Currently the world’s number one cryptocurrency, Bitcoin has been making major headlines and major fluctuations over the past 6 months. Almost everyone has heard of them, and almost everyone has an opinion. Some cannot fathom the idea that a currency of any value can be created out of nothing, while some love the idea that something that is not controlled by a government can be traded as a valuable entity in its own right.
Where do you sit on the question “Should I buy Bitcoin?” the fence probably ultimately boils down to one question: can i make money with bitcoins?
Is it possible to make money with bitcoins?
In the last 6 months alone, we have seen the price go from $20/coin in February to $260/coin in April, drop back to $60/coin in March, and rise again to $130/coin in May. The price has now settled around $100 per Bitcoin, but it’s anyone’s guess what will happen next.
Bitcoin’s future ultimately depends on two main variables: its acceptance as a currency by the general public and the absence of prohibitive government interference.
The Bitcoin community is growing rapidly, interest in the cryptocurrency has exploded online, and new services are increasingly accepting Bitcoin payments. Blogging giant WordPress is accepting bitcoin payments, and African mobile app provider Kipochi has developed a bitcoin wallet that will allow bitcoin payments on mobile phones in developing countries.
We have already seen people make millions from the currency. We’re seeing more and more people experiment with living off Bitcoin for months at a time while recording the experience for documentary viewing.
You can buy takeout in Boston, coffee in London, and even a few cars on Craigslist with Bitcoin. Bitcoin searches skyrocketed in 2013 with the April rally and subsequent fall in the price of Bitcoin. Last week saw the first major acquisition of a Bitcoin company for SatoshiDice, an online gambling site, for 126,315 BTC (about $11.47 million) by an unknown buyer.
This rapid growth in awareness and uptake looks set to continue as confidence in the currency remains strong. Which leads to the second addiction. State regulation.
Although Bitcoin is specifically designed to operate independently of government control, governments will inevitably influence it in some way. This should be so for two reasons.
First, to achieve a high level of adoption, Bitcoin needs to be accessible to a large number of people, which means going beyond hidden transactions to common everyday transactions for individuals and businesses. Second, these bitcoin transactions can become part of people’s taxable estates, which can be tracked and declared and regulated along with any other type of wealth.
The European Union has already stated that bitcoins are not classified as fiat currency or money, and as such will not be regulated per se. In the US, the 50-state system and the number of bureaucratic bodies involved have inevitably complicated decision-making, and consensus has yet to be reached. Bitcoin is not considered money as such, but it is considered to act like money.
The booming Bitcoin market in the US has a more uncertain future at the moment, and any final legislation in the US could have either a very positive or a very negative impact on the future of Bitcoin.
So, should you buy Bitcoin?
The answer largely depends on how risk averse you are. Of course, Bitcoin will not be a smooth investment, but the potential of this currency is huge.