In the ‘very’ broad marketplace on Wednesday Bitcoin – a ‘virtual’ money used on the Internet – tumbled in value dramatically. The reasons for this dive in value is still being argued by many, just like the many who are still debating the ability of Bitcoin to remain a currency that is able to prove its long-term worthiness. The past couple of weeks saw a large jump in value for Bitcoin and the reason given by many was because it was a reaction to the Cyprus banking fiasco. Meaning that some people worried about the long-term health of their currencies supposedly began to exchange paper for ‘virtual’ money.

Yesterday’s highs reached one Bitcoin for 266.00 USD and then suddenly began collapsing to lows of about 105.00 USD per virtual coin. Can you say tulips? Can you say danger? Digital Markets Advisor knew you could. As long as people find Bitcoin a worthwhile way of exchanging ‘it’ for something they believe to have value, the virtual currency has a chance to survive.

However, it must be remembered that Bitcoin is a virtual currency because it is a creation of computer algorithms and its value relies upon the confidence of a fair exchange. Yesterday’s volatile exchange rate per Bitcoin should be enough to serve as a warning to those who are looking for ways to preserve their wealth outside the standard norms. And while thinking outside the standard norms may in fact prove worthwhile if done correctly, those participating in Bitcoin as a means to preservation had better realize that like all forms of currency – speculation will always be part of its very dangerous equation and because of the illiquid nature of Bitcoin it is ripe for manipulation.

Here is a link that explains some of yesterday’s circumstances:

http://www.pcworld.com/article/2033809/bitcoin-volatility-caused-by-surge-in-demand-slow-software.html