US Government Hearing Boosts Bitcoin Value To Nearly £500

The value of electronic currency Bitcoin briefly reached close to £500 as a US Senate committee heard that it is a valid form of money.

The currency, which is based on an open source peer-to-peer protocol, has been on the receiving end of negative  press due to its use for drug dealing and other shady operations, but a US congressional hearing on virtual currencies was told by police and regulators that Bitcoin offers potential if the risks can be kept in check.

This is not formal approval, but the currency rose to $750 (£489), before falling back to a still-impressive $650 at the time of writing.

Bitcoin bonanza?

Virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system,” Federal Reserve Chairman Ben Bernanke said in a letter to the committee of senators.

Mythili Raman, assistant attorney general for the criminal division of the Department of Justice, observed that online currencies were “not illegal” and could make for more efficient commerce.

Overall, the US government’s steady approach to Bitcoin has pleased the currency’s advocates. It is only a few days since it was trading at £250, and it  seems to have recovered from a big fall after the closure of the Silk Road online bazaar where Bitcoin was used for various transactions, some illegal.

However, the currency does present risk: Global Bond, a Chinese exchange, disappeared from view earlier this week, along with £3 million worth of Bitcoin.

And the currency faces another  image problem – it is becoming a favourite currency for ransomware demands, where malware creators extort money from users with infected machines.

“Bitcoin gives criminals the benefit of a valuable and (more or less) anonymous coin,” said  Alberto Ortega, of AlienVault  “The problem for criminals is that Bitcoins are still mostly used by people with a minimum technical background, who are usually tech savvy, and less affected by malware infections.”

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