The price of Bitcoins surged this week, rising above $9 for the first time in almost a year. The increase suggests
growing public interest in the peer-to-peer cryptocurrency.
Last month, we marked the one-year anniversary of the Bitcoin bubble popping. We noted that after plunging for the last
six months of 2011, the price of Bitcoin had begun to stabilize around $5. But almost as soon as we published that
article, the currency began appreciating rapidly. Today, one Bitcoin is worth about $9.20—a 40 percent increase in a
month.
The transaction volume of Bitcoins has increased dramatically since April. In April, there were rarely more than 10,000
transactions in a day. In July, there have consistently been more than 20,000 transactions each day.
What explains the newfound popularity of the cryptocurrency? We suspect the factors we identified in last month's article
vices like pornography and gambling—continue to be a significant factor in the currency's value.
But other new uses for the currency continue to pop up. Coinbase, a startup aiming to make Bitcoin more accessible to the
masses, has been accepted by Y Combinator's summer class. That comes with a $164,000 investment.
The Verge notes that a student in Germany has built a Bitcoin vending machine. Insert a €1 coin in the slot and it will
dispense a slip of paper with a link that can be used to cash in an equivalent value of Bitcoins, currently around 0.13
BTC.
And New World Notes points out that that there has been a growing volume of transactions between Bitcoins and Linden
Dollars, the official currency of Second Life. Given that exchanges that convert Bitcoins to dollars have faced legal
challenges, the ability to convert Bitcoins into other virtual currencies that are more readily tradable for dollars
could boost the liquidity of the cryptocurrency
