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Virtual Currency Hurting Central Banks?

Bitcoin Gains Popularity

Written by Swagato Chakravorty
Posted January 29, 2013 at 5:08PM

Bitcoin, the world’s biggest virtual currency, may be becoming a serious player. Its value has been increasing, leading to concerns that it could actually pull down the value of real-world central banks.

In the past year, per Bloomberg, bitcoin value has gone from $5.88 to $16.37. A report by the European Central Bank last October indicated such virtual currencies can have a detrimental effect on central banks and their effect on the real-world market.

Remarkably, bitcoin value shot up 55 percent after that report’s publication.

Johns Hopkins University professor Steve Hanke thinks “the ECB obviously is concerned,” as he told Bloomberg, considering how easy it can be to use a virtual currency like the bitcoin.

More intriguingly, bitcoin gained a lot of popularity in Iran last year, Bloomberg reports, due largely to the difficulty of acquiring dollars and the low value of the rial.

It’s hard to say where this is going, but we’ll definitely be keeping an eye on the bitcoin.

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