With the need for fast and big profits from the 21st century, Bitcoins, the virtual currency, has become one of the most controversial new investment vehicles. view publisher site It’s gained attention due partly to its uncertainty, partly because of the instability of Bitcoin exchanges and partly because their intraceability meant that they were a preferred form of payment for criminals.
Things are shifting and after a particularly volatile period in which one of the main exchanges, MtGox, filed for bankruptcy, the currency appears to have settled into a more predictable pattern that enables investors to take a balanced view on whether to gamble their money in a currency that theoretically doesn’t.
Volatility While Bitcoins are becoming increasingly common, the market is still very low, which means that both good and bad news can have a disproportionate price impact. The long-term outlook for Bitcoins is theoretically healthy, which means the price upside is higher than the long-term potential for a decline. Because of its uncertainty, most brokers suggest that you make Bitcoin a medium to long term investment. Think of it in the real estate sense. Nobody buys and sells houses several times a day and property prices may drop dramatically but the long-term trend for property prices is typically up. We may assume the same for Bitcoins. Although there is a large regular trade in the currency, several Bitcoins are kept as investments as analysts believe it’s inevitable that Bitcoins’ price will increase in the long term as they are more widely recognized.
Influencers As with all financial instruments, supply and demand are affected on rates. Bitcoins are no different, but what triggered significant price spikes was the peculiar nature of the news that affected supply and demand: • The bankruptcy of MtGox, one of the largest Bitcoin exchanges • The closure of Silk Road, which allegedly used Bitcoins for drug dealing • The announcement by the U.S. government that, amid the negative uses of Bitcoins, they have been approved for drug trafficking
Generally the advice on investing in Bitcoins is to sit down and watch the market for a few weeks and get an understanding of how the currency moves, its price and trends. It’s hard to find reports that didn’t immediately affect the valuation, so many recommend spending a small sum and only looking for opportunities, a little like setting profit rates on shares and Forex, you can do the same on Bitcoins; it’s only a little bit longer and a little less automated.
As with any investment, the value will decline, and events like MtGox’s collapse and Silk Road’s closure have negatively affected Bitcoins; not just because demand has been decreased, but also because urban theory has wrongly associated Bitcoins with the companies. When more exchanges come online, the market seems to be becoming more frequent but not generally regulated. Some of the exchanges are going to go the same direction as MtGox while others are going to consolidate and become stronger and more dependable. No doubt in due course, official control will be extended to Bitcoins by which time the price is likely to decrease.
Bitcoins are an exciting and potentially lucrative medium to long term tool for investment. Exciting since it has not been accepted into the currency or investment fund mainstream yet. One thing investors like about Bitcoins is their confidence in prospects as it was in gold
