It is not often the case that one can disregard everything one learns in a class or picks up from common sense, and is still able to find great success. But, that is exactly what happened for Greg Denewiler. “Everything I have been taught about finance says these things shouldn’t work,” the Denver money manager said of the controversial virtual currency.
“There’s no economic sense behind them,” he said assuredly, clearly miffed by the way the currency works when contrasted with his expectations based upon experience. He added, “You can’t value them.”
Denewiler is a financial analyst and a value investor, so it is not as if he is speaking out of school. He manages nearly $40 million in his office in downtown Denver. Most of the accounts he handles are under $500,000, and most customers are closer to retirement age and do not need to invest in such things as bitcoins.
That said, Denewiler himself decided he might as well. And as luck would have it, a friend coaxed him into investing in a “bitcoin miner” nearly 18 months ago. The computer serve that creates bitcoins in exchange for processing the coin's transactions may sound confusing, but that is only because it is. Even Denewiler didn't understand the process at first, and he admits it still miffs him to this day.
“I never expected to see that money again,” Denewiler said.
The bitcoin is, at its core, a peer-to-peer electronic cash system that a man named Satoshi Nakamoto created in 2009. However, Nakamoto's literal existence is still somewhat in question. The currency he created has now taken on a life of it's own, and has multiple contributors around the globe.
What makes bitcoins fascinating is they do not use the modern standard for issuance. They are not issued by central banks, and are instead cryptographic codes that are limited through codes. Nonetheless, the value has moved greatly. While starting from $5 a year ago, the coins have now moved to $205 in the last week.
The all-time high was $260, which then saw a great plunge down to $170. The coins have regulators complaining that the currency is allowing for nefarious endeavors. However, that has not stopped many from trusting the coin or currency markets that appear to favor only those within the system.
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