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Bitcoins: the Official Made Up Currency of the Internet

bitscoinsThe Internet has often been compared to its own country. Social media websites and online games make up cyber-communities that are bigger than some of the most populated nations. Taking us one step closer to the New World Order, the Internet now has its own currency called Bitcoins. While Bitcoins may not be right for your business, it does make for a unique investment opportunity.

Bitcoins have yet to go mainstream, but they are soaring in popularity, reaching 70,000 transactions last month. Bitcoins are not backed by any government and they are unregulated. Their value comes directly from consumers and dealers who are willing to exchange this new currency for actual goods and services. This makes the Bitcoins currency a very shaky investment to say the least, but many will argue that this no more risky than stocks or currencies of countries with volatile markets.

Bitcoins have been around since 2009 and started off with few merchants accepting the rebel currency. Many people thought the Bitcoin was over with a crash in 2011 that sent the price from $30 per Bitcoin down to $2. Since then, Bitcoins have found a footing in the online marketplace and you can now buy virtually anything with this new virtual currency. Bitcoins have even recently peaked at $266 per Bitcoin, before crashing again down to a little over $100 per Bitcoin. Investing in Bitcoins is not for the faint of heart.

There have even been people who have sold their homes for thousands of Bitcoins. Due to the fact that Bitcoins are untraceable and unregulated, it is also becoming the preferred currency for the distribution of illegal goods sold online. Governments have taken notice and they are scrambling to make regulations requiring consumers to report Bitcoin transactions. With all of the unsurety that surrounds Bitcoins, there is one sure thing, and that is governments will find a way to tax it.

The Bitcoins currency is supported by a global computer network. The administrators of this network keep detailed logs of every Bitcoin transaction. Every transaction is posted and it is this transparency the gives users the confidence to invest. As a reward for being a network administrator and doing the work it takes to maintain the network and protect against fraud, these admins have a hand in “mining” new Bitcoins. Subsequently, admins are referred to as miners.

While Bitcoins are not a commodity that you would want to add to your retirement portfolio; this new currency can be hard to resist when you see numbers like a 433% growth in transactions from March 2012-2013. Are you enough of a risk-taker to convert your real money for fake money? Or do you see Bitcoins as a dumb fad and foresee another crash? Feel free to share your investment advice with others in the comments!