Sunday, 17 November 2013

BitBuzz Daily: A look at what's going on in the world of bitcoin

Well, it's a new start to the week (in Australia at least) and over the weekend Bitcoin hit and passed a landmark $500 on Mt.Gox. It has certainly been a bumpy road for bitcoin in terms of volatility yet it has shown surprising resilience to some of its most challenging times, such as the bump in April and the closure of the Silk Road. We thought we'd start with sharing this piece by Jon Southurst on CoinDesk looking at that journey over the past 12 months and its recent meteoric rise in value

Those bitcoins that made you gasp at $300 just a couple of weeks ago? They were a bargain — the value of 1 BTC has now passed $500.
Prices hit this record and landmark figure at 11.50am GMT on 17 November, and at the time of writing were trading at $503.10 on Mt. Gox.
That means: if you bought a stash of bitcoins at their absolute highest peak price of $266* in April 2013 and then felt nauseous as the price plunged to $65 the same week, you have now almost doubled your investment. Provided you didn’t cut your losses and sell prematurely, that is.

Following on from that, Jordan Wathen on the Motley Fool asks 'Is Bitcoin Really Going to $1million?' Well, given the history and the figures, that might not be as implausible as it sounds. Here's his take:
If I'd once told you intangible coins would be the biggest gainers in 2013, you'd call me nuts.
But as we head toward 2014, Bitcoin has already put up 3,311% returns. In the midst of a bull market in Bitcoin, one headline reads "Why Bitcoin is Going to $1 Million."
A bit of reality
Even after rocketing to $450 per Bitcoin, the total market size is still under $5.5 billion. That's a tiny sum, smaller than the valuation of 969 public companies, and about the amount the government debt grew each day in 2009.

In the past 30 days, average volume at one leading exchange, Bitstamp, has been about $7 million. So it doesn't take much to swing the market.

It will be interesting to see where the the bitcoin price is at the end of this week. We mentioned that the US Senate Committee on Homeland Security is holding hearings about digital currency from Monday and we will be keeping you up to date on any interesting news that comes out of that. The latest being that it looks as if some US agencies will be telling the Committee that bitcoin could offer "legitimate benefits" as Max Raskin reports on Bloomberg. It will be interesting to see how the markets respond to any claims or statements that come out of these hearings...

The Department of Justice and Securities and Exchange Commission are telling a U.S. Senate committee that Bitcoins are legitimate financial instruments, boosting prospects for wider acceptance of the virtual currency.
Representatives from the agencies told the U.S. Senate Committee on Homeland Security and Governmental Affairs ahead of a hearing tomorrow that the digital money offers benefits and carries risks, like any other online-payment system, according to letters they released before the meeting.

And one of the big selling points of bitcoin for many people is it is inflation-proof. One of the arguments against quantitative easing (QE) is the inflation it would cause with the extra credit entering the system. However, the hyperinflation some people feared in the US has not actually happened. If you want an easy explanation of what causes inflation - listen to this interview with Jim Puplava of  PFS Group, broadcast on Financial Sense. If you want a more in depth look into why hyperinflation has not materialised then also take a listen.
And that's your lot from today's roundup. We have some great features in the pipeline so keep checking our features page for those and our daily analysis will be posted on our blog and on Twitter!

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