Due to the fact that other organizations are getting involved and things such as “light coin” are popping up the value of bitcoin does remain in question as a means of high profits for the long term because more options for secure and anonymous transactions will devalue bitcoin which once stood as the only alternative. It is still profitable to invest in bitcoins themselves—though not Bitcoin mining—so long as you understand the mathematic guarantees associated with it (i.e. the value will be halved every four years and transaction fees will soon arise to cover the costs of mining and the system may not be wholly secure given the cryptography used).
Silicon Valley and real money bets on Bitcoin
Andreessen Horowitz, which is a leading venture capital firm, made the announcement recently that it just finished a $25 million fundraising campaign for Coinbase. Coinbase is a Bitcoin startup business that is located in San Francisco and aims to help the virtual currency gain a stronger and a wider spread mainstream acceptance. Chris Dixon, a partner at Andreessen Horowitz has said that it is difficult to overstate the excitement of investors who see the potential for a great technology and virtual based currency. This most recent funding campaign for Coinbase dwarfs any other fundraising for the virtual currency campaign. Circle Internet Financial, a startup industry that processes and handles digital money payments for merchants, got $9 million this past October for the Bitcoin campaign.
While Bitcoin has its share of opponents and naysayers who point out potential issues with a virtual currency- mainly concerns about fraud- a growing number mainstream investors and money gurus are saying it has the potential to be a new way of handling monetary transactions, and thus smoothing the electronic flow, exchange, and movement of cash from consumers to vendors and merchants. Big named companies who are recognized as leaders and experts are taking a keen interest in the growing popularity and the vast potential of Bitcoin. Within the last few weeks, Bank of America released what is being called the first significant research on digital money. There are many avenues for Bitcoin to become a common and recognized form of currency. With the hopes that online giants like Amazon, EBay, and others warming up to the idea of Bitcoin transactions, the future could be very bright indeed. No one is fooling themselves by expecting Amazon to offer Bitcoin payment options next year but it is something many feel could become a reality in the next five to ten years. The majority of those who are concerned about the virtual currency have concerns over Bitcoin’s dollar price and volatility. The argument they present is that the Bitcoin is too unstable to be very practical or useful as actual money and that if a collapse of the currency happens, more people will be impacted.
Bitcoins as a currency right now really only exist as software, which means that the virtual currency isn’t controlled by a single influence, any one government entity, or one central bank. The digital money was first developed sometime between 2008 and 2009, and was the brain child of programmers who were known only by the alias of Satoshi Nakamoto. To this day no one is really sure who Bitcoin’s creator is. Bitcoins are used extensively on the World Wide Web, with more than 12 million in circulation. Bitcoins have been used to buy food, cameras, craft supplies, computers, clothing, and everything in between. According to Bitcoincharts, a website that tracks the digital money’s activity, the virtual money is continuing to gain popularity among small users and investors. Announcements were also made that helps ease some fears about fraud and laundering of the virtual coinage. The Treasury Department’s Financial Crimes Enforcement Network made a statement that Bitcoin businesses would likely be categorized as money transmitters and then would be obligated to comply with anti money laundering laws as well as state licensing regulations for such businesses.
Trading Around the World
All is not sunshine and rainbows though for the virtual currency. A huge blow to the Bitcoins’ popularity came from China when the Chinese central bank ordered third party payment providers to stop working with Bitcoin exchanges. The move could prevent people in China from buying or selling Bitcoins online. The People’s Bank of China has a history of being very harsh with any money systems that pose a threat to the Chinese currency. Despite this there is still hope that China may soften somewhat on its stance since the current ruling does not forbid Bitcoin exchanges, it just makes it harder for many vendors to accept and deal with the virtual money system. In the days and weeks following China’s initial announcement, there was a drop in the value of Bitcoin but recently it has begun a slow yet steady climb back up. Many investors in the United States recognize this potential and are jumping on board to try and secure their place in the future of Bitcoins. With enough support and backing to instill consumer confidence again, the Bitcoin could reach its previous highs and even exceed them.
Finding the Right Platforms
Others around the world are also recognizing this potential. Li Lin, CEO of Huobi.com is waiting to see what the next move may be. Huobi.com is a site that deals with the exchange of Bitcoin transactions online. Bitcoin tokens are minted out of silver for clients who own Bitcoin. Li is believes that the Bitcoin has the potential to be as valuable as any precious metals, calling it virtual gold. Li and his company deal with approximately a Bitcoin value exchanged that is around $50million each day and hope to see the current low numbers reach those heights in the very near future. Things can change at a moment’s notice and in time it will be easy to determine how successful the Bitcoin is as a recognizable and viable form of currency for online transactions and trades.