The Winklevoss twins have ventured into the bitcoin controversy with their recent request that bitcoins be regulated so any investor could trade them, just like stocks.
What are bitcoins? Bitcoins are digital currency — there is no physical bitcoin to put in your pocket. Bitcoins are de-centralized — meaning the network of bitcoin users control how they are used. There are only 21 million bitcoins available, with about 11 million currently in circulation. A few online stores and websites are accepting them, but mostly the currency is being traded within the community of users.
The Winklevi are trying to up the ante by fast-tracking bitcoins to higher levels of scrutiny and regulation. Since bitcoins are volatile at this point, increased regulatory oversight may stabilize them and make them less of an investment risk. And at this point, you should consider bitcoins very risky.
There is an ongoing fight to capitalize on the “about-to-boom” world of mobile payments. Bitcoins promise to offer instant, mobile transactions by making payments easier and more secure in both the physical and virtual world. Other companies are trying to position their mobile payment solutions as well. The mobile payments market, or the “digital wallet” as its commonly referred, is a soon-to-explode industry valued at over $90 billion by 2017. It’s inevitable that we will use our mobile devices to make payments and fulfill transactions in the future — diminishing the need and value of printed currency.
The key to the future of bitcoins, however, is to convince a broader audience than geeks and hackers that the digital currency is safe and stable enough to invest in and use.
Historically, humans have used almost anything as currency: flowers, chickens, paper, metal and other material. The big question is: If you trade with digital currency and receive goods or services from using it, does it matter that its anything more than a mathematical sequence or a virtual algorithm?