One year ago today a Bitcoin was worth $.005USD. Yesterday, the value of a Bitcoin peaked at $10.50USD representing a 200,000% gain.
In just the past three months, the Bitcoin to USD exchange rate has skyrocketed from $3USD per Bitcoin (BTC) to over $10USD per BTC. As of May 2011, there are over 6.2 million Bitcoins in existence having a market capitalization of $62,000,000USD by today’s exchange rate of approximately $10USD per BTC. The graph below is a snapshot of BTC to USD exchange rate trends since March 2011.
The increase in Bitcoin value immediately caused a surge in press in mainstream media and in the blogosphere. NPR, The New York Times, TechCrunch, and Gizmodo have all published articles on the phenomenon in just the past few weeks. Bitcoin’s momentum at this time is undeniable, and it does not seem to be going anywhere. The graph below represents the number of Google searches for the word “Bitcoin” per day:
While Bitcoin becoming a dominant currency and replacing a currency like the U.S. dollar is extremely unlikely, Bitcoin’s success can be attributed to the currency’s advantages over other means of payments in certain transactions. Bitcoin is arguably the easiest individual-to-individual digital payment method; with no outside oversight or transaction fees, transferring Bitcoin ownership is much like transferring physical notes from individual to individual. In countries with poor payment infrastructure, for example, Bitcoin payments represent a more cost-efficient and safe alternative to services such as Paypal. Thus, as the idea of Bitcoin spreads due to the viral nature of the internet, it would be no surprise to see society’s faith in Bitcoin grow leading to even higher exchange rates in the near future.