It seems that Bitcoin is now attracting professional investors or at the very least they are taking note. I received the following email from Rothschild (London) Investments Bank's treasury team;
“Trading in foreign exchange markets averages $5.3 trillion per day, an increase in the last three years of more than a third and London still dominates as the world’s number one location with 41% of the global market going through the City. But there is a (fairly) new kid on the block, the Bitcoin, and London wants a slice of that business.
The Bitcoin is the first decentralised electronic currency that is not controlled by any one organisation or government. It started in 2009 as an experiment and is now used by more than 100,000 people across the world and requires no middle-man nor bank. It is community run and needs no backing by any authority, a mathematically secured currency system run on an algorithmic formula designed to eventually stop the creation of any new Bitcoins meaning it is calculated that there will only be 21 million in existence in entirety. Many had seen the currency as linked to illegal online activity and there was a fear the currency could be banned but last month a US Senate committee described the virtual currency as a "legitimate financial service" consequently sending the price soaring. The price in January this year to purchase a single Bitcoin was $13; hitting $238 in April then falling back to $84-100. Yesterday it hit a high of almost $1200 with just over 12 million Bitcoins in existence.
Many smaller companies such as coffee shops, food stores etc. as well as internet stores accept the coins as payment, but as the currency becomes more ‘mainstream’ larger businesses (e.g. Virgin) are considering them as valid tender. The Bitcoin Foundation has admitted though that there are “consumer-protection issues” on the use of Bitcoins. Last summer, London hosted a Bitcoin conference and businesses are considering moving to the UK as the UK’s city regulator, the Financial Conduct Authority has been asked to consider giving Bitcoin exchanges the same approved status as other firms in the financial services sector, a move they believe will help them gain the trust of the public.
Despite the success, comparisons are being made with the tulip bulb bubble of the 17th century. The currency is now subject to 20-25 times more speculative trading than payment for transactions for goods and services and those seeking to create new Bitcoins (rather than purchase them) must use powerful computers to solve complex software problems embedded in the currency, leaving demand outstripping supply and fuelling the price surge. How safe is it? Well apart from its uncertain value and unclear legal status, it has to be looked after. Just as paper money can get lost, yesterday brought the story of the man who threw out his hard-drive that stored his wallet of Bitcoins (said to be worth 4 million pounds). To retrieve it he would need to dig through three months’ worth of rubbish, a pile 1.5 metres deep and the size of a football pitch.”
I have also provided the link to the official “Bitcoin” website:
Poster Comment:
http://bitcoin.org/en/