The Winkelvoss brothers, who are famous from the film The Social Network based on the creation of Facebook, have made their footprint in the financial industry as leaders in the Bitcoin realm. Is Bitcoin the money of the future?
But what is a Bitcoin? A Bitcoin is a digital currency that uses person-to-person technology for instant payments. Essentially, it is an Internet cash system that does not have a central bank or government to regulate it.
Now that we understand Bitcoin is digital money, what’s going on with Bitcoin today? Bitcoin value has gone through the roof the past year—so back to the Winklevosses. The brothers began purchasing Bitcoin at $9 a piece. Earlier this month, Bitcoin reached a record-trading price $1,203 (USD) according to BlockChain.info. The Winklevosses proclaimed the Bitcoin “should be worth at least 100 times more than it’s valued today,” according to CNBC in November, which means an estimate $4 billion market cap. That’s crazy! Nevertheless, anything that insane is not stable, which sums up the Bitcoin journey from day one for the virtual currency and investment product is completely volatile. No matter the ups and downs the brothers believe the Bitcoin is the new gold with more potential as “payments are increasing going to use a network like the Bitcoin network to move money around the world” (CNBC).
Just today, the Bitcoin value dropped 30 percent in China—falling below $500 today from its high of $1203 this month. So why did the value drop? Well, the China banned its exchanges from dealing with Bitcoin, making it almost impossible for anyone in China to buy or sell a Bitcoin for yuan. This simple action should humble Bitcoin investors and exchangers that the Bitcoin can actually be regulated, if an organization truly desires (Economist, China Blues).
Companies are starting to accept Bitcoin as an official currency. Watch Bloomberg.com’s exclusive peek at businesses in New York that utilize the new currency, here.
Do I advise Millennials to empty their wallet to trade and invest in Bitcoin? I am not a professional advisor, but I cannot recommend the use of Bitcoin at this time. As I can tell, it is fake cash on the Internet that an individual created a few years ago. Is it an interesting subject? Yes, and the Winklevosses made an interesting point about utilizing the digital network formed by the Bitcoin community. We should research the technology behind the Bitcoin network to advance the financial industry. And who knows… maybe in a few years after more research and general understanding, the Bitcoin may be an advised alternative, digital investment product and currency.
This page does not contain any official financial advise. I am a student who is curious about Bitcoin and wrote this as a timed-assignment for journalism.
Photo credit: http://coxrare.files.wordpress.com/2013/10/bitcoin-stock.jpg?w=891