Bitcoin: Cryptography Currency revolution

Started out by some computer hacker in 2008, this cryptography based currency has started gaining considerable popularity in both online and offline market. The dollar exchange rate of this digital currency that appreciated by impossibly 1,950% to $266 per 1 bit coin within four months has gained trade volume of about $2.34 billion within 5 yrs of its inception (Reuters, 2013). Currently, bitcoin is widely accepted in big online market places like Amazon and WordPress and has also started gaining foothold in local businesses like coffee shops and vending machines in different parts of the world (Reuters, 2013). Lately, harilo.com, the online retailers in Nepal (a South-Asian developing nation) has also started allowing payments in bitcoins. This fast pace acceptance of this digital currency in serious commerce is establishing itself as a part of global monetary revolution. What’s more, bitcoin has also been characterized as a hedging currency against the fiat money, and some fund-management companies have even started to produce future contracts out of it. Hence, it’s been acting as an investment vehicle lately.

Ironically, bitcoin is more like a hollow fully digital currency with no legal regulator backing it, and it is also not represented by any country or economic bloc. It is merely regulated by cryptography protocol that maintains permanent transaction evidence in a block-chain in order to preserve its monetary characteristics (Wikkipedia, 2013).  Technically, unlike any other fiat currency backed up a government’s goodwill, bit coin is accepted by traders on basis to its circulation confidence whereby people believe that it is going to be accepted by someone else too. However, the volatility of its value classifies this currency more as a growth stock rather than a more risk-free currency. Therefore, it is advised not to invest considerably on this currency during the early phase of its world adoption. Moreover, it is understood that its current infrastructure might not promise its security and feasibility in order for this currency to qualify in mainstream trade (Reuters, 2013). Despite, the circulation of bitcoin is like going viral all over the internet world and therefore, should reach local market anytime now and then. In meaning, it is time that local businesses with basic internet ability to decide on whether accepting this new monetary trend or not.

On the other hand, the recent grand scandal regarding SilkRoad online exchange port that traded illegal drugs, guns and even involved in Money Laundering through bitcoins has some how questioned the legitimacy of this cryptic currency. This exchange port had allowed trading of $1,2 billion worth of such illegal items in bitcoin of which FBI seized $3.6 million worth of it (CNET, 2013). Interestingly, this scandal involving homeland threat has however not influenced the confidence on bitcoin as its exchange rate remain stable throughout the period. Instead, it proves that bitcoin has already gained strong confidence hard to shake in the global market place.

Reference:

Reuters (2013). Bitcoin gets Mainstream with ATM in Vancouver coffee shop. Source: http://uk.reuters.com/article/2013/10/29/uk-bitcoin-atm-idUKBRE99S1ED20131029

CNET (2013). FBI seizes online drug markeplace Silk Road, outs owner in indictment. Source: http://news.cnet.com/8301-1023_3-57605685-93/fbi-seizes-online-drug-marketplace-silk-road-outs-owner-in-indictment/

Wikkipedia (2013). Bitcoins. Source: http://en.wikipedia.org/wiki/Bitcoin

The Play money: For the Notorious necessity

Seriously, this topic is spicy enough for one to make a good movie out of it on a blending genre of economics, psychology and entertainment of course. But since for now, that I am structuring it in a form of an article, I will focus more of economics, a slight on psychology and hope that entertainment follows accordingly. After all, beauty lies in the eyes of the beholder, what more could I say?

Basically, play money is such kind of assets with which one can fulfill the inner-animal inside him. It’s a kind of money, that doesn’t have to tag anything like responsibility and values with it. Well, I am talking about money that is left after you have allocated for your basic needs, perceived savings needs and the discretionary (luxury) needs. All in all, it is something with which you want to fulfill your inner desire, specifically the desire to take risk or do some risky experiment. By the way, it depends idiosyncratically on the amount one would allocate as play money, or to even allocate anything like play money out of his/her wealth. Factually, it’s the motivation and situation that comes into play.

In general, Investment intellectuals consider this kind of money as something you would want to take a very high risk with, which means, you either lose all or you gain something like six folds on your principal. And importantly, it is somewhat backed up by a reasonable logic, unlike total gambling.

Though with a due concern to not emphasize this asset as any descent, it would be wise to say that play money has its own importance in the investment play field. After all, some amount of money has to circulate to the high risk ventures in Bio-technology, Software and others. Importantly, the characteristic of very high-risk ventures is such that, if success wonders anywhere near to expectation, it is bound to become a revolutionary break through. For instance, the commercialization of the great invention, i.e. telephone was always a very risky venture, but now it has become the nervous system of the human evolution. Well, it just has to heighten the vitality of the concept of play money.  Moreover, it is the wondrous of play money that there exists any option for kind of a venture that contains the risk of 50% or even more. This kind of high-risk containing investment would hardly match the investment criteria of a risk-averse individual or institutional investor. But the risk friendly nature of play money just has to make sure of that. However, it is very important to make sure that this money perfectly insulates any other wealth beyond this category, so as to avoid further loss.

If in anyways does the establishment of high-risk ventures extinct from the world due to financial constraint, then the coming human evolution couldn’t be getting anything but monotonous. Not expecting anything like another crazy Apple Inc. innovations, the e-commerce revolution or even breakthroughs in vital sectors like healthcare and energy in future would be one of the biggest faux pas ever committed in Human evolution.  Therefore, the activity of the play money has the vital role of filling the vacuum.

It Could be because I have more attachment towards investing, but I would personally recommend people to invest some acceptable amount of money in high-risk but potential ventures, rather than blowing it off in Casinos and crazy bets. Your play money can be lifeblood for high-risk ventures with potentiality of making revolutionary breakthroughs.