Bitcoin’s Price Zooms Ahead of U.S. Senate Hearing

Bitcoin’s price just keeps on zooming. The virtual currency again hit record highs Monday ahead of a U.S. Senate committee hearing on the potential risks and benefits of virtual currencies.

Reuters

Bitcoin was recently trading at $525.62 on the CoinDesk price index, which represents an average of bitcoin prices across large global exchanges. The currency closed Sunday at $476.30 on the index, marking a new record.

Meanwhile, bitcoin recently touched a high of roughly $619 on the Tokyo-based Mt. Gox exchange.
Bitcoin is a four-year-old virtual currency that isn’t backed by a central bank and can be traded on a number of  exchanges or swapped privately. A small but growing number of merchants also accept bitcoin as payment because the transaction costs associated with the currency are generally lower than those with credit or debit cards.

The recent price surges come as the Treasury Department, U.S. Secret Service, Department of Justice and others have sent letters to the U.S. Senate Committee on Homeland Security and Governmental Affairs saying that, like other currencies, bitcoin offers both risks and benefits.

The letters precede a hearing on virtual currencies that will be held later Monday by the U.S. Senate Committee titled “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies.”

Bitcoin has been vaulting to new records in recent weeks fueled by growing views that the virtual currency can have a credible future as an alternative to traditional methods of payment.

The momentum is coming from around the world, as amateur investors, venture capitalists and technology enthusiasts pump money into businesses that are trying to figure out how to swap and use bitcoin to buy goods and services.

Bitcoin’s price has been highly volatile. The virtual currency jumped to a record of about $265 in April as interest in the currency grew. But in early October, in the wake of the bust of an online drug-trafficking website that used the currency, it plunged to around $90.

However Monday’s price moves extend a winning streak that bitcoin has logged of late. On Slovenia-based Bitstamp, bitcoin was up 5.6% in recent trading to $504.