News / Science & Technology

    Bitcoin Surges on Zynga Announcement

    FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
    FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
    VOA News
    The value of the battered virtual currency, Bitcoin, surged again in trading to over $1,000 as popular gaming company Zynga Inc. announced it would test allowing users to pay for the games using it.

    In a post on Reddit, the company said it would be working with BitPay to offer “payment options for players to make in-game purchases using Bitcoin.”

    Zynga is among the first widely known companies to accept Bitcoin, which has yet to become a viable form of payment with major retailers such as Amazon.com.

    In late December, multiple bitcoin exchanges in India shut down operations after the country’s central bank warned about the currency.

    Earlier that month, the value of the currency plummeted to below $500 when China announced it would no longer allow the deposit of yuan for the cyber currency. Much of the value of the currency had been pumped in China due to the feeling that the virtual money could be a way for Chinese to move their money offshore.

    The Bank of France has also warned about the risks of the unregulated virtual money.

    Bitcoin is not backed by any central bank or government. The value depends on public confidence in the currency.

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    Comments
         
    by: Rashid Ahmed from: Mumbai
    January 07, 2014 2:05 AM
    I think the value depends more on the availability of the currency vs. the demand for it (as against people's confidence in it). Bitcoins have a limited availability and an upper threshold for coins issued. The Bitcoins are churned out through a process of mining (solving intricate and difficult math problems by people who dedicate computer time to this). Meaning that a bitcoin has a viable value based on multiple variables (including the time, energy and computing cost). Essentially, this puts Bitcoins into the 'classical' economic monetary model (which most of the world's banks do not support - because the banks can not issue new currency to 'regulate' and control Bitcoins). Look at it like the value associated with 'limited issue' comics, cars, jewelry, or even food (like the Cronut: a croissant-doughnut pastry attributed to chef Dominique Ansel who makes only 300 a day).

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