As the current leader in the cryptocurrency market world, Bitcoin has made some serious headlines and some major swings 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 thin air, while some love the idea that something without government control can be traded as a unit of value in its own right.
Where you stand on “Should I buy Bitcoin?” probably ultimately boils down to one question: Can I make money from Bitcoin?
Can you make money from bitcoin?
In the last 6 months alone, we have seen the price go from $20 per coin in February, to $260 per coin in April, back to $60 in March, and back to $130 in May. The price has now settled at around $100 per Bitcoin, but what happens next is anyone’s guess.
Bitcoin’s future ultimately depends on two main variables: its acceptance as a currency by a wide audience and the absence of prohibitive government interference.
The Bitcoin community is growing rapidly, interest in the cryptocurrency has spread dramatically online, and new services are increasingly accepting Bitcoin payments. Blogging giant, WordPress, accepts Bitcoin payments and Africa-based mobile app provider, Kipochi, have developed a Bitcoin wallet that will allow Bitcoin payments on mobile phones in developing countries.
We have already seen people making millions from the currency. We are seeing a growing number of people experimenting with living on Bitcoin alone for months on end while documenting the experience for documentary viewing.
You can buy takeout in Boston, coffee in London, and even a few cars on Craigslist using Bitcoin. Bitcoin demand increased sharply in 2013 with the April rally and subsequent drop in the price of Bitcoin. Last week, the first major acquisition of a Bitcoin company was made for SatoshiDice, an online gambling site, for 126,315 BTC (about $11.47 million) from an undisclosed buyer.
This rapid growth in awareness and adoption looks set to continue if confidence in the currency remains strong. Which leads to the second dependency. State regulation.
Although it was specifically designed to operate independently of government control, Bitcoin will inevitably be affected by governments in some way. This should be so 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 spreading beyond the realms of hidden transactions to normal everyday transactions for individuals and businesses. Second, these Bitcoin transactions can 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 money and as such will not be regulated per se. In the US, the 50-state system and the number of bureaucratic bodies involved inevitably make decisions more difficult, and no consensus has yet been reached. Bitcoin is not considered money as such, but it is believed to act like money.
The booming bitcoin market in the US has a more uncertain future for now, and any compelling legislation in the US could have a very positive or very negative effect on the future of bitcoin.
So, should you buy Bitcoin?
The answer depends mostly on how risk-averse you are. Bitcoin will certainly not be a smooth investment, but the potential of this currency is huge.