By PHI HA
The value of the world’s most used digital currency skyrocketed from $247 on October 12 to $400 on Tuesday this week, according to CBNC.
Bitcoin (BTC) is making huge gains, but its current price is still below its peak of $1150 in 2013.
The crypto-currency is still suffering from the impact of a hacking scandal last year that wiped out its major exchange. Bitcoin is bought, sold and exchanged in BTC exchanges and Mt Gox – founded in 2010 – was the largest.
Scandal struck the Tokyo-based company in February 2014 when hackers stole 850,000 Bitcoins ($450 million), forcing it into bankruptcy.
Despite 200,000 BTC being recovered from BTC wallets, most remain missing, raising concerns about the security of the currency.
Mt Gox customers protested outside its Tokyo headquarters in the fallout.
Class action lawsuits – particularly in the US, Canada and Europe – were dropped when Mt Gox promised creditors ownership in the relaunched company. The creditors also received a share of US$20 million of the recovered BTC.
Mt Gox’s liquidation led to a sharp fall in BTC’s value, falling 23 per cent to $418, according to Reuters.
But its value recovered after the scandal, hitting a high of $645 in June 2014 before slumping to just $247 last month.
China’s market turmoil, where global markets plunged in August, is blamed for recent drops in BTC prices.
WHAT'S THE APPEAL OF BITCOIN? Fees don’t change based on the amount transferred, meaning it costs the same to transfer one BTC or 1000. It’s an attractive option for international transactions, because services, such as Paypal and Western Union charge higher service fees. Users can also opt to leave out personal details, reducing the chance of identity theft.
How is Bitcoin faring in Australia after the fall of Mt Gox?
Business is opting out of BTC after Mt Gox’s collapse, despite Australia holding a 7 per cent share of the currency’s $3.5 billion value.
Bitcoin-babe.com founder Michaela Juric said banks were falling out of favor with the currency, often refusing to process her business transactions.
The 22-year-old told the ABC that up to 50 other traders could be experiencing similar treatment.
The Australian Taxation Office classed the currency as “intangible assets” in July 2014, hitting it with GST, and fringe and benefit taxes.
According to the Financial Review, the Senate Economics References Committee into digital currency has recommended it be treated as a currency rather than “legal tender”, which subjects it to heavier taxing.
THE APPEAL TO CRIMINAL ELEMENTS The option to not include personal details on transactions has proved attractive to criminals.Silk Road and Sheep Marketplace are among many online black markets used to trade illegal goods for BTC. The websites have been dubbed the “eBay of drug dealing”, weapons, fraudulent IDs, stolen goods, and hitman services. Illegal transactions have led nations – including Russia and Thailand – to ban BTC.
Bitcoin Association of Australia president Adam Poulton said regulation was inevitable, but it could affect local jobs.
He said regulation provided stability, but taxation was set to force businesses relying on cryptocurrency offshore.
“I think some regulation will be inevitable, but it has to be a really fine balance, too much regulation might just be a tad too much,” he said.
“Businesses will go overseas and will go to Singapore and Cayman Islands where there isn’t regulation and do business from there.
“So it’s a really fine balancing act, and I don’t think Australia’s got it right at the moment.”
He said BTC is set to become more prominent in the next decade.
“There’s so much trade being done in Bitcoin that couldn’t be done before, or it was too expensive to be done which can be done in the cost of a few cents and instantaneously, without risk.”