Bitcoin and other virtual currencies, AKA cryptocurrency or simply cryptoare causing much controversy in the financial realm. Their value is defined by a blockchain or complex code that can be shared among multiple computers but is completely anonymous and other mainstream bitcoin investment vehicles and attempts of any government issuer.
This makes crypto attractive for both legitimate such as supply chain transactions between a company and its vendors and illegal laundering of money from drug transactions use. Separate from its intended purpose, cryptocurrency has become a vehicle for intense speculation among traders and investors.
Huge daily swings in price, causing fortunes to be won and lost, are common to most cryptocurrencies. While some financial experts see great potential in cryptocurrency, others feel it represents a highly inflated asset similar to other bubbles of the past. We wanted to hear what the financial experts had to say, so we asked them to weigh in regarding their opinions and advice on Bitcoin and cryptocurrency. Here is a technology that allows other mainstream bitcoin investment vehicles and attempts to send any amount of money to anyone else in the world at virtually no cost with nothing more than an Internet connection or smart phone.
Bitcoin, like the Internet, is one of those innovations that can break down barriers; information barriers in the case of the Internet, and financial barriers with Bitcoin. It is a currency that is free of central bank control, is decentralized, and it has proven that it can serve as a store of value for people who lose trust in their national currency Greece, for example.
However, the supply of every currency is controlled by some function, and in the case of the Bitcoin it is through the process known as "mining. While the sheer difficulty of mining assures Bitcoin users that there won't ever be a massive supply shock in the digital market, the way that Bitcoins are created causes one enormous problem.
Primarily, it incentivizes miners to hoard the currency upon receiving it. The only way to alleviate this issue is to mandate that miners have to exchange all newly-mined Bitcoins for another currency of their choice.
Otherwise, volatility will end up killing this currency's potential, and a group of Bitcoin miners will control the supply. Is that really any better than a central bank?
While one could make the case for an investment in currencies due to their diversification benefitsa purchase of Bitcoin would be pure speculation, akin to penny stocks. But as a concept, I love it! A global currency would eliminate the need for exchanges making global commerce easier by increasing efficiency, reducing transaction costs, and ultimately reducing costs for the end consumer. Even better, Bitcoin is not controlled by a central bank, thereby reducing the risk of manipulation from authoritarian governments.
And with a limited supply, inflation should be kept at a minimum. It's truly a global unregulated currency that is not taxed at other mainstream bitcoin investment vehicles and attempts level. Multiple attempts have been made to harness in other mainstream bitcoin investment vehicles and attempts currency, but much like the other mainstream bitcoin investment vehicles and attempts attempts to regulate the Internet, the regulations so far have failed.
At some point, Bitcoins will likely need to be regulated to have lasting power. The questions will be who and how. FinCEN has issued guidance concerting virtual currencies and their administrators and exchanges that subject these companies to the same regulatory responsibilities as other financial institutions. States are also involved. At a time when we're seeing just how much power is abused I think the world is ready for a currency that is decentralized and controlled by the people.
But yes, Bitcoin still has a journey ahead of it. It needs greater adoption, and more simplicity to appeal to the general public. But then again, the general public should be more informed anyway. Monetary decisions affect them more than the people that make the decisions. Because the Bitcoin supply doesn't increase in proportion to the growth or use of Bitcoins, there is a deflationary effect, creating an incentive for people to hoard Bitcoins rather than spend them. Gresham's Law in economics suggests that for a complementary currency to be successful, it needs to have an inflationary effect that exceeds inflation in the national currency.
Until it gains widespread acceptance and price stability, it will never be a mainstream method of payment. And from an investing perspective, Bitcoin's uncertain future and the lack of any meaningful fundamental metrics make it a speculation at best, and gambling at worst.
It's nearly impossible to move USD in and out of the largest trading platform MtGox and, as a result, there are very few significant market makers participating in the exchange. Absent reliable providers of a liquid marketplace, volatility will remain high.
This presents major difficulties for businesses and individuals that might otherwise accept Bitcoin as payment for goods and service in forecasting Bitcoin other mainstream bitcoin investment vehicles and attempts rate risk. Bitcoin can't be a viable long-term currency unless, and until, it is more broadly accepted as an exchange medium for items of real value i. These challenges are interconnected and the current regulatory assault is the single most important aggravating factor to these circumstances.
But one thing we can all agree on is, while it's much safer and cheaper! On the dark side of it, Bitcoins can be used to hide large transactions from governments which really opens the door to black market activities. It's far too young for me to get involved in Bitcoin in my own life as I fear that global governments will try to shut it down as they will be losing billions in tax revenue if Bitcoin gets really big.
As a trader, it offers some incredible opportunities. Price fluctuations have been all over the map recently. It's too early to be sure which way it might influence monetary aggregates and velocity of circulation. It could expand the de facto money supply and could increase or decrease the velocity of circulation of the supply of fiat money and near-money.
Bitcoin might bring back Gresham's Law by driving out inferior or "bad" money. Central banks fight deflation by putting more fiat money into circulation. Consumers and businesses then spend it and raise the demand for goods and services.
That policy hasn't worked very well since because the consumers and businesses have been so cautious. They other mainstream bitcoin investment vehicles and attempts held onto money instead of spending it. The government should not get involved in regulating private money if there is no fraud. I do not take a position on Bitcoin and other proposed currencies in a technical fashion, but I understand the political ramifications of them, and I think that government should stay out of them and they should be perfectly legal, even though I don't endorse technically one over another.
I call the Federal Reserve Notes system a dismal failure. I hope the Bitcoin model, which was created by the powerful innovative free market system, will earn serious traction and acceptance as a global alternative digital currency model, and will compete with all fiat currency systems. The power of Bitcoin is that no central bank can print Bitcoins and dilute its purchasing power parity.
Even though there are some who claim Bitcoins are the currency of the future, I just don't see it. It has also been linked to drug trafficking and illegal gambling. I see it as a fad and nothing more, and as more people lose real money because of the legal issues surrounding Bitcoin, I eventually see it fading from existence.
Editor, Insider Monkey Website Twitter. Former CMO of cryptocurrency exchange Crypto. Founder of payment startup FreshPay. National Economist and Financial Reformist Website. Subscribe other mainstream bitcoin investment vehicles and attempts our award-winning newsletter OverLessons from the Pros readers. Check out last week's issue.
Although most people tend to overlook Litecoin in this regard, it may become a far more popular cryptocurrency in the near future.
Itвs frustrating for sure, but I guess this is proof of why cryptocurrencies have such a bold future: they allow the world to exchange assets without a third-party allowing fees to be kept minimal. No Coins match your settings 2.