Bitcoin’s 80-Fold Jump Unlikely to Last: Offit Capital

December 4, 2013 Leave a comment

Bitcoin’s 80-Fold Jump Unlikely to Last: Offit Capital

Bitcoins probably won’t become a popular method of exchange as competing “crypto-currencies” crowd the market, confusing merchants and sending them back to credit cards and cash, Offit Capital said. “Why should I pay $1,000 for a Bitcoin when I can acquire a Bbqcoin for $10 or a Hobonickle for 10 cents?” Todd Petzel, chief investment officer of the New York-based private wealth-management firm, said in a report today. “They are all costless to produce, and consequently ultimately worth as much.” Bitcoins, which aren’t regulated by any country or banking authority, jumped 80-fold from a year earlier to about $1,200 last week. They traded at $1,04.98 today at 5:57 p.m. in New York on online exchange BitStamp. The currency, which exists as software in an open online system, gained credibility after law enforcement and securities agencies said at U.S. Senate hearings last month that it could be a legitimate means of exchange. Bitcoins fall short as a viable currency because there is a finite supply, Petzel said. The software that creates bitcoin dictates there can be only 21 million in circulation. “A Picasso drawing could sell for one Bitcoin and a Starbucks latte for one one millionth of a Bitcoin,” he said. “An absolute fixed quantity of currency in circulation is a recipe for extreme deflation and all the problems that come with it.”

To contact the reporter on this story: Gerrit De Vynck in Toronto at gdevynck@bloomberg.net

Filed under Macro Trends

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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