Very few people in Serbia actually know what bitcoin is, but an increasing number of people are becoming aware of the vast amount of money that can be earned from trading in this virtual currency.
The value of bitcoin has been growing dramatically in the last few weeks. The Financial Times reports that, in only 20 minutes, the price of bitcoin soared from $2,000 per coin to more than $19,000 only to drop to $15,000 of the Coinbase trading value. This is 12 times the value of one ounce of gold which has reached the price of $1,250.
This virtual currency emerged in January 2009 at a value of less than a cent. Laszlo Hanyecz made the first documented purchase of a product with bitcoin when he bought two Domino’s pizzas from Jercos 10,000 BTC. On May 17, 2010, Laszlo posted a request to buy pizza with bitcoin. It was on 22nd May, that he reported successfully trading 10,000 BTC for two pizzas, with Jercos ordering the pizza and receiving the coins. The bitcoins were quoted at $41 at the time of the offer.
Financial experts do warn that bitcoin is a speculative bubble that can burst at any minute. Although, the Serbian regulation does not recognize it as a currency, bitcoin is being traded in Serbia too.
There are two restaurants in Serbia that accept bitcoin as a means of payment, as well as several ATMs where you can exchange bitcoins for ‘real’ money. Additionally, there are a few companies registered in Serbia which main business activity is trading in bitcoins. While traditional money is created through (central) banks, bitcoins can also be obtained through the process of the so-called mining carried out by Bitcoin miners, i.e. network participants that perform extra tasks. Specifically, they chronologically order transactions by including them in the blocks they find. This prevents a user from spending the same bitcoin twice; it solves the “double spend” problem.
The Governor of the National Bank of Serbia, Jorgovanka Tabakovic does acknowledge that trading in this virtual currency has made some people extremely wealthy, but underlines that bitcoin remains a very speculative currency. Regardless of the bitcoin hysteria that has engulfed the world, Tabakovic reminds that bitcoin is not a generally accepted mean of exchange, or a unit of value of a certain product or service.
A Faculty of Economics professor, Dejan Soskic also agrees that bitcoin is a speculative bubble that can burst at any moment. „What bitcoin traders should be mindful of what is going to happen when this bubble bursts. There have been several so-called speculative bubbles in the history of economy. The first recorded one happened in the Netherlands in 17th century when the price of tulips suddenly exploded only to sharply drop soon after. I would also like to remind you that the last global financial crisis was caused by a speculative bubble which was created due to unrealistic real estate prices. The only difference is that when bitcoin ‘bursts’, only private investors will be affected, not banks“, Soskic explains.
Wise investors will certainly not participate in this market hysteria, Soskic says, adding that in the past few weeks the bitcoin price has risen only thanks to the psychological factor.
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