Bitcoin soars 25pc on Chinese demand, above US$500 for first time in over a year

Bitcoin soared over 25 per cent on Wednesday to hit US$500 for the first time since August last year, with demand from China cited as behind the surge in the web-based "cryptocurrency".

Bitcoin has been on a tear since dipping below US$198 on the Bitstamp exchange in the wake of the devaluation of China’s yuan in late August, gaining over 150 per cent in the following 10 weeks to hit US$502 on Wednesday.

So far it is up over 50 per cent this week, putting it on track for its best weekly performance in two years.
Various reasons are given by bitcoin experts for the latest rally, which still leaves the digital currency far below its 2013 peak above US$1,100.

Aside from demand from China, bitcoiners say an increased awareness in the blockchain technology underpinning bitcoin is encouraging buying, as well as a European Union court ruling last month that bitcoin should be exempt from value-added tax.

Bitcoin is used as a vehicle for moving money around the world quickly and anonymously via the web without the need for third-party verification. That has made it controversial, but also attractive, to users ranging from drug dealers to those trying to circumvent capital controls in Greece and China.