Right idea, wrong execution
I've not seen the chap behind this's sales pitch - or if he came up with some credible real-world marketing outside of his "pirate" moniker online, etc, but there is an investment pitch to be made here that /can/ sound credible.
I.e. there are arbitrage opportunities of >5% at any given point between the different BitCoin exchanges. You can easily demonstrate how these can be leveraged to buy on one whilst selling on another and making a 5%+ margin each time.
To anyone who knows enough to be dangerous but not enough to be competent, I can see how they get suckered in by the promise of fools gold.
The reality is that by the time you've paid your fee on the exchanges, and had to do IBAN transfers from one exchange into your account back into another exchange, and (if he wasn't a merkin) to and from Yen with skewed exchange rates and FX fees, etc. each time assuming Mt.Gox is part of the loop... you realise that you're losing 5%+ of your money to the middlemen. And you're left with... ummm.... nothing.
The irony being that If "real money" were as easy and free to move around globally as Bitcoin, there'd be genuine margins here. ...And also no real need for Bitcoin. ...And also equivalent exchange rates.
As someone who's been involved in digital currencies since the start, but from a banking industry background, here's my 0.000338 BTC:
- They do serve a purpose and solve a real problem. Therefore they do have an innate value
- The problem is, the majority of that purpose and value is in illicit trade; moving money across borders, avoiding sanctions and AML screening, etc.
- Like many currencies and artefacts, their purpose as an instrument for financial speculation should never be underestimated. Not just because it has such fluctuation, but also because:
1. It's an easily manipulated market, and you DO get a lot of market manipulation of it by less salubrious types
2. It's a proxy for the rise of a digital economy, and so there are reasons others would want "a piece of the action"
3. It's an easy route into the equivalent of a "tech stock" that feels earlier in the cycle... for all those who wished they'd been angel investors to the dot-com startups and missed out on the pump and dump there
The flip side:
- An attempt at regulation will happen. And this will destabilise something that's already unstable... Realistically, I imagine it'll be the big exchanges that'll have their accounts frozen, making cash-in / cash-out problematic, removing many of the currencies secondary uses, and limiting it to being more a local currency kept within certain (illegal) circles
- Something else will come along and be the successor to BitCoin. It has innate problems that will need solving, an exchange between BTC and that will need creating. Watching out for this successor (and I don't mean "the next CNC / FTC / YAC clone of BTC") could be profitable
- The influx of public interest will die without profits / further pumping of the value / interesting news stories to fuel the hype. And without that public interest and the changing supply/demand ratio it creates, I can see a slide in the value... in the absence of other events occurring
- It's always the pick axe salesmen that get rich in a gold rush. Watching what happens with Butterfly Labs and the like will also be interesting