Bitcoin, the world’s first open source cryptographic currency, set a new record yesterday afternoon as the price listed on the largest online exchange rose past US $92. With nearly 11 million Bitcoins in circulation, this sets the total worth of the currency at just over one billion dollars. Bitcoin is a digital currency that runs on a global peer-to-peer network without the backing of a nation or any other central authority. The recent ascent has traditional economists scratching their heads.
“It’s something of a mystery that Bitcoin has a positive value at all since it wasn’t launched in the way a new currency is typically launched. Typically, if a country wants to introduce a new currency, they make it redeemable for the old currency at a fixed exchange rate and then after a while they cut off the link and retire the old currency. But they launch the new currency by giving people a sort of firm expectation of what it’s worth. Bitcoin didn’t do that. It just launched itself by its own bootstraps and we don’t really understand how that worked, as economists.”
Daily transactions utilizing Bitcoins as currency total about 300,000 per day in 2013.