The world’s most valuable cryptocurrency bitcoin is surging once again, this time toward the $600 mark, a price it has not reached since early August 2014 when the digital currency’s value was in freefall. The exact reason for the price rise is unclear, but the continuing uncertainty over the Chinese yuan is thought by many to be pushing the price of bitcoin higher.
On Tuesday, the price of bitcoin reached $590.98, according to CoinDesk’s Bitcoin Price Index, marking its highest price since July 2014, an almost two-year high. The recent surge has seen bitcoin’s price jump almost a third in the space of two weeks. On May 26 the price of a single bitcoin was around $450, a price it had been at for over a month.
In the space of two weeks, the market capitalization of the world’s most popular cryptocurrency has jumped from $7 billion to over $9 billion.
The reason for the continued upward surge in the price of bitcoin is believed to be linked to the devaluation of the Chinese yuan, with investors seeking to circumvent foreign exchange restrictions placed on the currency by the government.
“The fears of a sharp yuan devaluation are rising. It was set off by the People’s Bank of China weakening the yuan to the lowest levels since March 2011,” Arthur Hayes, co-founder of bitcoin exchange BitMEX, said in an interview with CoinDesk.
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While the general market consensus around bitcoin is currently positive at the moment, and in particular the blockchain technology that underpins bitcoin, those involved in developing it are currently embroiled in a heated battle over the future of the cryptocurrency.
One group (known as Bitcoin Core) wants to retain the current block size and instead change the way signatures are stored on the blockchain, while the other (known as Bitcoin Classic) proposes the adoption of an alternative blockchain. That blockchain, incompatible with the original, would increase the block size to 2 MB, a move some say would increase user adoption.
Another issue impacting the price of bitcoin is the ongoing debate over the identity of its creator. In April, Australian businessman Craig Wright claimed he was bitcoin’s creator, who has been known previously only as Satoshi Nakamoto, and despite backing from several prominent members of the bitcoin community, doubts remain about his claim. As a result, Wright declared he was withdrawing from public life once again and would not provide more proof.
Another factor set to impact the price of bitcoin is the impending halving of rewards for miners. Bitcoins are mined by solving increasingly complex mathematical equations. Currently, the miners get 25 bitcoins per block, but that number will be cut in half sometime in July to 12.5 bitcoins per block — a method of increasing the difficultly of mining bitcoins over time.