I’ve been following the stock market for over 30 years and when this Bitcoin concept came out, I couldn’t help but track where this thing was going. Up until this point, I never really considered participating because of the lack of regulation with this investment.  However, after the recent move of Payza pulling out of the U.S. market, I decided to look deeper into Bitcoin as a payment option for our digital marketing websites.  Below are some of my findings so far.

In a Nutshell…

Bitcoin Upside: Supply & Demand

With only 21 million Bitcoins in the world to be had, simple supply and demand will drive up the price of this, theoretically speaking.  Given that, there could be a big financial benefit to owning Bitcoins and including them as a payment method for your goods and services.

Bitcoin Downside: Political Power Control and Volatility

There is no way that the powers to be will let a virtual currency destabilize their own currency.  Case in point, China’s central bank announced regulations forbidding financial institutions from handling Bitcoin transactions yesterday (Dec, 5th 2013) causing some huge wild swings in Bitcoin prices.  As this thing gets larger and more popular, expect more of this.

My Take…

I personally find the Bitcoin concept fascinating but the lack of any regulation makes this a safe haven for those with bad intentions.  Because of the money involved, there are many hackers and scam artist targeting this as the new gold rush. Bitcoins are bought and sold through exchanges but not all exchanges are legitimate and many people have already been scammed.  DO YOUR HOMEWORK before you act.

There are higher risks involved with this virtual currency, but it could be argued that no virtual currency is as safe as we may think.  The Payza debacle was a prime example of just how vulnerable all virtual payment methods are to the fluctuating dysfunctional policies of politicians across the globe that create our laws.

In Conclusion….

Avoiding risks in this day and age would mean you wouldn’t invest in anything…. ever!  There are many people that are doing just that so don’t feel you are alone if you are sitting on the sidelines during this age of volatility.  However, if you have the stomach for it and decide to play in this arena, I would recommend buying on the dips just like you would in the stock market.  You should also avoid lump sum purchases and use dollar cost averaging to buy smaller portions as you go.  This will level out your costs over time.  If you are going to use this as a payment processor, you should also pay attention to what is happening and sell portions of your bitcoins on highs and buy more on lows.  Here is the daily prices http://bitcoincharts.com/markets/currencies/

It would appear volatility is going to become a part of the Bitcoin financial market as it gains momentum so watch what the world powers are saying or doing with regards to this.  The move China made on Dec. 5th can be a sign of future trouble for this virtual currency.  The U.S. hasn’t taken any steps in regulating bitcoin as of yet.

To Your Success!

Brad Webb

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