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December 6, 2013

Wall Street strategist endorses bitcoin

Bank of America describes ‘clear potential for growth’ in digital currency, and recommends a $1,300 price target.

By Ben Sullivan

A currency analyst on Wall Street has backed the digital currency bitcoin, claiming that it shows a clear potential for growth. This comes in contrast to the news that the Chinese central bank has banned the currency from financial institutions.

In a research note, David Woo of Bank of America Merrill Lynch argues that "bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers".

Woo goes on to argue that the fair value of one bitcoin should be around $1300, which is higher than the currency has ever been before.

However, two major investors in bitcoin have argued that the currency’s exchange rate could rise as high as $35,000 to one.

Woo also said: "It has been reported that bitcoin may help users avoid high taxes, capital controls, and confiscation… That said, the fact that all Bitcoin transactions are publicly available and that every Bitcoin has a unique transaction history that cannot be altered may ultimately limit its use in the black market/underworld."

Last week, the value of a single bitcoin surpassed the £1000 mark. Reports revealed that there are currently more than 12 million Bitcoins, bringing the overall current value of Bitcoins to over $12bn.

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Last month, the value of bitcoin suddenly plunged 20% in the wake of the online drug marketplace, Silk Road, being shut down by the US FBI.

The online drug bazaar saw millions of bitcoins moving across it in return for drugs over the last two years.

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