Bitcoin has hit $10,000 in value for the first time after a 1,000% increase in its worth this year - and it could 'easily' reach $40,000 by 2018
- Bitcoins were trading at $10,009 (￡7,500) on the CEX IO exchange this morning?
- One financial expert believes it could 'easily' reach $40,000 (￡30,000) by 2018
- Experts have warned over the expanding bubble which could burst at any time
A single Bitcoin has hit $10,000 (￡7,500) in value for the first time in the cryptocurrency's history.
The?digital money was trading at $10,009 per coin on the CEX IO exchange this morning, before dropping back down below this watershed mark.?
Over this past year, Bitcoin has seen its worth increase by 1,000 per cent and it is continuing to attract investment.
One former hedge fund manager believes it could 'easily' reach $40,000 (￡30,000) by the end of 2018.
But the dramatic rise has spared fears of a dangerous bubble which could end in huge losses.?
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A single Bitcoin has hit $10,000 (￡7,500) in value for the first time in the cryptocurrency's history. The digital money was trading at $10,009 per coin on the CEX IO exchange this morning, before dropping back down
Thousands of amateur traders are now piling in and betting huge amounts, while start-up companies are using bitcoin to raise money and avoid the transparency needed in a stock market float.
But experts fear that the currency has become a vast speculative bubble detached from reality.
Watchdogs across the world have warned there could be a sudden massive crash if the market turns.??
Economist Nouriel Roubini, who predicted the financial crisis, has described the fad for online currency as a 'giant speculative bubble' which is bound to end in disaster.
Bitcoin has seen a surge of activity in recent weeks, rising in value exponentially.
For comparison, in July 2010, one Bitcoin was worth only $0.08 (6p).?
Yet the number of transactions involving the currency have not grown at a similar pace.
This suggests that it is mainly being used as an investment, rather than paying for online shopping or other goods and services.
Former Fortress hedge fund manager Michael Novogratz believes Bitcoin's value could multiply more than four times over the course of the next year.
Speaking to CNBC, he said: 'Bitcoin could be at $40,000 (￡30,000) at the end of 2018. It easily could.
'There's a big wave of money coming, not just here but all around the world.'?
Bitcoin has seen an eye-watering tenfold increase in its value since the start of the year and financial experts have warned over the expanding bubble.??
Bitcoin has seen a surge of activity in recent weeks, rising in value (top) exponentially. Yet the number of transactions involving the currency (bottom) have not grown at a similar pace, suggesting that it is being primarily used as an investment, rather than for online shopping
Thousands of amateur traders are now piling in and betting huge amounts, while start-up companies are using bitcoin to raise money and avoid the transparency needed in a stock market float.?
But experts fear that the currency has become a vast speculative bubble detached from reality.
Watchdogs across the world have warned there could be a sudden massive crash if the market turns.???
Economist Nouriel Roubini, who predicted the financial crisis, has described the fad for online currency as a 'giant speculative bubble' which is bound to end in disaster.?
HOW TO BUY BITCOINS
Step One: Get a Bitcoin wallet
A bitcoin wallet is where you will store any of the digital currency you purchase.
There are a number of options available, with different levels of security provided.
The main options include using your hard drive, for more advanced users, or an online service like Blockchain, which also offers its own app to simplify the process.
Step Two: Find a Bitcoin broker
As the popularity of Bitcoin has grown, so too have the number of websites specialising in trading the cryptocurrency.
Some, like Coinbase, also offer their own app.
Different brokers will vary on their exchange rates and the fees they charge.
Step Three: You're ready to buy?
Each Bitcoin broker will require your bitcoin address, which is a unique identifier used to make your transaction.
If you have used an app to set up your Bitcoin wallet, they will normally have a record of this, but it is not the same as your wallet number.
Once you provide your broker with this number, you can then pay them via a credit or debit card, or bank transfer, for the desired number of Bitcoins.
Step Four: Sell, spend or wait for the market to rise
Once you have bought your Bitcoins, you can then spend them online at shops that will accept them.
Alternatively, you can wait until they rise in value and try and make a profit.
The Bitcoin market is notoriously unstable, so there is no guarantee when or if this will happen. ?
He said: 'This is neither a serious method of payment nor a good way to store capital. The bitcoin feeds on itself.
'There are no fundamental reasons for its price to reach such levels.'
Roubini said the lack of regulation made the currency popular with crime gangs looking to launder money.
These warnings have done nothing to dampen enthusiasm, whipped up by celebrities who have endorsed online currencies.
Bitcoin has seen an eye-watering tenfold increase in its value since the start of the year and financial experts have warned over the expanding bubble. One expert believes it could hit ?$40,000 (￡30,000) by the end of 2018
Boxer Floyd Mayweather, actor Jamie Foxx and reality TV star Paris Hilton have all tweeted their support for bitcoin.
Football manager Harry Redknapp – who has previously claimed he doesn't know what an email is or how to send a text message – tweeted support for a lesser-known currency called electroneum.
Watchdogs around the world are starting to take action on bitcoin trades out of fears that it is being used to fund crime and that vulnerable people are being lured into gambling away their savings.
WHAT IS A BITCOIN? A LOOK AT THE DIGITAL CURRENCY?
What is a bitcoin????
Bitcoin is what is referred to? as a 'crypto-currency.'?
It is the internet's version of money - a unique pieces of digital property that can be transferred from one person to another.
Bitcoins are generated by using an open-source computer program to solve complex math problems. This process is known as mining.??
Each Bitcoin has it's own unique fingerprint and is defined by a public address and a private key - or strings of numbers and letters that give each a specific identity.
They are also characterized by their position in a public database of all Bitcoin transactions known as the blockchain.?
The blockchain is maintained by a distributed network of computers around the world.
Because Bitcoins allow people to trade money without a third party getting involved, they have become popular with libertarians as well as technophiles, speculators — and criminals.
Where do Bitcoins come from?
People create Bitcoins through mining.
Mining is the process of solving complex math problems using computers running Bitcoin software.
These mining puzzles get increasingly harder as more Bitcoins enter circulation.
The rewards are cut in half at regular intervals due to a deliberate slowdown in the rate at which new Bitcoins enter circulation.?
Who's behind the currency?
Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts.
Nakamoto dropped off the map as Bitcoin began to attract widespread attention, but proponents say that doesn't matter: the currency obeys its own, internal logic.
Dr Craig Wright was suspected as the creator following a report by Wired last year and he has now confirmed his identity as the cryptocurrency's founder. ?
What's a bitcoin worth?
Like any other currency, Bitcoins are only worth as much as you and your counterpart want them to be.?
Bitcoins are lines of computer code that are digitally signed each time they travel from one owner to the next. Physical coin used as an illustration
In its early days, boosters swapped Bitcoins back and forth for minor favours or just as a game.?
One website even gave them away for free.?
As the market matured, the value of each Bitcoin grew.
Is the currency widely used?
Businesses ranging from blogging platform Wordpress to retailer Overstock have jumped on the Bitcoin bandwagon amid a flurry of media coverage, but it's not clear whether the currency has really taken off.?
On the one hand, leading Bitcoin payment processor BitPay works with more than 20,000 businesses - roughly five times more than it did last year.?
On the other, the total number of Bitcoin transactions has stayed roughly constant at between 60,000 and 70,000 per day over the same period, according to Bitcoin wallet site blockchain.info.
Is Bitcoin particularly vulnerable to counterfeiting?
The Bitcoin network works by harnessing individuals' greed for the collective good.?
A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction.?
The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional Bitcoin.?
As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.
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