or the pound, prices can vary considerably from exchange to exchange, sometimes by as much as $200.