Bitcoins have been attracting significant interest recently. With the Winklevoss twins — most famous for their controversial role in Facebook's genesis — the latest in a line of high-profile investors to throw their weight behind the digital currency, the time might be ripe for getting in before it explodes.
Those familiar with Bitcoin can skip this section. For everyone else, here's a quick primer.
Bitcoin is a digital currency. It's a decentralized, peer-to-peer, cryptographic currency free from government oversight or regulation. There are currently around 11.5 million Bitcoins in existence, with only 21 million planned.
Each Bitcoin is completely unique, the result of millions of computer calculations — a process known as 'mining.' An entirely mathematical currency, payments can be made internationally, instantly, for free (or close to it). Currency exchanges exist where you can trade in Bitcoins for established 'real world' money like dollars, or you can use Bitcoins to pay for an increasing raft of goods and services.
The case for investing
As a new currency, and an entirely new type of currency, Bitcoin makes for a peculiarly uncertain investment. But its growth record is already impressive. Early adopters have taken Bitcoin from being practically worthless to around $960 per Bitcoin. At one point Bitcoins were worth more than $1,200 a piece.
It's easy to see the appeal of the new currency. In an increasingly fluid and globalized economy, a currency that crosses international borders without conversion, instantly, with practically no transaction fees just makes sense.
The draw of a currency independent from national governments is particularly strong in developing and unstable economies where inflation is a daily concern. There has been talk of Bitcoins replacing the dollar as the world's reserve currency; even usurping gold as the de facto 'safe haven.'
That the currency is peer-to-peer, avoiding banks and financial services middlemen makes Bitcoin doubly attractive in light of recent events, and more stable than even strong currencies. No one can shut it down.
And it has already made people rich. Early investors like 35-year old Roger Ver have become millionaires, many ploughing their earnings back into the currency to secure even higher future returns — and out of sheer enthusiasm.