The surging price for bitcoin, the most widely recognized cryptocurrency, overtook the price of gold this week in a changing of the guard among assets that serve as an alternative to traditional cash.
The price for a single bitcoin jumped to a record high Friday, closing just under $1,280. That’s slightly higher than the $1,235 cost to buy an ounce of gold. The price for bitcoin, the well-known digital currency introduced in 2008, jumped by more than 200 percent over the last year, driven by a range of volatile currency moves in emerging markets.
Ongoing weakness in China’s currency, the renminbi, has been the primary driver of bitcoin’s rising value. (A New York Times analysis found that 42 percent of all bitcoin occurred on Chinese exchanges in 2016. A report from Goldman Sachs in 2015 found that 80 percent of bitcoin transactions involved the Chinese currency.)
What’s going on? China’s currency has been facing downward pressure because as Chinese economic growth decelerates, money is pouring out of the country.
Some of that money is going into bitcoin, which operates in an anonymous, decentralized system that helps people avoid the Chinese government’s rules on taking money in and out of the country.
At times the Chinese government has tried to clamp down on bitcoin for this reason. But the surge in the price of the cryptocurrency shows they haven’t managed to control it completely.