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Author Topic: barrons.com: Meet Bitcoin, the World’s Best Performing Currency  (Read 1253 times)

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Meet Bitcoin, the World’s Best Performing Currency


Who needs the euro when you have bitcoin?

The best performing currency this year? No it’s not the Seychellois rupee (+8.07%), Paraguay’s guarani (+5.24%) or Brazil’s real(+4.45%). It’s bitcoin, the online, open source currency, which has gained nearly 200% so far this year.

Quote
Let me first acknowledge that I know next to nothing about bitcoin. I was clued into it by the father of one’s of my daughter’s friends, who does a bit of trading in the online currency. But it’s real, even if it’s virtual, and it can be used to buy real-world goods. And those goods don’t have to be legal. Because it uses a peer-to-peer network, its users remain anonymous and safely out of reach of the law enforcement (at least most of the time), which has made it handy when purchasing illegal drugs and the like.

Why is bitcoin gaining? The number of coins in circulation grows very slowly–there are about 10.8 million coins changing hands now, and that will increase to 21 million by 2140 (no, that’s not a typo). No currency wars here.

That growth, however, hasn’t been able to keep up with demand and so the value of the currency doubles, and then doubled again. Here are some bitcoin stats courtesy of ConvergEx Group’s Nicholas Colas. As of Feb 28:

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Those 10.8 million bitcoins in circulation are worth $345.6 million as of today. The velocity of this
 money is astounding: 1.6 million bitcoins have changed hands in the last 24 hours, or over 10% of the existing money stock.
The U.S. dollar value of a Bitcoin is up from just shy of $5.00 a year ago ($4.87, to be precise) to $31.09 today. It has appreciated by over 100% from the end of 2012 alone, when the quoted price was $13.48. And back during most of 2010, you could buy all the BTC you wanted for less than a dime.
Over the last 24 hours, there have been +61,000 transactions using BTC. This is almost double the 30,000 transactions in January 2013, and more than 6x that of March 2012.

And it’s also going mainstream, reports in the Guardian and Forbes suggest.

But buying a bitcoin is not a risk-free bet. As ConvergEx notes, the value of a bitcoin dropped from $27 to $2 in 2011 after a “short-lived attack on one Bitcoin ‘Wallet’ company out of Japan…Confidence in money as a store of value is the ultimate driver of its value, both in the cyber and real worlds.”  These days, the biggest risk likely comes from the FBI or other government agencies, ConvergEx says.
http://blogs.barrons.com/emergingmarketsdaily/2013/03/05/meet-bitcoin-the-worlds-best-performing-currency/
"Your keys, your Bitcoin. Not your keys, not your Bitcoin." (Andreas Antonopoulos)
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