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Know about the Bitcoin Value Risk & Analytics Factors. Mainstream media has caught wind of Bitcoins and media attention on this alternative currency reached fever pitch after Thanksgiving in 2013 when the price of one Bitcoin reached the $1,000 mark and even went as high as $1,200. It has gone a long way from being a relatively unknown piece of technology that attracted hobbyists. It is also still struggling to shake off its reputation as the preferred currency for buying drugs from websites like SilkRoad.
As governments look into crypto-currencies, the legal grey areas blocking the wider adoption of currencies like these are starting to become clearer and now, even major financiers are investing in start-ups built around crypto-currencies.
Lately, the Financial Crimes Enforcement Network of the U.S. Treasury Department ruled that mining Bitcoins won’t qualify an individual as a money transmitter so that means they aren’t required to get a state license. Developments like these serve to further answer questions of those who want to invest in it.
While U.S. officials have a more favourable view of Bitcoins, the same could not be said about China though. In the last month of 2013, the People’s Bank of China ruled that banks and merchants will be banned from dealing with crypto-currencies. Prices took a hit after the Chinese ruling but it has since climbed back to its current price of around $950 on Mt. Gox.
Being a virtual currency that isn’t backed by any government, the value of a Bitcoin is determined purely by supply and demand. There was a time when it had absolutely no value and its price only started to really increase last year.
$950 is still a lot of money and that begs the question of whether it is already too late to invest in Bitcoins. Whether the price will go up or down will depend largely on the direction of government policy. Positive news like the ones coming from the U.S. will only bolster the price of crypto-currencies but regulations like the ones laid down in China in December will push its price down again.
While Bitcoin mining today may be more difficult compared to a couple of years ago, it’s good to remember that there are other crypto-currencies that are not yet as difficult to mine. There’s the Litecoin and Namecoin, to name a few and the value of these aren’t as high as those of Bitcoins—not yet, at least—so acquiring them is much easier for smaller investors who want to buy some of these coins on exchanges. The difficulty level of mining other crypto-currencies too isn’t expected to grow as yet, as there are still less in circulation and because other currencies are built in a way to allow for easier mining.
Investing in mining other crypto-currencies may represent an easier way to get into the crypto-currency market. Just like Bitcoins, the prices for these crypto-currencies will also be determined by supply and demand as well as any government regulation. So, if projections look good and you’re willing to take a risk, go ahead and invest.
This Post Contributed by Jep Barroga, a blogger & editorial specialist at MoneyHero, Hong Kong’s premier comparison website for finance and insurance providers.