There's No Real Reason Not To Believe In Bitcoin, Apart From One Dodgily Located ATM

Bitcoin had a mini-crash the other night after the FBI’s Silk Road raid. At first I shrugged it off as just another of the long line of mini-crashes and actual crashes that this dodgy virtual currency seems prone to.

But one of my colleagues here at Business Insider called me on that view and pointed out that Bitcoin looks like it is going mainstream with the production and roll out of ATM machines.

Coindesk, which styles itself as the voice of virtual currency reported yesterday that:

Lamassu has shipped its first Bitcoin ATM, which allows users to insert cash and transfer it, in bitcoins, to their bitcoin wallet.

I checked the calendar and the story was posted yesterday on October 3, not April 1.

I guess as a rusted-on financial markets guy who’s traded, invested and strategised since the late 1980’s Bitcoin seems, well, unreal. But then I got to thinking in a world of flat currencies, those not backed by a hard metal like gold or silver, how is Bitcoin any different?

The answer I came to is that maybe it’s not. Maybe I’m just too old and set in my ways.

But Bitcoin certainly looks like it has attracted a decent community of traders. Indeed, some argue that while Silk Road precipitated the collapse yesterday, it was entirely technical driven.

That is just a classic sell and maybe Bitcoin’s fall had nothing to do with Silk Road, which just acted as a catalyst for position squaring the way any new item does for any tradeable instrument.

Clearly Bitcoin is in a big gradual downtrend over the past six months. But it also had a strong uptrend recently that broke and then retested the trendline, before falling over again the other night.

That’s a big tick for Bitcoin in that people believe in it enough to trade it in the manner that they will trade any other currency or commodity. Let’s face it, that’s really what Bitcoin is.

Equally supportive of Bitcoin going mainstream is the growing number of sites and “real” businesses who are willing to accept payment in bitcoins.

The rollout of Bitcoin ATMs is a further step in the virtual currency’s evolution. Look at the locations where you can withdraw bitcoins:

  • Bratislava, Slovakia
  • Shanghai, China
  • Paris, France
  • Montreal, Canada
  • Sydney, Australia
  • Auckland, New Zealand
  • Helsinki, Finland
  • Copenhagen, Denmark
  • Stockholm, Sweden
  • São Paulo, Brazil

One other location did catch my eye though, and probably will of the NSW Fraud Squad – Nimbin, Australia.

Speaking to sources who want to remain anonymous, the key question about Bitcoin – and to be fair, the whole virtual currency world – was how they are created, the use of computer power to “mine” them and the unregulated nature which can lead to fraud, corruption, and potential money-laundering.

I guess that is where the mainstream sits – if Bitcoin, or another virtual currency, is to become truly mainstream and replace Aussie or US dollars as a means of exchange, then users need to be sure that their transactions are secure.

At present, Bitcoin is still a small part of global exchange. According to Block Chain, which says of itself that it is “Bitcoin’s most popular bitcoin wallet and block explorer” , the total value of coins in circulation is about $1.5 trillion US dollars.

Nothing to be sneezed at, because that’s bigger than Australia’s annual GDP. But it’s still nowhere near enough to be a genuine global means of exchange.

Evan Lucas from IG Markets Australia, which launched but then closed Bitcoin trading on their platform earlier this year, told Business Insider that it seems clear that a virtual currency will take hold, grow and prosper in time. Bitcoin has the lead at the moment, but whether it or some other up-and-coming currency wins out, only time will tell.

Virtual currencies increasingly look like the future of money but the big question for investors and traders in Bitcoin is will be an Apple or a Palm?

Again, only time will tell.

Follow Greg McKenna on Twitter.

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You can watch the video of the Bitcoin ATM below.

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