Bitcoin price (COIN, OTCQB:BTCS) has crossed the $875, doubling its level from the start of 2016. It marks a new market cap all-time high of around $14.05B on the Bitstamp exchange.
Analysts cited several reasons for the continued surge in prices. Indeed, falling Chinese yuan, the increasing demonetization of cash and the recent restriction on physical assets have increased the demand for Bitcoin.
Bitcoin is a cryptocurrency and a payment system. It was invented by an unidentified programmer under the name of Satoshi Nakamoto. Bitcoin was introduced on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009.
The system is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes. So, they are recorded in a public distributed ledger called the blockchain which uses bitcoin as its unit of account.
Since the system works without a central repository or single administrator, the U.S. Treasury categorizes bitcoin as a decentralized virtual currency. Bitcoin is the largest of its kind in terms of total market value.
Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the blockchain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins. Besides being obtained by mining, bitcoins can be exchanged for other currencies, products, and services.
Since February 2015, the number of merchants accepting bitcoin for products and services passed 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees in the range from 0% to less than 2%. Despite the fourfold increase in the number of merchants accepting bitcoin in 2014, the cryptocurrency did not have much momentum in retail transactions.
