Will the next Wolf of Wall Street be a Bitcoin Miner?
If you follow the basic investing principle of buying low and selling high, now may be the perfect time to invest in Bitcoin. The cryptocurrency hasn’t been this cheap since November 2013 and with investors panicking all over the world, one could potentially take advantage of a volatile marketplace.
With the world’s largest Bitcoin exchange virtually disappearing overnight, the future of Bitcoin remains uncertain. Mt. Gox is claiming the closure is largely due to a theft of 744,000 Bitcoins, roughly 6% of the 12.4 million Bitcoins in circulation, but some in the Bitcoin community believe it’s because Mt. Gox had no idea what they were doing.
Mt. Gox, an acronym for Magic: The Gathering Online eXchange, was established in 2009 as a way to buy and sell trading cards. When Bitcoin started to become popular, the owners felt it would be more profitable to trade that instead. And they were right.
It didn’t take long for Mt. Gox to become the largest Bitcoin exchange in the world. They essentially controlled the value of the cryptocurrency and this became a huge problem for a company with no background in finance. The closure of the company was the final nail in the coffin to a lengthy list of problems for Mt. Gox that included money laundering, suspension of trading and various other legal issues.
Some financial analysts believe the downfall of Mt. Gox is a good thing and even predicted its demise.
Patrick Murck, the general counsel of the Bitcoin Foundation, says:
“This incident just demonstrates the need for initiatives by responsible individuals and responsible members of the Bitcoin community.”
Recently, several different banks released research reports that indicate virtual currencies like Bitcoin could become an important new part of the payment system. It’s much cheaper to move money through Bitcoin than credit cards or money transfers and with more business accepting Bitcoin as a method of payment, the time is right for a legitimate financial institution to step in and take over the exchange.
SecondMarket, an exchange made famous for allowing users to buy and sell shares of companies like Twitter and Facebook before they went public, is currently putting together a Bitcoin exchange similar to the NYSE that could draw the world’s largest banks into the virtual currency market for the first time.
The exchange is set to launch in summer 2014 along with financial regulators to make sure there are no hiccups in the operation. The value of Bitcoin will most likely continue to drop until then so there is still plenty of time to invest if you believe the value will rise again.
This can also be a good time to get into Bitcoin mining as miners are switching over to different currencies like Dogecoin. While the lesser-known cryptocurrencies are increasing in popularity, their value has remained relatively low when compared to Bitcoin. Whether you decide it’s time to invest is up to you, but it appears as if the ducks are all lining up in a row for someone – maybe you – to make a lot of money.
