Kalafrana Rambler: Bitcoin bubble

Rollercoaster ride for digital currency

News this week of great volatility in the value of the world's first digital currency, Bitcoin.

Bitcoin is the hot digital currency

For those of us new to such things, Bitcoin is one of the modern marvels of the internet age - a currency accepted across the world and offering an unprecented level of security not possible with other payment methods.

It's become popular with commercial speculators, with music artists, with individuals - anyone who wants the ease of commerce without traditional banks, government agencies or other rogues getting in the way (at least for now).

Bitcoin is well protected against theft. Each Bitcoin is 'owned' by an individual, cryptograhically insured and can't be spent by other people who may try to get loose with someone else's dosh.

Another curiosity of this digital currency world is Bitcoin mining, where smart mathematics is used to solve a problem. The first person to crack the problem earns the right to mine some new Bitcoin currency. The number of units earned is steadily falling as time goes by and when the Bitcoin supply hits 21 million units, no more will be available. Wouldn't that be hard pill for many countries to swallow with their currencies?

Bitcoin can't be destroyed, it seems so far immune from theft and it's becoming very popular. It's traded like any other currency, it has a banking system and it increases or decreases in value, dependent on demand. Recently there's been huge swings in the value - an all time high of $US266 was countered by a staggering 60% fall to $US105 before recovering to trade at US130 before falling back to $US120 on 11/04/2013. Trading was halted until April 12th.

What's next for Bitcoin? Will it weather this storm like it has previous assaults or is it poised to become another Cyprus?

Links for Bitcoin

Check out a 101 on Bitcoin trading and mining and make your choice on whether this kind of currency speculation is for you.

Future money's wild ride (Stuff)