What is Bitcoin and why is its price so high?

Bitcoin: Rival cryptocurrencies quietly gaining ground on all-conquering market leader

Likes of either, litecoin and ripple blossoming in shadows

Joe Sommerlad@JoeSommerlad
Wednesday 07 March 2018 12:42

Bitcoin continues to be the most prominent cryptocurrency on the market, its profile greatly raised by the surge in value it experienced over the Christmas period.

That sudden increase saw its worth peak at $19,850 (£14,214) in mid-December before returning to a more stable norm around the $10,500 mark (£7,568), where it remains today.

But the recent rise and rise of bitcoin and the excitement it has stirred among investors has overshadowed the quiet but steady growth of several of its key rivals.

Ethereum's coin ether, for instance, has a market capitalisation of $76.5bn (£55bn) compared to bitcoin's $178bn (£128bn), according to CoinMarketCap.

While still a long way behind, this is impressive given that the currency was only launched in 2015 and the fact that there are 98m ethers in circulation, compared to just 16.9m bitcoins.

It is worth $780 (£562) today, according to Coinbase data, having experienced a huge 3,922 per cent rise in value over the last year, peaking at $1,339 (£967) on 15 January this year at the height of the new year crypto-frenzy.

Other contenders like litecoin and ripple have market capitalisations of $35bn (£25bn) and $10.5bn (£7.6bn) respectively.

The former was started in 2011 and has 55.5m coins in circulation. It is worth less than ether - $190 (£137) - but has seen even greater growth in percentage terms year-on-year, up 4,597 per cent on 7 March 2017.

One ripple coin is worth less than $1 but this is skewed by the fact that there are 39bn of them currently sloshing around out there.

Bitcoin continues to dominate not least because it blazed a trail as the first cryptocurrency created - by the mysterious "Satoshi Nakamoto" in January 2009, whose true identity remains unknown - and the cheerleading seen on its half by well-known investors like the Winklevoss Twins.

Its pathfinder status has meant bitcoin has been at the forefront of the debate surrounding the concept of anonymous, unregulated peer-to-peer transactions, not least regarding the discussion of such contentious issues as federal oversight, consumer protection and cryptocurrencies' vulnerability to piracy and misuse.​

Bitcoin has born the brunt of much criticism as a result, its detractors including Warren Buffett, Bill Gates, Governor of the Bank of England Mark Carney and JPMorgan Chase CEO Jamie Dimon.

With as many as 1,500 different virtual coins now in play and its rivals gathering momentum, bitcoin is finding itself in an ever-more complex and competitive trading environment.

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