Bitcoin surged over 27 percent to a new high of $675 US on Monday as the U.S. government began hearings on possible regulation of the digital currency.
While not an official seal of approval, the hearing is giving some legitimacy to a payment mechanism that has been associated with illegal activities even as it gains acceptance by the general public and investment community.
“The government is taking a very thoughtful and balanced approach to bitcoin and bitcoin regulation,” said Barry Silbert, founder of the Bitcoin Investment Trust, launched in late September and valued at $22.8 million on Friday. It holds around 53,000 Bitcoins.
Bitcoin traded as high as $675 on Monday on Tokyo-based exchange Mt. Gox, the best-known operator of a bitcoin digital marketplace. That was a rise of 27.7 percent from Sunday’s close. It last changed hands at $672.
The digital currency, which trades 24 hours a day, every day, has risen around 404 percent in the last two months.
Association with drugs, money laundering, murder for hire and other illegal activities has not stymied interest in bitcoin, the digital currency not backed by any government or central bank and until recently a niche alternative currency touted by computer geeks and anti-government advocates.
The currency, whose supply is limited, is “mined” by solving math problems. Bitcoin transactions are tracked by a network of computers that validate transactions and prevent counterfeit.
In October, the U.S. Federal Bureau of Investigation shut down Silk Road, an online marketplace used to buy and sell illegal drugs, and seized $3.6 million in bitcoins.
“Lawmakers are rightfully concerned about the illegal aspects of bitcoin but the fact that they’re giving bitcoin the time of day helps cement its legitimacy,” said Christopher Vecchio, currency analyst at DailyFX.
What is a bitcoin?
Bitcoin has received a lot of attention recently due to the big names supporting it, but many investors have yet to grasp the basics of what this online currency is.
If you want to know more about what’s bitcoin watch the cool short animated film down below: