Bitcoin’s Trillion Dollar Challenge

The rate of adoption of Bitcoin as a currency will be a function of the rate of acceptance of the standard by storefronts – both on and offline.   If the currency can fall, or rise in value dramatically, it will be exceedingly difficult for stores to charge using the currency as its relative value vs. standards such as the US Dollar will be flux for consumers.  If Bitcoin continues to realize any further traction, however, there will be more flux in this marketplace before there is less.   The total value of the market today is $1.4B US and growing.   It is an imperfect market characterized by a lack of liquidity.   This will attract hedge funds and other large institutional trading firms seeking mass-scale arbitrage opportunities to move the proverbial needle financially.   And as they enter, it will be nuts.  They will try every trick in the book to monetize this market.  Pumping and dumping the currency for example, might be a huge opportunity in the short run.  Or, perhaps, we will see them start to create and trade derivatives.  These markets are not regulated so it will be no holds barred.

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