7 Reasons Why Speculators Can’t Talk Enough About Bitcoins

Unless you’ve been living under a rock, you should know that a bitcoin is basically a decentralized virtual currency that you can keep in virtual wallets and can be used to make real-life purchases and even be exchanged for real money.

Critics say that using cryptocurrencies like bitcoins can be dangerous as they have no intrinsic value, are not regulated, and can be used in making illegal transactions. So why are market players still talking about bitcoins? Here are possible reasons:

Reduced transaction costs

Unlike existing online payment systems such as PayPal and credit cards, bitcoin payments don’t have to deal with middlemen and international regulations. This significantly brings down the cost of bitcoin transactions (think transferring millions of US dollars for only a few pennies).

Alternative to fiat currencies

Some believe that bitcoins is a good alternative to holding national currencies dealing with capital controls, high inflation, and economic sanctions. For example, Cypriots probably would have preferred holding bitcoins over euros when banks had imposed withdrawal limits earlier this year.

Semi-anonymous trading

While a lot of exchanges require personal information, other services don’t require such trivialities. Identification isn’t impossible though. Remember that all bitcoin transactions are recorded in a public ledger!

If you think that you’ve seen the advantages listed above before, you are not wrong. So why the heck did the bitcoin’s popularity skyrocket early this month? Here are more recent reasons:

Bitcoins as a new type of asset class

Since breaking above $200 on the Tokyo-based Mt. Gox exchange in April, speculators and long-term traders are slowly recognizing the cryptocurrency as a possible investment. It also didn’t hurt its appeal when it staged its impressive spike a few days ago. But more on that on my next point.

Bitcoins are getting more legitimate

Over the past weeks major institutions such as the BOE and the Fed have joined Germany and have stepped closer to recognizing the crytocurrency as a unit of payment. In fact, just last week Ben Bernanke’s statement that virtual currencies “may hold long-term promise” was one of the main reasons why the value of bitcoins spiked to $900 on Mt. Gox and $1,100 on BTC China. Yowza!

More and more are using it

If you’ve read articles on what the heck bitcoins are, then you have no doubt also seen that a lot more merchants are now accepting payments in bitcoins. This includes China’s Baidu, Reddit, WordPress, some pizza chains, apartment rentals, and other small businesses.

Incentive to make it mainstream

Due to the cryptocurrencies’ nature, those who are holding bitcoins have incentives to make it more popular, more mainstream. Remember that cryptocurrencies technically have no instrinsic value and instead their value mainly depends on their demand.

This is why you shouldn’t be surprised that British billionaire Richard Branson, a bitcoin investor, recently announced that Virgin Galactic is accepting bitcoins for tickets to space. Heck, the famous Winklevoss twins who are on their way to establishing a bitcoin ETF also said that bitcoins are worth 100 times that they are now!

This doesn’t mean that bitcoin trading is some elaborate scheme formed by techno geeks though. Fact is, whether you think bitcoin trading is some type of Ponzi scheme or the future of money, there’s no denying that we’ll see and hear more about bitcoins in the future. This means that you should seriously start reading up about bitcoins (if you haven’t yet) so you can make informed decisions in case we see another significant development on the industry.

How about you? What is your opinion about bitcoins and cryptocurrencies in general? Give me a shoutout!

[Here’s a newbie-friendly guide to bitcoins!]

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  • morgan

    I don’t really trust bitcoin. It’s not regulated and the price spike too quickly. Not to mention there are no way to prevent money laundring or tax evasion with bitcoin.

    It prices is also too inflated. It’s like gold in 2011, before long the bubble will burst. My advice to anyone who hold bitcoin, sell now before get burned.

  • ruben

    not so fast, its true about inflation but at longer term it may go up a lot, its relative easy to mining bit coins specially in a poll, and you can even buy a kit just for mining, the tendency is for bit coin to be used in every day life

    • morgan

      My point is bitcoin still has no real value. People can use gold for jewelry, money is backed by government. Bitcoin?

      • gnew

        so you think gold price is that high because it is used for jewelry?.. of course not, most gold is just packed to pieces saved in the banks just sitting there as a measurement of wealth.. if one day people stop using it as such then the jewlwry use will worth almost nothing.. u could even find gold thrown in the streets and no one picking it up.. golden jewels are expensive now just because of the rule of demand and supply

  • Steven

    Given the potential of bitcoin, I will hold on to mine. Sure I could lose all of my investment of it in a moment, however the money I invested is money I can afford to lose, and given how bitcoin can have huge surges in value and percentage points the risk to reward ratio is in my favor. If I lose this bet I lose no big deal but if those bitcoin fanatics are right then I will have Huge returns.

  • morgan

    Well, it’s up to everybody what to do with their money. Maybe I’m wrong and bitcoin will soar. One thing I know for sure is I will watch bitcoin price closely and see how it pan out in the future.

    It will be a good experience to know whether I make the right or wrong investment choices.

  • Superb all 7 reason, I haven’t even thought of this thanks.

  • Pretty legit reasons. thanks for the share!

  • Hey enjoyed reading your blog, great points on using Bitcoins. We know “Currency” by many names and forms in our real world. Glad that currency is making wonders even on Virtual platforms. Very soon we shall use Bit-coins to buy our snacks.