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Bitcoin price SOARS after US SENATE hearing on 'legit' currency

Virtual currency can be 'legal means of exchange', Feds tell committee

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The price of Bitcoin has soared to astronomical heights after a US Senate hearing on the "promises and risks" of the crypto-currency.

One Bitcoin was worth $637 (£396) on the Mt Gox exchange at the time of writing, but hit highs of over $900 (£558) during the hearing, prompting analysts to warn the bubble is about to burst.

Senate Homeland Security and Governmental Affairs Committee chairman Tom Carpe held the first ever hearing on Bitcoin yesterday.

He said: “Virtual currencies have captured the imagination of some, struck fear among others, and confused the heck out of many of us. Fundamental questions remain about what a virtual currency actually is, how it should be treated, and what the future holds. It’s clear that this technology presents some new and unique risks, but with it, there are clearly some who believe it has great potential."

The Senate heard evidence from the Financial Crimes Enforcement Network, US Department of Justice, US Department of Homeland Security and the Bitcoin Foundation.

According to the Justice Department, it can be “legal means of exchange”. The acting assistant attorney general of the Justice Department told the committee that virtual currencies “offer legitimate financial services."

The tentative backing of the currency is likely to lead to further gains by Bitcoin traders.

Carpe said: "The federal government and society as a whole need to come together to figure out how to effectively deal with it, and this hearing was the first step. "Congress and federal agencies must continue to stay engaged and informed to develop smart, sensible, and effective policies and to properly implement such policies."

The hearing was called after the collapse of the Silk Road, which was a huge, worldwide drugs market where all transactions were carried out in Bitcoin.

Mythili Raman, head of the Justice Department's Criminal Division, said: "We have seen increasing use of such currencies by drug dealers, traffickers of child pornography, and perpetrators of large-scale fraud schemes."

Lots of people have accidentally become rich after buying Bitcoins when they were as cheap as $1 each and then promptly forgotten about them. This Reddit thread features a user whose stash is now worth more than $50,000. A Norwegian man was also able to buy a flat after his 5,000 Bitcoins grew in value to about £430,000. ®

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