Bitcoins More Valuable Than Gold: Digital Currency Makes History

For the first time in history, Bitcoins have become more valuable than gold, reports say.

On Friday morning, a single Bitcoin – one of the first “digital cryptocurrencies” to gain popular usage - was trading above $1,292.71 in New York, according to Bloomberg Markets.

Coming off a terrible week that saw its price drop more than 2 percent, a troy ounce of gold was worth just $1,226.89 on Friday morning, technically making the virtual currency more valuable than the most iconic precious metal in the world.

At the same time gold’s value was dropping, the price of Bitcoins rose more than 7 percent after a recent regulatory clampdown by the People's Bank of China and speculation about a possible ruling from the U.S. Securities and Exchange Commission on whether it will approve a Bitcoin-based exchange traded fund (ETF), CNBC.com reported.

The financial surge has been a major reversal for the digital currency, which saw a heavy drop in price in 2014, BBC News stated.

However, investors might want not want to read too much into the Bitcoin bonanza, some financial experts say.

“The gold supply is 180,000 tonnes of 'above ground' gold, valued at $7 trillion,” Fran Strajnar, of data and research company Brave New Coin told CNBC. “The bitcoin market value is $20 billion, so gold versus bitcoin is psychological more than anything.”

WHAT ARE BITCOINS?

According to Bitcoin.org, the “consensus network” allows users to access a personal Bitcoin wallet that can send and receive units of currency.

[Bitcoin] is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen,” the website states. “From a user perspective, Bitcoin is pretty much like cash for the internet.”

Bitcoin is open-source, which means that its protocol and software are published openly and any developer around the world can review the code or make their own modified version of the software.

“Nobody owns the Bitcoin network much like no one owns the technology behind email,” Bitcoin.org states.

At the end of August 2013, the value of all bitcoins in circulation reportedly exceeded U.S. $ 1.5 billion.

Photos via Flickr Commons: Steve Garfield, James St. John

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