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Bitcoin’s on a bull run again

The screen of Southern California's first two bitcoin-to-cash ATMs which began operating today, is seen in Locali Conscious Convenience store in Venice
Reuters/Lucy Nicholson
Bitcoin bulls are doing it.
By Joon Ian Wong
Published Last updated This article is more than 2 years old.

The price of bitcoin has been climbing all year, even as a “civil war” has divided its community of developers, and an Australian man has claimed to be its creator in a highly orchestrated media spectacle in recent days.

Bitcoin is now trading at $457, according to the Bitcoin Price Index maintained by CoinDesk. That’s a few dollars off the highest daily “closing price” in the last 12 months that the index tracks, of $465 on Dec. 15. (Since bitcoin trading never stops, closing prices differ among indices and measures.)

And one of Silicon Valley’s best connected people, YCombinator president Sam Altman, thinks bitcoin is set to rise even more:

Here’s what the one-year BTCUSD price looks like:

It has been a busy year for bitcoin. A man claiming to be Satoshi Nakamoto, the cryptocurrency’s inventor, “unmasked” himself in a public relations spectacle last week (May 2). The price dipped slightly as the news broke, but it has regained its upward momentum since then.

In many respects, it doesn’t really matter who invented bitcoin, because the technology is designed to operate in a decentralized manner. What does matter is the code that it runs on, and that is entering a period of serious dispute that some have called a “civil war.”

The so-called “block size debate” is a fundamental disagreement between the digital currency’s top technical minds about how best to enlarge its capacity to process transactions. The fight has gotten so intense that one top programmer quit the scene altogether.

There’s also another event on the horizon that could be a price catalyst. In July, something called “halving” will occur on the bitcoin network. That’s when the reward that bitcoin miners (here’s an explainer) gets slashed in half, at a time determined in advance by the bitcoin code. Miners will earn 12.5 bitcoins per block instead of the current 25 bitcoins.

Daniel Masters, who runs a bitcoin hedge fund in Jersey and was a former commodities trader at JP Morgan, argues that the halving could boost prices even more, as the mining process will then create bitcoins at a slower rate. He draws a parallel to oil prices, which have rallied this year, possibly because oil supplies are declining. (Of course, that might now change.)

How high could bitcoin go? It’s now trading at about 70% of its two-year peak of about $660, achieved in June 2014. And that’s a far cry from the $1,200 all-time high it briefly hit in November 2013.

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