Bitcoin has passed the US$2,000 barrier for the first time.
As of today, Bitcoin is trading at US$2,129.11.
As you can see in the graph below, the cryptocurrency has been steadily climbing since 2016 due to more confidence in the technology and increased political risk.
As recently as a few months ago, Bitcoin was facing a civil war. Transactions in the Bitcoin network are added as blocks with each block containing a finite number of transactions. The transactions weren’t happening as fast as blocks were being created (on average, every 10 minutes). To keep up with transaction demand, the currency was looking into two solutions that divided Bitcoin into two camps.
The debate has lightened since another cryptocurrency, Litecoin, gave hope for a resolution. Litecoin has been testing a new technology called SegWit, short for Segregated Witness, which can shorten bitcoin transactions and improves the capacity of transaction blocks.
There is more confidence in the technology, as well as growing interest from Japan, as the country has recently regulated the technology. According to CoinDesk, the Japanese yen is the single largest currency being exchanged for bitcoin, and it accounts more than 45% of all the money flowing into the cryptocurrency. The US dollar makes 30%.
Political turmoil in Brazil and the US has also sent the cryptocurrency rising. Both markets are in turmoil — President Trump fired FBI director James Comey and Brazilian President Michel Temer is being investigated over corruption.
Bitcoin in recent times
Since the beginning of the year, the cryptocurrency has gained over 113%, and has only been stopped temporarily after the WannaCry ransomware attack.
As you may already know, on 12 May, hackers released the ransomware virus WannaCry. The virus infected more than 200,000 systems in over 150 countries. If you are not familiar with ransomware, the virus encrypts all the files and holds them hostage until you pay up. The hackers were asking for payment in bitcoin, which raised questions as to whether governments would increase regulation on the cryptocurrency.
Global companies like Renault and Fedex were affected by the attack, in addition to infrastructure, such as the National Health System in the UK, Chinese ATMs, and US universities.
The virus created a panic, but it didn’t turn much of a profit.
You see, the beauty of Bitcoin is that it is a public ledger, which means that anybody can see the balance in any Bitcoin wallet.
In the case of WannaCry, there are three bitcoin addresses tied up to the attack. And there is a twitter bot — @actual_ransom — watching the bitcoin wallets tied to the attack and tweeting the amounts in each account. So far, hackers have taken 296 payments, totalling US$99,448.11. Not much for a global attack of this magnitude.
Many people have not paid as there are reports that, even though some have paid the ransom, they have not received the encryption key, and are still unable to access their files.
The truth is that, with so many eyes watching the wallets, it will be hard for hackers to cash in their money, which makes you question if money was really the motive for the attack, especially if they are not releasing the key after payment.
We’ll keep an eye on this story as it develops. In the meantime, click here to learn more about the The Four Best ASX Stocks for 2017.