Bitcoin trades above $ 5000 for first time ever

Last Updated: Thu, Oct 12, 2017 20:15 hrs
FILE PHOTO: Chain of block erupters used for Bitcoin mining is pictured at the Plug and Play Tech Center in Sunnyvale, California

LONDON: Bitcoin currency has smashed through the $5,000 barrier on Thursday. The 7 percent jump is a first-ever, chalked after a biggest daily rise in over two weeks.

At 17:20 IST, bitcoin was trading at $5204.9 a piece, marking a 7.73% gain in intra-day gains. The bitcoin rallied by $373.32 cents on Thursday alone.

For investors, Thursday certainly was a day of great promise. For an investment of one bitcoin which started the day on $4830.77 or Rs 314410.73, you would have stood the chance to gain a gain of Rs 24297.54.

Thats almost the price of a Samsung Galaxy C7 Pro retailing at 24900 on Amazon India.

Here is an intra-day graph taken from the trading session on Thursday.

Bitcoin, the original and still the biggest cryptocurrency, has been on a tear recently, rallying nearly 75 percent in barely a month. It has chalked up a more than a five-fold increase in price since the start of the year.

Although profits may sound enticing, there have been concerns with valuations. This has resulted in many burning their fingers. There have been cases where investors have failed in earning their principal investment, forget the returns.

Bitcoins for all the hoopla, have been linked with the wrong news. In fact , there are reports that a sizable proportion of bitcoins are employed in dark-web transactions. A good over 80% transactions on the Silk Route were carried through bitcoins.

Recently, Russian President Vladimir Putin said that crypto-currencies were risky and used for crime. Russia’s central bank stepped up the intensity a step further saying it would block websites selling bitcoin and its rivals - a change of tone from a month-old promise to legalize the market.

Central Bank First Deputy Governor Sergei Shvetsov told a conference in Moscow that the currencies were “dubious” and investors needed to be protected. Read more about the story here:

China too launched a similar crackdown. It banned coin offerings, owing to fears that valuation rise could be similar to a dotcom bubble observed during the year 2000.

Investors in China contributed up to 2.6 billion yuan ($394 million) worth of cryptocurrencies through ICOs in January-June, according to a state-run media report citing National Committee of Experts on Internet Financial Security Technology data.

South Korea too followed suit, and banned money raised through initial coin offerings .

Initial coin offerings could have been a splendid and easy way for startups to raise money, but it still does not rule out dubious transactions. Market regulators cited reasons such as investor protection on top agenda while banning ICOs.

Back home, in India, we are yet to see a formal marketplace for bitcoin trading or capital-raising through bitcoins. But in the last few weeks, there have been murmurs about Lakshmi Coins.

For those who think Lakshmi is not a very cool name unlike Ethereum, the name is still not finalized. The entire structure is based around blockchain, but after RBI revises the currency act to enable provisioning for a new cryptocurrency, we should have a formal, secure payment structure with all regulatory frameworks in place.

Digital payment systems have their own charm and benefits, and central banks world over have thereby taken an opposing stance to bitcoins. The RBI's adoption could be hence a welcome one.

How the Lakshmi fares against the likes of Ethereum or Bitcoin is still unadressed, but the idea is to enable a transaction mechanism devoid of volatile valuations.

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