The dollar value of a bitcoin crossed the $20,000 mark on Wednesday, taking the cryptocurrency to a life-time high. Data from cryptocurrency exchange Coindesk shows bitcoin trading at $22,426, up nearly 15.5% from $19,429 in the last 24 hours (as of 1:38 PM IST, Thursday).
This value indicates a year-to-date (from January 1) return of 210% and what has been a red-hot rally for cryptocurrency. Since its yearly lows in March where it lost 25% of its value, the price of bitcoin has risen more than 400%. This rise correlates with the series of lockdowns that grappled the global economy as a response to the ongoing COVID-19 pandemic.
Earlier this month, on December 2, the price of bitcoin hit $19,920 as a lifetime high but it was unable to cross the $20,000 mark; a price point that has long eluded the cryptocurrency. Since then bitcoin, known for its volitality where it can instantly gain or lose value, sunk to just above $17,700 - losing $2,000 in value - on December 11, but has quickly recovered. In December 2017, when bitcoin hit its previous high of $19,783, it still fell just short of $20,000.
The rise also has been driven by greater institutional support, with formal credit institutions and especially investment firms looking at cryptocurrency as a new creator of wealth.
Only recently, British investment firm Ruffer Investments, managing £20.3 billion worth of investments (as of November 30), has announced that was investing $744 million (£550 million) worth of bitcoin to hedge its assets, equaling 2.7% of its assets under management.
Bitcoin was founded by one Satoshi Nakamoto 2008, whose identity still remains anonymous. It is based on blockchain, that enables a cryptographic ledger system that stores every transaction ever made - thus the term 'crypto'currency. What makes it attractive is its decentralisation, which means it is not linked with any government or bank and blurs the restrictions posed by traditional currency. Bitcoin and other cryptocurrencies are supported by 'miners' who "lend" computing power to verify transactions, and in turn are rewarded cryptocurrency in exchange.
Indians can access cryptocurrency trading using local exchanges and can trade in Indian rupees. Earlier this year, the Supreme Court struck down a ban by the Reserve Bank of India on banks, NBFCs and other entities regulated by it to offer banking services to such cryptocurrency exchanges and brokers.
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