Bitcoin has jumped in value from a few dollars to over $100 in a year, causing people to speculate that it is the ideal hedge against the uncertainties of the global financial markets. Bitcoin’s other reason for coming to prominence recently is that it is the currency of choice for anonymously purchasing illegal drugs on the SilkRoad site.
There have been virtual currencies before – remember Flooz (bankrupt in 2001) and Beenz, one of the great dotcom disasters. Also good to remember Bitcoin had a big crash in value in 2011. Legally there are significant regulatory issues which are yet to be fully answered by virtual currency operators.
In terms of investment categories, you might put Bitcoin as a shade more risky than Scratchies and investing in a friend’s wife’s new dress shop idea.
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