There has been a lot of interest in Bitcoins. Recently we have seen Internet Moguls such as Marc Andreessen invested through his venture firm $25 million in Bitcoin processor Coinbase. Another high profile investor has been Winklevoss Capital the brothers that inspired the creation of Facebook, recently they invested $11 million Bitcoins and now that investment is worth about $32 million...not a bad return for virtual currency.
What is a Bitcoin(BTC)? Well a Bitcoin is a virtual currency to help facilitate the transfer of funds without paying the hefty processing fees of Visa, Mastercard and other banks that may be involved.
The value of a Bitcoin comes from the potential that it will be treated as an alternative currency to the US Dollar or the Chinese Yuan. The problem I see with a Bitcoin is that it is meant to be spent not saved. If consumers that currently use Bitcoins abandon this currency we will see it crash. What is vital to the survival of this currency is acceptance by consumers and merchants. The banks and central governments would never endorse this currency because it would weaken their own economy, just look what China did.
In the end, if you were to invest in Bitcoins, make the assumption there could be a loss and that there will be a lot of volatility.
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