Recently there has been a lot of talk about a new virtual currency called the Bitcoin that is growing very quickly, its gaining a lot of media attention and its value has increased dramatically.
The current financial turmoil in Europe and around the world has also made people invest in alternatives to fiat currency such as the Bitcoin. For most people it is strange that someone can take seriously a currency that is not backed by a Government or central institution, but that is the precise advantage of this coin.
Bitcoin developers spoke to the Guardian's James Ball at their home in central London and these were some of their comments:
Bitcoin is a virtual currency just like dollars, pounds, euros but at the same time we have a type of currency that is not controlled by central institutions, its completely decentralized. I can send money to whoever I want, whenever I want, wherever I want in the world and no one can stop me.
The Bitcoin is a very interesting concept that is gaining acceptance by many companies on the internet like PayPal, WordPress, Reddit, Microtronix and many others. In fact ATM machines are already on the way to be used.
Some of the critics of Bitcoins say that they are facilitating buying drugs on the internet, the developers say that the virtual currency is just a tool and you can use it for good or bad.
Fiat currency has the disadvantage that central institutions can print as much as they want, therefore it is always losing purchasing power. The same principle applies if you have money in the bank. Instead what you should do is put your money on an asset that keeps its value or increase it.
At this moment the Bitcoin seems a good option because its increasing its value, however this can change in the future. Another alternative is to invest your money on something productive like a business or land that increases in value or invest it in gold.
Even though the virtual currency is a good way to diversify your portfolio and not depend on paper money or bank deposits, you need to look for a way to store value that is secure against financial hedge and the best option is Gold, because its the ultimate money. Gold has been a store of value for centuries and will always be, because its valuable, its limited in quantity, its easy exchangeable and its a store of value.