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Bitcoins: the Ultimate Safe Haven

Bitcoin Value Skyrockets in Mere Weeks


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By Erik Neilson
Wednesday, March 27th, 2013

If you haven’t heard of Bitcoins, you can rest assured that you’re not alone. The same thing may not be able to be said a few years from now, however, as many believe this “currency” has an exceptionally bright future.

According to Smart Company, Bitcoins were first developed in 2009 by a secretive individual known as Satoshi Nakamoto. Originally costing only pennies per piece, Bitcoins have been seeing a great deal of increased performance as of late.

One Bitcoin was worth approximately $73.75 last Friday, according to Fox Business—up an astonishing 84% in just the last two weeks, when the currency was worth around $40. This morning, it was pricing around $87. Currently, the value of outstanding Bitcoins sits around $800 million.

Bitcoins are an entirely new take on the concept of modern-day currency. While currency has almost entirely been regulated by governmental authorities throughout the world for practically as long as it has been in use, Bitcoins do not fall into this realm.

bitcoinThey operate on a peer-to-peer network, making this perhaps the world’s first decentralized currency to actually drum up a fair amount of interest. The currency works off of an algorithm that ensures Bitcoins will gain steadily.

Methods for obtaining Bitcoins are almost as interesting as the currency itself. While Bitcoins can be purchased with regular currency, they can also be “mined” by those who are savvy enough and have the right equipment to do so.

Mining Bitcoins is a process that entails finding specific numbers that can satisfy the equation that results in a single piece of the currency. Because there are only so many numbers that serve as a good fit, the number of Bitcoins is limited—a major aspect of how the currency actually works.

Much of the recent success of Bitcoins comes as a result of the fact that there is growing uncertainty regarding centralized currency throughout the world. The financial crisis in Cyprus in particular has caused people the world over to begin thinking about how government regulates currency and whether or not the same situation could happen where they live.

Because Bitcoins act as a decentralized form of currency, the issue of government does not come into play—a lucrative concept for those who tend to err on the side of caution.

This is being threatened, however. The U.S. government is seeking to regulate the usage of Bitcoins, according to Silicon Angle, basing this on fears that the new form of currency could be used for money laundering purposes.

Regulating Bitcoins would practically defeat their purpose entirely, however, and considering the fact that HSBC has in the past found itself in the center of a money laundering scandal with almost no consequences, the argument is less than valid.

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A major reason many people are interested in investing in Bitcoins comes down to the fact that the currency allows for anonymity in ways that simply don’t exist when it comes to more traditional currencies.

The wealthiest Bitcoin investor in the world is sitting on somewhere around $30 million worth of the currency, according to Smart Company, but identifying this person is next to impossible; he or she goes by a username that consists of 40 random characters. 

Many people throughout the world like the idea of using a currency that isn’t as hyper-trackable as the dollar or euro, which is where Bitcoin comes into play. Bitcoin traders cite this aspect of the currency as a major selling factor for switching over from traditional money.

While the currency is still in its infancy, it's starting to gain quite a bit of exposure and will likely keep doing so. Some retailers such as coffee shops have begun to accept the currency, and it doesn’t stop there.

According to SF Gate, TDV Media CEO Jeff Berwick plans to open the 1st Bitcoin ATM in the world in—of all places—Cyprus. The ATM will allow users to exchange traditional currency for Bitcoins, as well as the reverse. 

Investors have nothing to lose in keeping a close eye on Bitcoins and may actually have quite a bit to gain. After all, it’s been a very long time since a currency this unique has been introduced to the world, and the fact that it is gaining steam is quite exciting.  

 

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