As Americans are continuing to read and hear more and more about Bitcoin, some still do not know exactly what it is?
Competitive Enterprise Institute Vice President Jim Harper shared a little more about the phenomenon.
"Bitcoin is best thought of as digital gold," Harper, who is also the former global policy counsel for the Bitcoin Foundation. "That is, it's a rare item that you can trade online, [and] even though the online world makes lots of copies of things, it's the one thing that can't be copied because of the Bitcoin Blockchain – the ledger that tracks all the transactions."
The first-ever Bitcoin future began trading Sunday, as the increasingly popular virtual currency made its debut on a major U.S. exchange.
Harper sees its expansion as another step in the widespread adoption of bitcoin.
"It's passed a lot of hurdles in recent years, and that's a new one," he elaborated. "It's often thought of as a good investment because it's counter-cyclical. That is, it has nothing to do with much other in the way of investments, so if you want to broaden your portfolio holding some Bitcoin along with stocks and bonds – maybe precious metals and other things – it's a way to diversify."
For those who have any concerns about a bubble, a simple web search finds opinions on the subject, which are mixed.
"It's always wise to be watching out for a bubble when things go up in price a lot, and bitcoin has gone up in price a lot, but nobody knows exactly when it will stop," Harper pointed out. "Bubbles are always easy to call in the rearview mirror, but right now, Bitcoin is on its way up – whether it's a bubble or whether it's not, will be something we find out later on."
The wise thing to do, says Harper, is to invest cautiously.
"If you're going to buy, just buy a little bit – enough that you're willing to lose," Harper advised. "Already online, you see names that I've never heard of, and I know a lot of people in the Bitcoin world who claim to be the expert – who made the right buy at the right time. Well, you should be as leery of those [who sell gold] as you are about those who sell everything else you see online."