As the current world leader in the cryptocurrency market, Bitcoin has been making some serious headlines and some serious fluctuations in the past 6 months. Almost everyone has heard of it and almost everyone has an opinion. Some can’t fathom the idea that a currency with any value can be created out of nothing, while some love the idea that something without government control can be traded as a valuable entity in its own right.
Where do you feel on “Should I buy Bitcoin?” The fence probably ultimately comes down to one question: Can I make money with Bitcoin?
Can you make money with Bitcoin?
In just the last 6 months, we have seen the price go from $20 a coin in February, to $260 a coin in April, back to $60 in March, and back up to $130 in May. The price has now settled around $100 per Bitcoin, but what happens next is anyone’s guess.
Bitcoin’s future ultimately rests on two main variables: its adoption as a currency by a wide audience and the absence of prohibitive government intervention.
The Bitcoin community is growing rapidly, interest in the Crypto currency has spread dramatically online, and new services are accepting more and more Bitcoin payments. Blogging giant WordPress accepts Bitcoin payments, and Africa-based mobile app provider Kipochi has developed a Bitcoin wallet that will enable Bitcoin payments on mobile phones in developing countries.
We have already seen people make millions with the coin. We are seeing a growing number of people experimenting with living on Bitcoin alone for months on end, 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 have skyrocketed in 2013, with the April spike and subsequent fall in the price of Bitcoin. Last week saw the first major acquisition of a Bitcoin company for SatoshiDice, an online betting site, for 126,315 BTC (about $11.47 million), from an undisclosed buyer.
This rapid growth in awareness and uptake looks set to continue, if confidence in the currency remains strong. Which leads to the second dependency. Government regulations.
Although it is specifically designed to function independently of government control, Bitcoin will inevitably be affected by governments in some way. This must be the case for two reasons.
First, to achieve high levels of adoption, Bitcoin will need to be accessible to a large number of people, and that means extending beyond the realms of hidden transactions to normal everyday transactions for individuals and businesses. Second, these Bitcoin transactions could become a traceable part of people’s taxable wealth, to be declared and regulated along with any other type of wealth.
The European Union has already declared that Bitcoin is not classified as fiat currency, or as money, and as such, will not be regulated in its own right. In the US, the 50-state system and the number of bureaucratic bodies involved have inevitably made decisions more difficult, with no consensus being reached so far. Bitcoin is not considered money as such, but it is considered to act like money.
A thriving Bitcoin market in the US has a more uncertain future for now, and any conclusive legislation in the US could have a very positive or very negative effect on Bitcoin’s future.
So, should you buy Bitcoin?
The answer mainly depends on risk aversion. Bitcoin will certainly not be a smooth investment, but the potential of this currency is huge.