Diana Clement: Bitcoin – Virtual gold or junk?

Bitcoin traders report making huge profits but they also face real risks

Looking for a 21st-century investment that might (or might not) make you a small fortune? The virtual currency bitcoin is proving to be an answer for a small but growing number of Kiwis. Investors worldwide have reported making huge profits.

Bitcoins and other virtual currencies such as Litecoins can be used to buy real-world things. Internet service provider Slingshot allows you to pay your bill with bitcoins and there are a number of other businesses in Auckland accepting the currency, including Green Rental car hire and plumber Mr Pipes. Other businesses can be found at Coinmap.org.

Investors make money by buying bitcoins at one price and reselling when the market rises and converting their gains into real-world money. It’s standard foreign exchange trading, just based on a virtual currency.

Bitcoins started out worth US$13 each and by December last year had jumped to more than US$1200. On Monday they were worth US$588.80.

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