Bitcoin bursts: Hacker currency gets wild ride

LONDON (AP) ― It's a promising form of electronic cash free from central bankers and beloved by hackers. It ― Bitcoin ― may also be in trouble, registering catastrophic losses that have sent speculators scrambling.

Although the cybercurrency has existed for years as a kind of Internet oddity, a perfect storm of developments have brought it to the cusp of mainstream use.

As currency crises in Europe piqued investors' interest, a growing number of businesses announced they were accepting bitcoins for an ever-wider range of goods and services. The value of a single bitcoin began racing upward amid growing media attention, smashing past the $100 mark last week before more than doubling again in just a few days.

Then came the crash.

The price of Bitcoin has imploded, falling from around $266 on Wednesday to just above $40 on Thursday, according to bitcoincharts.com, which tracks trades across the Internet. The best-known exchange, Tokyo-based Mt. Gox, has suspended trading for what it described as a 12-hour "market cooldown." By late Thursday, the currency was back up to just more than $100.

Nicholas Colas, chief market strategist for the ConvergEx Group, said it was a "great question" whether the currency could survive the wrenching ups and downs.

"At this point I would say yes, since it has before," Colas wrote in an email. But he noted that, unlike previous oscillations, Thursday's collapse was taking place in the full glare of international media attention.

"A lot more people know about Bitcoin than during the prior problems,'' he said.

To its supporters ― tech-savvy libertarians, currency geeks, and online speculators ― Bitcoin has enormous promise.

Bitcoins are created, distributed, and authenticated independently of any bank or government. The currency's cryptographic features make it virtually immune from counterfeiting, and its relative anonymity holds out the promise of being able to spend money across the Internet without fear of censors, regulators or nosey officials.

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