Touted as the best invention in history since the Internet,
the Bitcoin business has also been dubbed as a "mathematical
framework that is free of politics and human error." The
blistering speed of the booming Bitcoin is evident from its rise
to over $1,000 a unit at November end, from less than $15 in
January of this year.
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The concept of Bitcoin sprouted in 2008 from a paper published
under the fictitious name of Satoshi Nakamoto. The idea was
officially implemented the following year. Digital currency
gained distinction in 2012, and has not looked back ever since.
Is It Overvalued?
The price of cryptocurrency saw its ebb and flow, hitting $230 in
April, falling below $70 in July, and then peaking at $1,000 in
November. The only thing constant is its huge flock of followers.
However, the latest jump - symbolic of the surging Chinese demand
- looks like an archetypal bubble.
With Bitcoin touching such unforeseen heights, mainstream
adoption cannot be far away. In a major victory last month,
digital currencies got U.S. regulatory signals of being accepted
as legitimate payment alternatives. Indications that Bitcoin
growth will not be disrupted by regulatory intervention,
strengthened the rally in the price of the cryptocurrency.
The Beauty of Bitcoin
The best part of Bitcoin is that it's a peer-to-peer currency not
regulated by any central bank, but based on digital tokens with
no intrinsic value. The value of a bitcoin depends on a
distributed system, based on a transaction ledger which is
cryptographically verified and jointly maintained by the
Bitcoin transactions are free from intermediaries and designed to
ensure increased money supply only at a fixed rate that slows
over time and then stops altogether. Also, anonymity is possible
with the right precautions. This has increased the appeal of
Bitcoin among geeks, libertarians, drug dealers, speculators and
However, with the recent regulatory acceptance, cryptocurrency
has gained popularity. Further, building on its success, many
other altcoins have emerged in recent times. Litecoin, Peercoin,
Anoncoin and Zerocoin are only to name a few.
Authorities Cracking the Whip
The worldwide use of virtual currency has left regulators with a
nagging headache thanks to the risky dealings prompted by it. In
June, another virtual currency firm, Liberty Reserve was hauled
up by regulators on allegations of money laundering.
In March, the Federal Financial Crimes Enforcement Network issued
regulations for virtual currencies, entailing them to register
with the government. This means that every source of virtual
currency has to worry about conformity to certain standard laws.
Moreover, regulatory bodies are investing heavily in their
cybercrime software and equipment. With companies like
Akamai Technologies, Inc.
) churning out new and innovative cybersecurity software,
anonymous transfer of criminal proceeds has become difficult.
This has resulted in noticeable changes in the digital currency
business. Companies like Perfect Money and WebMoney are no longer
accepting U.S. customers. Further, some organizations are
steering clear of Bitcoin exchanges. Certain consumer Internet
companies such as
), which use virtual money, could be hit by the regulations.
The overwhelming success of digital currency has been the
foundation of the rip-roaring growth in online money transmission
business. Prosecutors over the world will keep a watchful eye on
this booming business. But as long as online games as well as
dating and shopping sites gain popularity, virtual currency will
not lose its luster.