Wednesday, April 17, 2013

The Ascent of The Bitcoin

When I last wrote about "Bitcoin a Digital Currency" it was trading at $5 for 1 Bitcoin.  Fast forward 1 year later and you will need $93 to buy 1 Bitcoin on MtGox it recently traded as high as $266.  Lack of trust in the European economy and the demand for privacy has made the digital currency rather expensive in the past few weeks. 

Want to jump in and make money? The crashes and wide spreads make this currency risky to speculate as tons of money can be made or lost in less than 24 hours. The recent popularity and glitches that need to be addressed suggest new comers will enter.  Online currency may be here to stay not hard to see in a paperless society full of online banking and credit cards.  When was the last time you handled a $1000 transaction in cash?  The Bitcoin is set to have a limited supply of coins minted making it a scarce commodity just like gold, corn or cigarettes in jail.

Although you can't buy a house or stock with the Bitcoin just yet the currency is making a few investors very wealthy.  Many websites are starting to accept them and the first Bitcoin ATM is being developed.  Even with the rise of the currency buy with caution there are several prices quoted on different exchanges at the same time and hack attacks have stolen Bitcoins.  Although many have complained about the lack of security and the use of the currency for illegal activities due to its anonymity the same can be said about all currencies and online transactions.  Whether the Bitcoin continues to rise or possibly disappear as fast as it appeared it is showing us the need for alternatives. 

With inflation still very low at 1.5% and the threat of deflation, cash is king no need to go running to another currency just yet.  Even gold had a historic slide now trading at $1,377.40 the troy ounce.  If you do buy a Bitcoin do it for fun I wouldn't suggest trading your life savings for a computer code.