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Bitcoin is the Best Currency of 2013 because it kind of took over the world.
A pile of Bitcoins are shown here after Software engineer Mike Caldwell minted them in his shop on April 26, 2013 in Sandy, Utah.(George Frey/Getty Images)
And the GlobalPost 2013 End of the Year Award for Best Currency goes to: Bitcoin.
2013 was the year that Bitcoin, a virtual currency traded anonymously via peer-to-peer exchanges, emerged from the shadows of crypto-e-commerce into the global spotlight.
This time last year, you'd probably never heard of Bitcoin. It was created in 2009, worth exactly nothing, and then traded at just a few cents on the dollar. At the beginning of 2013, it was still a niche currency, trading for between $10 and $20 and best-known as the currency that fueled illegal transactions on the Silk Road, a deep-web black market website where you could purchase drugs, guns, child pornography, and other things you don’t want on your credit card statement.
That's all changed. Bitcoin has emerged as functional currency and has spawned a speculative investment market.
There were lots of reasons to get excited about Bitcoin in 2013. For people concerned about the state of surveillance, it offered anonymity. For people who looked around the world and saw fragile nation-states and failing economies, it promised an alternative means of exchange unbound by borders, regulations, or monetary policies. And for people looking for to make investments in a time of massive technological change, it seemed like the currency of the future: Commercial transactions increasingly happen online. Physical cash and the currencies based in it were starting to seem like outmoded relics.
Forget central banks and ineffective governments. Forget the National Security Agency (NSA) and the UK's Government Communications Headquarters (GCHQ). Let’s just meet online and use Bitcoin, right?
Bitcoin was suddenly everywhere, it seemed. As it became one of the stories of the year, its value rose steadily, collapsing occasionally and then recovering. WikiLeaks used Bitcoin to work around a financial blockade against the organization, and then raised $12,000 worth of it for the defense of NSA whistleblower Edward Snowden. Bitcoin ATMs became a thing. Richard Branson announced that his private space-travel company, Virgin Galactic, would accept Bitcoin. Newspapers reported stories of people whose bitcoins, purchased long ago for nearly nothing and then forgotten, were suddenly worth massive sums. When US authorities expressed some positivity about the currency’s potential in November its value spiked to $1,000.
But there are plenty of reasons to be skeptical. As a currency, Bitcoin is extremely volatile. As an investment, Bitcoin might be a speculative bubble that’s already popping. And as the supposed future of global commerce, Bitcoin's value remains dependent on the whims of government, despite the currency's promise of circumventing regulation and surveillance. If a few positive words from US bureaucrats could boost its value in hours, the reverse could happen just as easily.
That’s exactly what’s happening as 2013 comes to an end. The Chinese government has soundly rejected Bitcoin. New government regulations ban financial institutions from trading in Bitcoin, and while individuals can still trade, it's becoming much more difficult because third-party payment service companies are no longer allowed to process the transactions. BTC China, the world’s largest Bitcoin exchange by volume, has stopped taking deposits. Within a day of BTC China's announcement, the price of a Bitcoin fell by 50 percent.
Looking back over the past few months, here’s what Bitcoin’s value has looked like in USD.
When midnight strikes on Jan. 1, 2014, what will Bitcoin’s value be? It’s very hard to tell.