Bitcoin investor Trace Mayer explains the virtual currency.
How much is a bitcoin worth?
Well, it’s worth whatever somebody will pay for a unit of the online currency, which as I write this is $209, up from $142 last Friday, $44 a month ago, and $4.93 a year ago. This huge run-up — the latest spike began with EU’s botched rescue of Cyprus’s banks — has led to much talk of a bitcoin bubble.
Posted by Peter Cohan @Forbes. Read it here:
I have been curious about Bitcoins — an unregulated electronic currency running on a computer network — ever since June 2011, when I first wrote about them after a hacker broke into Mt. Gox, a Bitcoin exchange, sending its price plummeting from $30 to pennies on the dollar.
After reading my post in which I compared the risk of Bitcoin to that of Cyprus, a Bitcoin trader contacted me and shared his views on their value as an investment. In a nutshell, this trader is bullish and plans to buy it on dips.
A financial network is a technological platform that people build businesses on top of. And the traditional banking and credit card networks are closed platforms. If you want to build an e-commerce site, a payment network like Paypal, or any other service that deals in dollars, you need to convince incumbent financial institutions to do business with you. Getting such a partnership is difficult and involves a lot of red tape.
As Adam Ozimek points out Bitcoin has so far largely been greeted with eye-rolling by professional economists. One reason is that the cryptocurrency’s most enthusiastic advocates tend to subscribe to a hard-money, end-the-Fed worldview that is unpopular among elites. That has caused the latter to reflexively take the opposite view, treating Bitcoin as primarily a monetary policy experiment and predicting its doom.