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Bitcoin Climbs to Record on Wider Acceptance, China Trade

The rally comes a month after the closing of the “Silk Road Hidden Website,” where people could obtain drugs, guns and other illicit goods using Bitcoins. Photographer: Tomohiro Ohsumi/Bloomberg
The rally comes a month after the closing of the “Silk Road Hidden Website,” where people could obtain drugs, guns and other illicit goods using Bitcoins. Photographer: Tomohiro Ohsumi/Bloomberg

Nov. 6 (Bloomberg) -- Bitcoin’s price hit a record at $265 on the BitStamp online exchange, driven by wider acceptance of the virtual currency.

The digital money, which can be used to pay for goods and services on the Internet, has risen 20-fold so far this year, as trading activity has increased. Bitcoins were trading at $251.36 apiece at 6:30 p.m. in New York on BitStamp, one of the more active Web-based exchanges where Bitcoins are traded for dollars, euros and other currencies.

The rally comes a month after the closing of the “Silk Road Hidden Website,” where people could obtain drugs, guns and other illicit goods using Bitcoins. The virtual currency lost a third of its value in the days after the website was shut down. Bitcoins are becoming increasingly popular, particularly in China, said Ugo Egbunike, director of business development at IndexUniverse, an index-fund researcher.

“I thought Silk Road is going to do some damage to the price,” Egbunike said. “But with BTC China buying this up -- they seem to have picked up the slack.”

BTC China is now the world’s largest Bitcoin exchange, Nicholas Colas, a ConvergEx Group analyst, wrote in a Nov. 5 report.

The virtual currency exists as software that’s designed to be untraceable, making it an attractive tender for those seeking to trade anonymously via the Web. There are about 30 transactions per minute, at an average amount of 16 Bitcoins, according to a report today by the Federal Reserve Bank of Chicago.

Virtual Money

Since being introduced in 2008 by a programmer or group of programmers going under the name of Satoshi Nakamoto, Bitcoin is being used to pay for everything from cupcakes to electronics on the Internet, with almost 12 million Bitcoins in circulation, according to Bitcoincharts, a website that tracks the digital money’s activity.

Bitcoin’s previous record was $259.34 on BitStamp in April. The virtual currency was also trading for $263 apiece on Mt. Gox, another online exchange, today.

“If James Bond, Sergey Brin and Paul Volcker all got together and designed their ideal currency, it might look a lot like Bitcoin,” Colas wrote in the note.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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