2016 could prove to be the year that the price of bitcoin surges again.
Not because of any dark-web drug-dealing or Russian ponzi scheme, but for an altogether less sensational reason – slower growth in the money supply.
Bitcoin is a web-based “cryptocurrency” used to move money around quickly and anonymously with no need for a central authority. But despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.
The reason 2016 looks set to be different is that bitcoin’s price is likely to be driven in large part by similar factors to a traditional fiat currency, following the age-old principles of supply and demand.
Instead of being controlled by a central bank, bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and thereby clear the transactions is currently rewarded with 25 new bitcoins, worth around $11,000 (£7,420).
But when it was invented in 2008 by the mysterious “Satoshi Nakamoto”, who has yet to be identified, the