Growing acceptance of bitcoin propels virtual currency past USD 1000 mark

By Nicel Jane Avellana

Nov 27, 2013 11:59 PM EST

The wide acceptance of bitcoins has brought the price of the digital currency past the USD 1,000 mark on Wednesday, November 27 as it reached a high of USD 1,073 on Mt. Gox, the online exchange that trades bitcoins for dollars and other currencies. According to an SFGate report, the growing acceptance of bitcoins has encouraged speculators to invest on the virtual money. Bitcoins are now being accepted to pay for tuition fees and even purchases on consumer items including Gummi Bears.

The statement of law enforcement and securities agencies in hearings held in the US Senate about the Bitcoin also helped establish the digital currency's credibility, the report said. The agencies had said that the Bitcoin could be used as a legitimate means of exchange. Last month's shutdown of Silk Road also fueled the virtual currency rally as people became more optimistic that  the digital currency could be utilized for legal purposes, the report added. Silk Road was came to be known as an online black market for drugs and other illicit goods that are bought and sold using bitcoins.

ConvergEx Group Chief Market Strategist Nicholas Colas told SFGate, "Milestones do tend to provide some validation, even though they are entirely arbitrary. $1,000 for a bitcoin would draw attention and certainly gives people (who are) positive on the currency another reason to laugh at the naysayers."

The current price of the Bitcoin represented an 80-fold growth from a year earlier when the currency was merely trading from USD12 to USD 13, the report said. The currency plunged to about a third of its value just days after Silk Road was shut down and its operator arrested as a crackdown was feared. However, the willingness of regulators to prevent the digital currency from being used for illegal purposes was taken as an endorsement for bitcoins, the report said. As a result, users and investors became more at ease  with the currency.

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