Bitcoin - to bet or not to bet
Bitcoins, the currency that exists only online, already trades at more than USD 780 to a single US dollar. If you had bought the virtual currency on January 1, you would have paid only USD 13.50 for one Bitcoin. This would translated to a gain of more than 54 times of the original investment. However, in his report on The Wall Street Journal, Joe Light asks if the digital currency is worth investing in.
For his part, Federal Reserve Chairman Ben Bernanke believed that the digital currency may hold promise. In his letter to the Senate committee that held hearings this week to discuss the digital money, Bernanke said virtual currencies like the Bitcoin may carry promise for the long-term, especially if innovations will facilitate a payment system that is faster, safer and more efficient.
The WSJ report also featured Global Macro Investor Founder Raoul Pal who gave a buy recommendation for Bitcoin to his subscribers. Pal, however, said there is a chance that the Bitcoin may end up to be worthless, it also has an equal chance of becoming a store of value in the same as gold. Should that happen, it's going to be worth way more than its current price, Pal said.
However, there were others who were not so optimistic about the possibility happening. University of Illinois Professor of Economics Larry Neal is one of them. He compares the Bitcoin fever to past manias. Neal is currently writing a book about the investors who lost their money in the currency bubble that took place in France in the 18th century. As far as investing in Bitcoin is concerned, Neal begged for proof of its viability. He said, "Where's the backing that would persuade random strangers to accept this?"
While it is up to individual investors to decide whether they should bet on Bitcoins or not, there is only one safe and less costly route for Neal. He told Light, "Just ignore the whole thing."
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