When he was a Yale Law School student, Reuben Grinberg wrote one of the first academic papers about Bitcoin, a novel virtual currency that uses sophisticated cryptography to validate and secure transactions that exist only online.
When Grinberg, now a lawyer in the financial institutions group of the Manhattan law firm Davis Polk & Wardwell, first learned about bitcoins, they were selling for 10 cents. Now, after the latest price surge that began in January, the cost of a bitcoin on an exchange that converts them to dollars is something like $140, and the collective value of all bitcoins has passed a billion dollars.
That is a lot of coin in any form, and the billion-dollar milestone has turned the once-obscure online currency into a media sensation. “People are buying bitcoins because the price is going up,” he said in an interview. “That is the classic indicator of a bubble.”
The question of whether the increase represents real value or is simply evidence of a bubble is at the heart of the current media frenzy.
New York Times