Given the convenience of established currency and payment systems, what is driving the ever-growing interest in Bitcoin and other virtual currencies?
Interest comes from a confluence of several factors. The recent increase in the price of bitcoin showcased the status of this virtual currency as an asset class for investment. There has been a significant increase in hedge funds investing in virtual currencies and retail investors are also investing in and trading the asset. Further, trading markets are emerging – for example, the CBOE Futures Exchange (CFE) and the Chicago Mercantile Exchange (CME) have begun offering Bitcoin futures. Although it has not been widely adopted in US consumer and retail transactions, virtual currency may become increasingly attractive to consumers because of data security concerns and the possibility of lower transaction fees. At the international level, China, India and Japan have seen a growth in virtual currencies – partly as an alternative to the US dollar.
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