Bitcoins: The New Safe Haven?

Trading bitcons onlineRecently, a Norwegian man made the headlines for coming into a small fortune of $1,000,000 U.S dollars. Although the amount is considered modest by today’s standard, it was the way that he made the fortune that made this story newsworthy. , 29 in 2009 bought $27 dollars worth of Bitcoins as part of his thesis research and then forgotten about it until earlier this year. It was only with all media attention on this relatively obscure crypto currency recently that reminded Mr. Koch about the investment he made way back in 2009.

Bitcoins Windfall

According to Mr. Koch, the reason that he bought 5000 Bitcoins was not because he wanted to invest in the virtual currency but rather as part of his research on encryption. After having completed his research, he totally forgot about it. It wasn’t until after all the media exposure on Bitcoins earlier this year that he realized that he had small fortune tucked away. At today’s exchange rate, one Bitcoin is worth nearly $212 U.S dollars making Mr. Koch holdings of 5000 Bitcoins worth a cool million dollars (Before Tax). So what did Mr. Koch do with his windfall? Well, the word is he sold 1/5 of his Bitcoin holdings and bought himself a nice small flat in the upscale part of Oslo.

What is Bitcoin?

Bitcoin is a crypto currency which had gain popularity in usage on the internet during the last few years. Its main attraction is chiefly due to the lower cost of cost transaction. Another reason for its attraction is the fact that Bitcoin is not issued or controlled by any central government, hence a major draw for the underworld economy which value anonymity. However, it was the Cyprus banking crisis earlier this year which really thrust Bitcoins into the limelight. Investors having learnt that their money is never totalled secured decided to switch to Bitcoins as a safe haven for their wealth as it is not subjected to any central government control. The downside of all this? Because of the lack of control, the value of Bitcoin is extremely volatile which help to account for the rapid appreciation in value that Mr. Koch experienced with his meagre investment of $27. According to Mr. Koch, “Not in my wildest dreams could I have imagined that they would have soared like this.”

Trading Bitcoins

Because of the volatility of Bitcoins, many financial investors are drawn to it due to the wealth of speculative opportunities that this virtual currency represents. To cater for this growing demand, many binary options brokers are beginning to offer Bitcoins as part of their tradable asset index. Currently, some of the leading binary brokers that offer the opportunity to trade in this volatile asset include:

Although Mr. Koch’s story makes for nice reading, it should be remembered that his case is the exception rather than the rule. Nevertheless, the moral of the story here is that we should never be quick to judge what makes for a good investment and what makes a bad investment.

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