Should You Buy Bitcoin?

As the current world leader in the cryptocurrency market, Bitcoin has been in serious headlines and serious fluctuations over the past 6 months. Almost everyone has heard of them, and almost everyone has an opinion. Some cannot fathom the idea that a currency of any value can be created out of thin air, while others like the idea that something without government control can be traded as a valuable entity in its own right.

Where do you sit on the “Should I Buy Bitcoin?” The fence probably comes down to one question in the end: Can I make money from Bitcoin?

Can you make money from Bitcoin?

In just the last 6 months we have seen the price go from $20 per coin in February, to $260 per coin in April, back to $60 in March and back to $130 in May. The price is now set at around $100 per Bitcoin, but it’s anyone’s guess what will happen next.

Bitcoin’s future ultimately rests on two main variables: its adoption as a currency by a wide audience and the absence of prohibitive government intervention.

The Bitcoin community is growing rapidly, interest in the cryptocurrency has expanded dramatically on the Internet, and new services are increasingly accepting Bitcoin payments. Blogging giant WordPress accepts Bitcoin payments and African mobile app provider Kipochi has developed a Bitcoin wallet that will enable Bitcoin payments on mobile phones in developing countries.

We have already seen people make millions on the currency. We’re seeing an increasing number of people experimenting with living off Bitcoin for months at a time while filming the experience for documentary viewing.

You can buy takeout in Boston, coffee in London, and even a few cars on Craigslist using Bitcoin. Bitcoin searches increased in 2013, with a spike in April and a subsequent drop in the price of Bitcoin. Last week, the first major acquisition of a Bitcoin company was made for SatoshiDice, an online gambling site, for 126,315 BTC (about $11.47 million), from an unknown buyer.

This rapid growth in awareness and acceptance looks set to continue, if confidence in the currency remains strong. Which leads to another addiction. Government regulation.

Although specifically designed to operate independently of government control, Bitcoin will inevitably be influenced by governments in some way. This must be the case for two reasons.

First, to achieve a high level of adoption, Bitcoin will need to be accessible to a large number of people, and that means expanding beyond the realm of hidden transactions to normal everyday transactions for individuals and businesses. Second, these Bitcoin transactions could become a traceable part of people’s taxable wealth, to be declared and regulated along with any other type of wealth.

The European Union has already announced that Bitcoin is not classified as a fiat currency, nor as money, and that it will not be regulated as such. In the US, 50 state systems and the number of bureaucratic bodies involved have inevitably made decisions difficult, with no consensus yet achieved. Bitcoin is not considered money as such, but it is considered to act like money.

The successful US Bitcoin market has a more uncertain future for now, and any final US legislation could have a very positive or very negative effect on the future of Bitcoin.

So should you buy Bitcoin?

The answer largely depends on how risk-averse you are. Bitcoin will certainly not be an easy investment, but the potential of this currency is huge.