Bitcoin gets 121 siblings as price crashes
Feb 23 2014 , New Delhi
The bitcoin rate at its largest exchange Mt Gox has crashed below $100 level amid certain "security issues", while its average price across all exchanges has also dropped to near $500 apiece.
But the number of bitcoin-like virtual currencies continue to surge despite rising volatility in prices, security issues, hacking attempts and continuing crackdown by regulators and law enforcement agencies in different parts of the world.
Alternatives such as potcoin, olympiccoin, teslacoin, and pandacoin, grandcoin,phoenixcoin and astrocoin -- named after animals, famous events, scientific terms and just about anything under the sun -- are cropping up at a feverish pace.
One such alternative '42 Coin' is trading at nearly $104,000 apiece. At last count, 122 of them, including Bitcoin, were there.
At this pace, the number of virtual currencies may soon be more than that of all real currencies of the world.
However, prices of these virtual monies, backed by neither governments nor by any real assets, have started to show cracks.
Bitcoin, the most popular among all of them and accounting for over two thirds of total virtual currency volume, has fallen the most to an average price of $550.
The prices were at lofty highs of $1200 apiece in late 2013 after trading below $100 for most part of 2013.
According to market estimates, the collective valuation of all virtual currencies put together has dropped below $10 billion level, from about $13 billion at the beginning of this month.
The slide can be attributed to panic selling of bitcoins after some popular platforms halted withdrawals while others were hacked by cyber criminals who stole coins worth millions of dollars.
At end of December 2013, there were total 67 virtual currencies in the market, while the number was in single digit about four years ago as virtual currencies could not strike a chord among users amid a global financial crisis.
The renewed proliferation of new currencies is being linked to the complexities involved in the way bitcoin is 'mined' and the newer avatars are comparatively much easier to create, word-of-mouth publicity and a rush of speculators has ensured they are catching up much faster, traders said.
The rapid growth of virtual currencies has also shone light on the illegal acts being committed with such systems.
From being used in Ponzi schemes, as ransom for holding files hostage in computers and to facilitating criminal transactions, virtual currencies are the medium of choice for anonymous faces looking for a way to transfer monetary values across the world without being detected.