Bitcoin crosses $1,000
I haven't seen anything like it since 2000. After a near crash earlier in the year took Bitcoin tumbling from the $200 range back to $50 some thought it was the end of the virtual distributed currency founded by a man that only has gone by a pseudonym, Bitcoin has ripped roared and risen past the $1,000 level. The Bitcoin rush is on and at investcorrectly we watch with wonder and slight confusion.
Bitcoin while technologically fascinating as a distributed payment method with no control, has uses that are still very limited at best. Every time you send a payment in bitcoin, information of the use is propagated through the Internet along bitcoin nodes. When I make a transaction with a bitcoin I pass along the information to my nearest peers and those pass it on and soon the whole internet knows that we've exchanged bitcoins. This distributed model is great for payment processing and much cheaper then things like Paypal but if you don't transfer to US Dollars or your own currency it leaves you at the whim of the wild swinging prices of Bitcoin.
It hasn't been since 2000 that I've seen something that has wildy levitated like Bitcoin. I've seen basketball announcers on TV joke about buying things with a bitcoin and my girlfriend ask me about a bitcoin.
What is a bitcoin worth? At investcorrectly we feel it's very difficult to calculate a very value given it's limited at best use cases. The unknown safety models in place for the exchanges. There's an awful lot of trust in a virtual currency that's current best use is buying illegal goods on the internet. Scams that have been flushed out by the SEC throughout the last few decades could easily be present in Bitcoin markets. The element of trust can disappear quickly and after this astronomic rise do you think the “exchanges” even have enough money to back a mass cash out? I don't.
I don't know how long it will last or what will be the catalyst but I would bet that the Bitcoin rush of 2013 will not end much better then the Tulip Craze or the Dot Com Boom. We'll keep watching with interest here but we won't be participating in this fools gold rush.