BusinessWeek Writes: Bitcoin Buyers Beware: Being Greedy Ain’t Easy

 

Fitting, then, that the price of a Bitcoin just crossed—at least for a little while—the $1,000 mark.

Money men who proudly call themselves greedy say that Bitcoin remains undervalued at that price. The preferred currency of online drug dealers, it’s just beginning to become a bit more mainstream. Folks such as Richard Branson are talking about accepting Bitcoin for flights on Virgin America (or, soon, spaceflights on Virgin Galactic). Stores in Silicon Valley will let you buy a sandwich and sushi with the virtual currency. Each new level of visibility is likely to push the value of Bitcoin higher.

Advocates of Bitcoin use liken the currency’s position to the Internet in its early days. We’re in the dial-up phase, they say—you should buy in before the boom of all booms arrives.

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“You should buy in before the boom of all booms arrives”, WOW is all I have to say. If that is not a clear sign of speculative mania, I don’t know what is.

I have written about Bitcoin before. You can see it here  “Bitcoin: Crazy or Smart”

Even though the currency has appreciated significantly since that write up, I continue to maintain my position. Primarily, that the Bitcoin is nothing more than a speculative investment that warrants no capital outlay.  My biggest problem with Bitcoin is not having the ability to measure and/or analyze its value at this stage. It can be worth zero or it could be worth $1 Million.  In fact, some speculators believe that it should be worth $1 Million. Indeed.

Given its volatility, unpredictability, tiny float and no real value, Bitcoin remains a highly speculative investment. Certainly, it can go to $1 Million just as easily as it could go to Zero. Overnight. As such, only speculators who do not care about losing their money should apply.  I maintain my position that traditional investors must stay away. This is nothing more than a drunken Tulip Mania. 

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The Secret Behind Bitcoin Madness. Should You Invest?