As Gov’t Deliberates its Legality, Bitcoin Soars to $1,000

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November 27, 2013 5:06pm PST

On Nov. 18 the U.S. Senate began a series of hearings on whether or not the U.S. government should recognize the legitimacy of the online currency called Bitcoin. But no matter what the U.S. government does at this point, Bitcoin is soaring on the exchange market reaching $1,000 per, the highest its ever reached.

(See also: Senate Hearing on Future of Bitcoin: Legal Tender or Criminal Enterprise?)

The Senate Committee on Homeland Security & Government Affairs held a major hearing on Bitcoin and other virtual currencies called, “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies.” The Committee also has a video of the proceedings.

(See also: Internet Gurus Create Digital Currency Bitcoin Trust)

Bitcoin has gotten a black eye because criminals and drug dealers have used the currency in an effort to avoid law enforcement and earlier this year U.S. authorities shut down several websites that traded in Bitcoins over this use by criminals.

But recently the Chicago Federal Reserve Bank issued a “primer” on how Bitcoin works that raised the virtual currency’s stock in the world of finance.

(See also: DHS Issues Seizure Warrant For BitCoins Assets, Seeks To Shut Down Digital Currency)

François R. Velde, senior economist of the Federal Reserve in Chicago, wrote that bitcoin is a “remarkable conceptual and technical achievement, which may well be used by existing financial institutions.”

Velde went on saying, “The bitcoin protocol provides an elegant solution to the problem of creating a digital currency–i.e., how to regulate its issue, defeat counterfeiting and double-spending, and ensure that it can be conveyed safely–without relying on a single authority.”

(See also: DHS Shuts Down Dwolla, Direct Attack On Bitcoins (Digital Currency))

So, in some places Bitcoin is getting a good reputation.

On the other hand, the Federal Election Commission just said that politicians can’t take Bitcoin as donations.

Even as all this is happening the exchange market for Bitcoin has soared.

As the Eashington Post says:

“At the start of November, one Bitcoin traded for just a bit over $200. By mid-month it had soared to $400. Then, around the time of the Senate hearings, it rose briefly above $900. Earlier Wednesday, the price broke through the psychologically significant $1,000 barrier on Mt. Gox, the most popular exchange for trading Bitcoins for dollars.”

It’s a brave new world, but the US government can still hurt Bitcoin.

What do you think? Tell us in the comments.

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