The price of bitcoin, the most widely used virtual currency, has risen above $10,000 for the first time, breaking a symbolic threshold in what has been a vertiginous ascent this year.
The cost of buying one bitcoin as measured by the website coindesk.com rose was at $10,673 by morning trading Wednesday in Europe.
At the start of the year, it was valued at about $1,000.
Virtual currencies have been the subject of much debate this year, with the CEO of JPMorgan Chase calling bitcoin a “fraud” but other executives saying it should not be dismissed.
Bitcoin and other virtual currencies were initially used primarily to buy illegal goods and services online. In recent years, they have become a hot investment among speculators.
The virtual currency rocketed above $9,000 for the first time on Sunday.
The digital currency, which only rose above $8,000 about a week ago, has surged an incredible 860% since the start of the year.
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of Bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls this cryptocurrency and everyone can take part. Bitcoin price grew significantly within a short period of time making the BTC/USD pair quite popular among active traders and investors. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Despite skepticism from some top finance executives about bitcoin’s rise, experts say the latest gains appear to have been fueled by expectations that big professional investors — such as hedge funds and asset managers — could soon pour money into the currency.
Even a small portion of the cash managed by major funds “would make a dramatic impact on the bitcoin market,” said Thomas Glucksmann, head of marketing at Hong Kong bitcoin exchange Gatecoin.
The cryptocurrency has been gaining more legitimacy in some parts of the financial industry.
From early next month, investors should be able to trade bitcoin futures via the Chicago Mercantile Exchange, which is likely to help bolster the currency’s reputation among mainstream investors. Futures allow traders to bet on the future price of assets like currencies, metals and agricultural commodities.
The backing of a major exchange is encouraging “institutional investors to actually pop their crypto cherries,” Glucksmann said. He expects more professional investors to move money into bitcoin if it breaches $10,000.
The virtual currency has famously attracted the derision of JPMorgan Chase CEO Jamie Dimon, who called it a “fraud” that would “eventually blow up.” But other leading figures in finance, including Goldman Sachs CEO Lloyd Blankfein have defended it.