Traded heavily in China, the cryptocurrency is used to go around capital control norms placed by China’s ruling bosses.
In a significant development, bitcoin has jumped above $1,000 for the first time in 3 years. It has outperformed all currencies issued by central-banks and has registered a growth of 125% in 2016.
The cryptocurrency has no central authority. Instead it relies on several thousand computers worldwide which validates transactions and add new bitcoins to the system.
On the Europe based Bitstamp exchange, the currency jumped by 2.5% to touch $1,022, its highest since December 2013.
Although historically, bitcoins have been highly volatile, in late 2013, a hack on the Mt Gox, a Tokyo based bitcoin exchange, saw it plunge to levels below $400. However, in the last two years, it has been relatively more stable.
Its average daily movement were around 10%, which compared to other traditional currencies, is very volatile.
In 2015, with the devaluation of the value of the Chinese yuan, demand for bitcoins have grown considerably in China.
According to available data, more bitcoins are traded in China.
Incidentally, since bitcoins do not have a central authority, funds can be moved swiftly and anonymously across the globe thus circumventing many of the capital controls placed by China’s authoritative regime.
“The growing war on cash, and capital controls, is making bitcoin look like a viable, if high risk, alternative,” said Paul Gordon, co-founder of Quantave, a firm which seeks to make access to bitcoin exchanges easier for institutional investors. Gordon is also a member of the board of UK’s Digital Currency Association.
With more bitcoins in circulation, 12.5 bitcoins are added to the system every 10 minutes, their total worth is at a record high of more than $16 billion, thus its value at approximately the same as that of an average FTSE 100 listed company.