My son taught me much about Bit coin 2 days ago. He reckons it is a good alternative currency which can’t be manipulated by the government or central bank.
Bit coin is acting crazy and just for the last 2 months, it has gained 440%.
And just 1-2 days ago, bitcoin has traded from $450 to $900 and then back to $450, and up to 620 on Mt. Gox. I have never seen such kind of wild volatility in any kinds of financial investment for the last 20 years.
If you want to read more about Bit coin, go read http://blogs.marketwatch.com/cody/2013/11/18/bitcoin-everything-you-need-to-know-and-why-you-might-want-in/
This virtual currency has no central bank and is created through a process called mining.
So without central bank’s regulation or manipulation, what’s behind the big gyration?
Here is some information taken from marketwatch.com:
There’s the surging demand in China, growing legitimacy in the U.S. as demonstrated by hearings in the Senate, the closure of the bit coin-only drug market Silk Road, and an open-ended bit coin trust run by Second Market. Read more about why bit coin could be in a bubble here.
And then there’s speculation, which is powerful in a market currently valued at $6.97 billion, according to bitcoincharts.com.
Bloomberg News reported Tuesday:
Speculative trades exceeded transactions for goods and services by 20 to 25 times in the latest quarter, said Vladimir Maslyakov, co-founder of brokerage Exante Ltd., which has set up a Bitcoin investment fund.
“The real economy is not growing as fast as the price,” said Maslyakov, who said his firm now holds about 60,000 Bitcoins and is seeking approval to solicit funds from U.S. investors. “Speculators are usually much faster.”
The volatility in bitcoin has rubbed off on other virtual currencies, as well. (Here are five more virtual currencies.)
Litecoin, which was built off the bitcoin code with a few key changes, was down nearly 9% on Wednesday afternoon, according to coinmarketcap.com.