Bitcoin is probably a familiar story to most of you by now – a new online currency that has grown in price from a lowly price of .10$ USD in September 2010 to over 1000$ USD over the past month. During these past two years I’ve been watching over this price on various forums, admittedly largely sceptical, but none the less interested, as to where this hugely speculative currency will end up. Let me make clear – BTC is not a stable currency; and yes it is overvalued… for now. With that said, its rise does not seem to be slowing down anytime soon, for various reasons… the first and foremost being pure speculation is keeping it stable.
That said, the idea of Bitcoin as a currency is not one that can be easily discarded, especially with the advantages that it provides to its users (not including the more nefarious and well known examples available.)
For starters, say you were planning on buying an item for a large amount of money, 20,000$, but the seller refuses to use credit cards or –gasp- Bitcoins even! The amount of effort you would have to go to just to get that amount of money in cash, while ensuring the cash wasn’t counterfeit, highlights how Bitcoin in the place of cash would be useful. Had the seller been interested in using Bitcoin the time spent trading would be cut down to a few minutes.
Here’s the kicker. Say the seller accepted credit cards. Well, paying via credit card usually attracts a 2-3 percent transaction fee.
What’s that you say? Bitcoin has little to no fees involved? Yes. And that is an extremely attractive attribute to anyone interested in saving money. This is due to there being no need for Bitcoin to be processed through a third party institution and it’s a major selling point of this crypto currency. To me it’s the best one and the other benefits are humdrum in comparison, the others being transparency and anonymity – as well as others.
Keep in mind that with very few businesses worldwide, with 4 in Australia, accepting BitCoin, the notion that people are buying Bitcoin in relation to an expectation of an increased price in the currency as opposed to a need to use it for any practical purpose is highly probable. With the high volatility of the currency, it lends a lot to the view of the current state of Bitcoin to be that of a gigantic bubble. If and where it bursts remains to be seen.