Bitcoin price hits 2-year high above $700 US
The value of a bitcoin has risen to its highest level since 2014 as the software code that underpins the cryptocurrency is set to cut the amount of new coins being created by half.
The price of a bitcoin hit $719 US at one point on Monday, according to digital currency website Coindesk. That's the highest since early 2014, when the currency was on its way back down after being valued at more than $1,200 US the previous year.
Founded in 2009, bitcoin is a digital currency that exists solely via a network of computers and isn't controlled or influenced by any central or commercial bank. Its backers believe it is the future of payment because other forms of money are subject to manipulation from governments and other private interests.
According to the software that underpins bitcoin, only 21 million bitcoins can ever exist, and they are slowly being discovered over time by "bitcoin miners" — computers set up to solve complex mathematical equations and thus uncover the next block in the currency's software or "blockchain."
When a miner uncovers a new block, the miner is rewarded with a certain number of bitcoins. Originally set at 50, the reward was first cut in 2012 to 25 bitcoins, but next month, based on the rate of new discoveries, that ratio will be halved again to 12.5 bitcoins per block. That rate will continue to be halved 62 more times until all 21 million bitcoins have been uncovered.
That's pushing up the price of existing bitcoins, since the flow of new ones is about to be cut in half.
The price is also moving higher as the currency gains more mainstream acceptance, although it is still largely a niche product that can be used at relatively few real-world businesses.
The cryptocurrency is popular in China due to concerns about the manipulation of the yuan, and also to get around strict controls on moving money out of the country.