Bitcoin has become one of the hottest new topics to hit the financial world in the last year or so. Bitcoin, which is merely one of a growing handful of virtual or electronic currencies, remains a very young and highly unknown instrument.

2. Bitcoin has become one of the hottest new topics to hit the
financial world in the last year or so.
Bitcoin, which is merely one of a growing handful of virtual or
electronic currencies, remains a very young and highly unknown
instrument
It is also a highly risky investment. Just overnight as this article was
prepared for posting, the third largest international Bitcoin
exchange in the world which accounts for 14% of all trades
worldwide halted trading.

3. This sent Bitcoin prices down approximately 20% in hours.
The rewards of Bitcoin, should it gain widespread acceptance, are
easy to imagine. The risks of Bitcoin are substantial and perhaps
much harder to explain.
Virtual currencies are so new that regulators and courts have yet
to firmly recognize their existence as items of property, although I
believe they will ultimately be recognized as unquestioned assets
much like derivative instruments whose physical form takes not
the form of a contract but an algorithm to which the closest
analogy might be computer code.

4. Nevertheless, regulators are taking notice and announcing plans
to study the Bitcoin / virtual currency market; New York State's
financial markets regulator announced just last week its intent
to study the feasibility of a "BitLicense" and otherwise propose
virtual currency regulations this year.
(Curiously, the state's Superintendent of Financial Services has
issued or made public no comments, so news of the
Department's intent comes only through the financial press
following Bitcoin

5. These analyses and such questions may be beyond the interest of
most investors and traders to whom Bitcoin boils down to a central
question: Can I make money with this stuff?
Read More: What is Bitcoin? What is the value argument for
Bitcoin?
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