Bitcoin spread betting

Bitcoin has had its ups-and-downs in the few short years that it has been in existence. If you like to take risks, then it may be the spread bet that you have been looking for. You may have to look harder than usual, however, as not all spread betting providers are allowing bets on the volatile value.

For instance, IG started with a flourish earlier in the year, boasting that they would be the first brokerage to offer binary bets on bitcoin, only to pull the plug a few months later. One problem for spread betting providers is that bitcoin shows great volatility, and because of its virtual nature, the broker has to take trades onto its own account rather than laying them off onto the markets.

To try to understand the nature of bitcoin and why it is different from many other financial bets, you need to go back to its origins. The idea of bitcoin came about in 2008 in response to the global financial crisis. It was to present an alternative to fiat currency, that is most currencies, which are based purely on a government’s word. It has been many years since currencies were required to be backed by physical gold held in a vault.

Fiat currency has been criticized over the years, and even now with the US doing “quantitative easing” on a regular basis, you can see the production of money seemingly from thin air, which seems intuitively to be an inherently unsound practice. Some feel that bitcoin is the same as it also seems to “appear”. However, it is generated by virtual work and there is an absolute cap on the amount that can be in circulation.

The risky side of bitcoin is that it is not innately worth anything. It has recently run up to $340, but it could just as easily be $1000, $100, 000, or $2.50. Many commentators are saying that bitcoin is in a bubble. For example, in April 2013 it rose from $30 to $260 in a month, crashing back below $70, demonstrating classic bubble behaviour.

Bitcoin has proved ideal for money laundering, and this has caused government intervention, which again affected the value of the bitcoin. There is no reason for the value to continue to rise, but then again, there is no specific reason for it to fall. It is the perfect speculative instrument, depending solely on what the market believes it should be at any particular time.