Jaffe: new internet currency Bitcoin grows in popularity
Jeff from Cary, N.C. has concerns about the American economy and the future of the dollar. Bob in Boston is scared of inflation and the stock market. Michael from Selinsgrove, Pa., is out of the market and mostly in gold but wants to diversify further without relying on big government or traditional financial-services firms. Pete in New York just likes investing in new technology.
What they all have in common is that they recently heard about an investment that appeals to their sensibilities. The fact that it comes with performance numbers that are jaw-dropping has made it so tempting that all four either have dipped their toe in the market or say they are about to.
What they are buying is Bitcoin, a new form of currency that is not tied to any country or government, and that doesn’t actually exist in the physical world. It’s an Internet commerce unit, without any central bank or computer behind it. The Bitcoin system is run by the people who use it, a big enticement for the people just hearing about it and thinking of taking the plunge; there are no government officials to step in and mess things up, just the masses purportedly about to make Bitcoin a worldwide market force.
As Bitcoin has gained popularity, so has its value. About nine months ago, Bitcoins traded for roughly a nickel each; they spiked to nearly $30 a piece in June, but have since settled down to just north of $10. For someone who got in last fall, the value of their Bitcoin holdings – despite the big haircut they’ve taken since June – is up more than more than 22,000% annualized.
http://www.nj.com/business/index.ssf/2011/08/jaffe_new_internet_currency_bi.html
You know it's amazing, as much as I'm on the darn internet I missed out on the ground floor of something yet again. If I'd put just $500 into this back when the bitcoins were trading at 6 cents and if I sold at $30 then that would have been $300,000.
Basically, this an attempt at an "open source" currency, and it's attracting a lot of people who are looking for an alternative to fiat. The currency is backed by computer processing.. what I'm not clear on is whether the processes (mining) which create and back the currency are just meaningless busywork or if this is crowd-sourced computing that serves research purposes?
The project is legit, even though it sounds like a ponzi. They have had some problems.. one of the bitcoin banks got hacked and depositers / miners lost half their money.
Recently the value has been falling, down to $8 now and looks like it has some more to fall. Too risky to get involved now.. and the mining doesn't seem to pay UNLESS you're using solar electicity then it's free money. From what I gather like $150 per mining rig, so if you had the electricity covered then a farm of ten mining PCs would bring in $1,150 per month and it scales from there just limited by electricity and wherever the bitcoin exchange ends up.
(caution.. again.. it seems to me the currency is on the way down so don't go putting money into this )