It’s hard to believe that the current price of bitcoin is now an astonishing $390. It seems like it’s the game we should have been playing these last few years - like Kristopher Koch did, the Norwegian student who bought 5,000 bitcoins for $27 in 2009 as part of his thesis. He forgot all about them and only found them last month. Now he’s rich: 5,000 times $390 is $1,950,000! Unfortunately, most of us missed the boat then! But is it too late now? Should we be buying bitcoin in the hope it will continue rising? People find it hard enough to value gold, but how do you value bitcoin? It has a limited supply in its favour (there are about 12 million so far, and an upper limit of 21 million). Couldn’t someone find a way of replicating them? Apparently not, but these days, you never know. Assuming bitcoin is here to stay, there are two bigger issues. The first is that bitcoin is meant to be a medium of exchange but they’re rising in value so fast, it’s tempting to spend your pounds or dollars instead! This is a form of Gresham’s Law at work; bad money driving out the good.

Clearly, this is one of the issues with being an independent currency in a world where central banks are hell-bent on devaluing their own paper. It cannot be entirely coincidental that bitcoin’s recent surge in value coincides with the European Central Bank cutting a key interest rate from 0.5% to 0.25%. If bitcoin is to become useful as a more mainstream medium of exchange, its value has to fall or stabilise at the very least. This goes against its astronomic rise continuing forever. Another concern is that that governments may come after it. They may not be able to crush the crypto-currency concept now that it’s out there but they may well be able to keep a hold on it with regulation. Surely there’s no way that governments are going to relinquish control over one of the key things that gives them their legitimacy and power – the monopoly over currency issuance?

So will bitcoin continue to rise? As it’s a ‘bit’ of an unknown at present, it’s probably best to play safe and maybe accumulate a few, but only with speculative funds you can afford to lose.