Bitcoin Investing in 2014: A Wise Speculation or a Fool’s Decision?

bitcoin2013 will go down in history as the year of the Cryptocurrency. Here is when “virtual” currencies like Litecoin and Bitcoin enjoyed an immense rise in value (Bitcoin was $120/bitcoin at the start of the year, it went over $1000/bitcoin by November 2013), and when the silly, meme-inspired Dogecoin almost became a legitimate cryptocurrency on its own. A wide variety of establishments- from large corporations and international non-profits, to shady Silk Road (literal) drug stores and your friendly neighborhood mom-and-pop shops- have already adopted Bitcoin as a form of payment.

2014 – The Year of Bitcoin Trouble?

But all is not well inside the Bitcoin community. While 2013 ended on a high note, the first quarter of 2014, well, basically SUCKED. A number of online wallets and exchanges, most prominently Mt. Gox, was allegedly hacked- millions of dollars in bitcoins siphoned off almost overnight.

Since the whole Bitcoin system is not supported by any legitimate financial institution, there’s no way that pissed off clients would get legal help in getting their bitcoins. The least that they could do is hope that the establishments themselves (i.e. the online wallet companies like Mt. Gox) take the initiative to refund the value of the lost bitcoins back to them. But this scenario is highly unlikely. Some Bitcoin and cryptocurrency communities, especially those that can be found on Reddit, have even speculated that all of the sudden shutdown of the Bitcoin wallets and exchanges were deliberately engineered by the administrators themselves (i.e. they stole off most of the money).

These setbacks have forced the governments of China and Russia to effectively ban Bitcoin transactions from their shores.

Rising from the Ashes

Here’s the weird thing: the value of Bitcoin has plummeted to around the $440-$460 range and people are becoming wary of any new online wallets that pop up- but entrepreneurs and angel investors are still putting a lot of money into the Bitcoin system. CoinDesk, a cryptocurrency news site, has reported that $72 million worth of venture capital have went into the coffers of Bitcoin startups in the first few months of this year alone. Well-known venture capitalist Marc Andreesen has also put in a few millions into Bitcoin-related ventures in the first quarter of 2014. Why aren’t people completely shunning Bitcoin?

Well, it seems that more and more people want no government intervention in their financial matters. They want a system of currency that is unregulated, untaxed, and uncontrolled by any other financial entity. Bitcoin and other cryptocurrencies fulfill this need.

Bitcoin is far from perfect- there are still a lot of kinks that need to be ironed out first before people can put 100% trust in the system. It’s still a long way to go before the whole public can finally open up to the idea of having a financial system that is purely digital and does not depend on any governmental entity to regulate it. Bitcoin is still young- there’s still a lot of time to fine tune things.

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