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Bitcoin's price is skyrocketing. Even Uber drivers and house cleaners want in.

David Pierson, Andrew Khouri and Samantha Masunaga, Los Angeles Times on

Published in Business News

Keith Ellison's first hint that bitcoin was poised for a breakthrough was over the summer when a friend planning her nuptials sent an unusual text.

"She wanted to know whether to accept the wedding band's offer of a discount in exchange for bitcoin," said Ellison, a Manhattan Beach, Calif., investment analyst, who advised the friend to decline.

Given the way bitcoin's value was rising, there was no guarantee the friend would be able to afford the band when the bill eventually arrived.

"A lot of people are getting caught up in the mania," said Ellison, who bought one-third of a bitcoin in July for about $1,000 and has seen it appreciate more than fivefold. "Even random wedding bands are encouraging people that likely know nothing about bitcoin to pay in bitcoin."

Once the domain of technologists, libertarians and criminals, bitcoin has crossed into the mainstream, attracting interest from all walks of life with its soaring returns -- while reviving memories of the dot-com bubble of the turn of the last century.

Bitcoin, a form of digital money un-administered by a central authority, shot past $16,000 apiece Thursday, up from about $1,000 at the start of the year. It was going for about $220 in early 2015 -- meaning anyone who invested a mere $13,000 in bitcoin back then would now own $1 million in the emerging currency.

 

Returns like that are why investors are flocking to bitcoin to hold like stores of gold rather than use for frequent payments.

Others are getting into the business of mining bitcoin, the digital equivalent of printing cash in which a group of computers solves encrypted math problems to verify bitcoin transactions. The energy-intensive process poses a problem for bitcoin's ability to scale up and handle massive numbers of transactions, but not serious enough to discourage the cryptocurrency's supporters.

"There's a lot of excitement that this thing we all believed in and thought could be a game changer is now entering the mainstream," said Brian Klein, a partner at the Los Angeles law firm Baker Marquart, who started evangelizing the potential of cryptocurrencies as early as 2013. "If it really succeeds, there's no reason to think the price couldn't rise to $1 million in 10 years. It got to $15,000 much quicker than anyone anticipated."

Klein admits there's also a chance bitcoin could nosedive -- it's been prone to wild swings, including on Thursday. But as an attorney who represents many early adopters of the cryptocurrency, he expects bitcoin to stabilize after some growing pains.

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