Bitcoin's reputation continue to grow. The cryptocurrency's value could go up and down in the range of more than ten percent in a day. Nevertheless, it is increasingly recognized as even Zynga, the most popular social gaming company, recently accept it as payment option. Until the end of 2013, more than 20000 online merchant and 1000 brick-and-mortar businesses accept payment in bitcoins. So, is this the time to invest in the cryptocurrency?
Bitcoin's reputation continue to grow. The cryptocurrency's value could go up and down in the range of more than ten percent in a day. Nevertheless, it is increasingly recognized as even Zynga, the most popular social gaming company, recently accept it as payment option. Until the end of 2013, more than 20000 online merchant and 1000 brick-and-mortar businesses accept payment in bitcoins. Opinions on bitcoins among analysts are quite divided. Some called bitcoins as a 'bubble' that is going to explode sometime soon. Some other says that bitcoins is the future of world currency, by referring to bitcoins increasing value against major currencies, particularly USD. So, is this the time to invest in the cryptocurrency?
A By-Product Of Cyberworld
One thing that common people often unknowledgeable about is that the existence of internet has created a world without political nor geographical limit, where direct human interaction is a surplus requirement. You want to study in college? there are online universities, you could even study for free there. You want to go shopping? there are numerous online shopping websites. You need a job? Just do online trading, or seek freelance work in online job market. Whatever you need, legal or illegal, material or immaterial, internet made it possible for you to get it without stepping outside your house.
Bitcoins is a by-product of such world. Long before the creation of bitcoins, e-payment appeared to facilitate online transactions. We transfers a certain amount of money to provider, and then an equal amount will be deposited to our virtual wallet to be used in transactions. However, for some people, e-payment is still thought of as unsatisfactory. To use e-payment, we ought to have official money first, which are regulated by government, experience inflation, deflation, and has certain legal limit. For the residents of cyberworld, these are bothersome limits.
So, when Satoshi Nakamoto released Bitcoin software as open source software in 2009, it instantly drew attention. The concept of 'mining' your own money attracts cyber-citizen, idealists, and speculators. For vendors, bitcoin (BTC) becomes increasingly attractive because payment doesn't need to be approved by government body. Aside from uncomplicated processing, transaction fee too become lower, even practically zero. Game producers, fast food restaurants, and even a brick-and-mortar university has accepted it. Several forex brokers like eToro, AvaTrade, LiteForex, Bit4x, and others have started to accept bitcoins.
Taking Notes From E-Gold
However, the nonexistent legal control made bitcoins risky. If we take notes from the experienc eof e-gold, the absence of legal control could take bitcoins down. E-gold was gold-based digital currency which could be used by its users to pay for their transactions. It was a good concept, and many people likes it for the value of gold in the long-term continue to rise. The problem is, e-gold didn't do one basic rule: Know Your Customer (KYC). As the result, e-gold became crime nest. In the end of 2005, FBI arrested the founder of e-gold, Douglas Jackson, and ended the life of e-gold.
Douglas Jackson himself didn't mean to allow criminal activities goes through his facilities, but he too, unable to prevent criminals from using e-gold. Therefore, although the court admitted that Jackson didn't have nefarious intent, he was punished. The story of e-gold is a warning for anyone engaged in virtual currency, that legal aspect can't be ignored.
Apart from legal aspect, there is another factor in the cons corner that works against bitcoin: the absence of back-up. When asked on his opinion about bitcoins by Financial Times, Jackson stated that bitcoins is different than e-gold. Bitcoin doesn't work under a certain company; instead, the transactions are recorded in peer-to-peer network. In this sense, payment system backed with gold or sovereign entities are superior than bitcoins. When e-gold was prosecuted, he could try to pay back their consumers deposits by liquidating golds in e-gold reserve. On the other hand, bitcoin won't be able to do the same. Nowadays, bitcoin was traded at around 1000USD per bitcoin. Say, something happens and its value declined into 500USD, or even forbidden, then who is it that's going to compensate you?
Prospect of Bitcoins
Said variables influence bitcoins recognizance as medium of exchange. At December 2, 2013, Central Bank of China forbid financial institutions from handling bitcoins. In the same month, Europe Banking Authority (EBA) warned that bitcoins has no consumer protection facility. Iceland even outright declared it as illegal. On the opposite, a couple coutries see the prospect of Bitcoins. Germany has recognized it. It also warmly welcomed by Australians. United Kingdom's HMRC mentioned that although bitcoin may not be treated as currency, but it could be taxed. Finland, Norway, and some others already tax bitcoins although they don't formally recognize it as payment tool. Major countries most possibly are going to take this route; they'll tax bitcoins, but won't recognize it as money per se.
From the various responses, we could say that bitcoins will continue to exist. Its value could go up and down, but as long as there are many people use it, it will spread further. This is especially because the segmentation of bitcoins user is unique. Half of bitcoins holder now may be speculators, but its mass base is well-established cyber citizen. Nevertheless, the possibility of it beinga ccepted as official currency of the world is pretty slim. There will be more stores across the world accepting it, but we should note that not everyone feel comfortable holding currency without legal and back-up assurance. Yesterday (8/1) e-commerce giant Alibaba forbid the use of bitcoin in its shopping websites. It came hot on the heels of Central Bank of China announcements.
The value of Bitcoin will continue to experience extreme fluctuation for the time being. Soon after Central Bank of China announcements, bitcoin price tumbled to no less than 30%. And after Zynga said it is going to accept bitcoins, the price increases more than 10%. This circumstances made investing in Bitcoins particularly risky. For now, trading in forex or gold is still far more conducive. However, if you are practically a permanent resident of cyberworld, then mining this cryptocurrency is in your must-do list.