Bitcoin broke above the US$10,000 mark for the first time on Wednesday (Nov 29) as the virtual currency continued a stratospheric rise that has seen it increase more than tenfold this year.
The cryptocurrency surged to a high of US$10,059 in early Asian hours, according to Bloomberg News, though the recent surge in the volatile unit has fuelled fears of a bubble.
Launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, Bitcoin has had a roller-coaster ride that has taken it from just a few US cents to its current sky-high valuation.
Traded on specialist platforms, with no legal exchange rate and no central bank backing it, Bitcoin is monitored and regulated by its community of users and is used to buy everything from pizza to a pint in a London pub.
But it has attracted widespread criticism, from financial industry titans to governments.
JP Morgan Chase boss Jamie Dimon in September slammed the unit as a “fraud” and said he would fire his employees if they were caught trading it, while China has shut down Bitcoin trading platforms and South Korea’s prime minister Tuesday voiced fears it could lead the young to get involved in fraudulent crime.
Analysts say the popularity has been driven by growing interest from major investors and a decision last month by exchange giant CME Group to launch a futures marketplace for the currency, which has not been listed on a major bourse before.
But there is growing unease with the rate of growth, which has seen it increase in value from a 2017 low of US$752 in mid-January.
“This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes,” warned hedge fund manager Mike Novogratz at a cryptocurrency conference Tuesday in New York, according to Bloomberg News.
Commentators also suggest some are buying it as an alternative bet in times of global economic uncertainty.
But critics point to its volatility, an apparent vulnerability to theft and its use in illicit purchases online.
In one of the most high-profile scandals to hit the currency, major Tokyo-based bitcoin exchange MtGox collapsed in 2014 after admitting that 850,000 coins – worth around US$480 million at the time – had disappeared from its vaults.
Bitcoin’s use on the underground Silk Road website, where users could use it to buy drugs and guns, was also presented as proof it was a bad thing.
Despite concerns, most observers believe it is unlikely to suffer heavy falls soon.