WASHINGTON – It’s been an amazing month for Bitcoin, the decentralized payment network that got a surprisingly positive reception last week at a pair of Senate hearings.
At the start of this month, one Bitcoin traded for just a bit more than $200. By midmonth, it had soared to $400. Then, about the time of the Senate hearings, it rose briefly above $900. On Wednesday, the price broke through the psychologically significant $1,000 barrier on Mt. Gox, the most popular exchange for trading Bitcoins for dollars.
The new high represents a massive windfall for those who bought the currency early. Gavin Andresen, Bitcoin’s lead developer, reportedly bought 10,000 Bitcoins for $50 early in the currency’s life, giving away one Bitcoin at a time on a site called the Bitcoin Faucet. If he had held on to those coins, they would be worth $10 million.
The Winklevoss brothers, Olympic rowers made famous by a high-profile dispute over the founding of Facebook, had amassed $11 million in Bitcoins by April, when one Bitcoin was worth about $120. Earlier this month, the value of those Bitcoins had swelled to at least $32 million. Today, the value of their holdings have tripled again, to at least $90 million.
It’s important to note that the price of Bitcoins varies significantly between exchanges. Mt. Gox hasn’t made it easy to withdraw dollars from the exchange. As a result, Bitcoins on Mt. Gox trade at a premium, relative to alternative exchanges. On Wednesday, Bitcoins were trading for $950 on Bitstamp, the second-most popular exchange, and for $915 on BTC-e.