Bitcoin believer split widens further

It may at first seem rather perverse that the continuing increase in the value of Bitcoin, the most successful cryptocurrency to date, should result in a bigger divide between those who believe in the new digital currency and those who are still sceptical. Schools of thought vary from people who believe we are seeing the firming-up of a new global currency, to people who maintain that this new phenomenon is nothing more than a fraud. Those who position themselves between the two extremes are either sitting back reserving judgment, or are those who believe Bitcoin to be a genuine long-term currency, but that the cryptocurrency is currently going through a highly speculative phase. Your own stand in where the truth lies will depend on three approaches. 1. The number of genuine holders vs the pure speculators The genuine holders of Bitcoin are those who are of the opinion that the future value of the cryptocurrency is outside the control of banks and governments. This group of people are also convinced about the technology behind Bitcoin, believing that this will imbue the digital currency with an innovative long-standing advantage. At this point in time, there is no clear understanding of how many genuine holders of Bitcoins there are against sheer speculators. The smaller the genuine camp is in proportion to the speculators, the greater the fluctuation of the value is likely to be. 2. The potential for widespread take-up Will Bitcoin be used by a wider audience simply for making transactions, or will they be used for savings? Those in favour of Bitcoin as a long-term currency think that it is only a matter of time. The fact the CME will offer Bitcoin futures and that Japan decided just last month to accept Bitcoin as legal tender, fuel their fire of belief. The sceptics, on the other hand, are simply waiting for banks and governments to step in and crackdown. They are convinced that the authorities will want to outlaw a cryptocurrency that is outside of their influence and that, in their opinion, doesn’t have appropriate consumer protection. They see China’s stand against Bitcoin as a significant factor. 3. Financial manipulation Bitcoin holders are advantaged by the fact that initiatives like hedge funds face a hard time trying to “short” the digital currency. Not only is it hard to borrow Bitcoin, but there aren’t any assets around to fabricate proxies that can influence the pricing mechanism. What this boils down to is that the Bitcoin market is biased towards the long. There are those, however, who believe that the arrival of future trading in Bitcoins will result in easier exchange and price manoeuvrability opening up the way for the “shorts” to become more involved. Make up your own mind You must, of course, draw your own opinions for what the future of Bitcoin holds.