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Should You Invest In Bitcoins?

By Emma Overton

Over the holidays, the digital currency Bitcoin attracted attention by fluctuating
dramatically in value, increasing from $110 US in September to $1,100 in early December,
then back down to $550 in mid-December. The currency, formerly best-known for being the
trading chips in online black market the Silk Road, is making its foray into the
mainstream, and has many wondering whether or not to invest.Some have already
taken the leap of faith: The Peter Thiel Foundation has invested $3 million and the
Winklevoss twins, of The Social Network fame, made a personal investment of $1.5
million. The IRS is already studying how bitcoins may be taxed.However, many
economists have decried the currency due to its volatility. The roller coaster of activity
over the past few months is a prime example. The value shot up dramatically after it was
declared in a United States Senate committee hearing in November that “virtual currencies were considered a
legitimate financial service.” However, in early December, China prohibited Chinese
financial institutions from using bitcoins, and the value of the currency quickly dropped
by 40%.Regardless of whether or not the currency will be recognized as
legitimate by major national financial institutions, it is still recognized, even by
China, as a “commodity” — and this means merchants can choose whether or not to accept it
in exchange for goods and services. According to Wikipedia, there are currently 1,000
physical merchants and 20,000 online merchants that accept bitcoin as payment — some of
which include OkCupid, WordPress and Virgin Galactic. There are already
several Bitcoin ATMS at which you can exchange cash for bitcoins across the world. The first opened in Vancouver in late October and was
followed by others in Hong Kong, Slovakia, San Diego, Helsinki, and most
recently Toronto.Bitcoins prove particularly useful in transferring money
across nations, as there …read more    

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