You've probably heard about Bitcoin, the digital currency that may or may not be a fad and that may or may not make you a millionaire. But would it make for a good holiday gift? Well, like just about everything involving Bitcoin, it depends on who you ask.
There are lots of different opinions about Bitcoin, but one fact is not in dispute: The digital currency has soared in value and is trading at about $548. Last year, one Bitcoin was worth less than $15. So if you received a Bitcoin in your stocking last year, consider yourself lucky. On the other hand, what goes up must come down -- the currency's value is down more than 50 percent from November, when prices reached $1,200.
If you've never owned a Bitcoin and still aren't exactly sure what the heck it even is, here's a quick primer. Bitcoin is a digital currency that is created online through a difficult and time-consuming "mining" process that involves solving different kinds of puzzles. Most of us would never mine Bitcoin since it's far easier just to buy it outright from an online exchange.
Some people see Bitcoins as a way to store value, an alternative investment of sorts, though the currency is still unproven, extremely volatile and has been marred by controversy. You might think about Bitcoin as a successor to the stock certificate as a gift idea. Shares of stock are a dependable gift, but giving them to others can be extremely expensive. (Check out all the fees
associated with buying shares of Disney (DIS
) directly from the company. There's a $50 minimum investment, a $10 enrollment fee, a $10 sales fee, a $1 to $5 investment fee, and a $10 termination fee. And one share of Disney is about $70.
By contrast, you can give out fractions of Bitcoins to friends as gifts without paying all those fees. Bitcoins can be divided down to eight decimal places, so you can give very small amounts, said Gabriel Sukenik, chief operating officer at Coinapult.com
. Sending the coins to others can be free, or nearly free, based on the service you use, he added.
"Want to give a unique present to 50 co-workers? Send them 10 cents of Bitcoin each to try it out," he told CBS MoneyWatch. That amounts to a $5 gift total.
So how do you acquire and send Bitcoins? The process is still a bit complicated. First, you have to create a Bitcoin e-wallet account through a service like Coinbase
. Then you buy Bitcoins through an exchange, such as the popular MtGox.com
Once you have Bitcoins, you use a transfer site to give a portion of them to someone else, and you can print out a piece of paper with the account information on it. The recipient also needs a Bitcoin account to receive the gift and start spending it.
And then there is perhaps the biggest barrier to the currency's acceptance: You can't head to the local Walmart (WMT
) and hand over a chunk of Bitcoin for your purchases. Finding places that take Bitcoin can be hard work.
Still, Time Magazine's Jessica Roy managed to buy
all of her Christmas presents with one bitcoin, spending .0206 of one unit on wool socks for her dad and .0294 on a portrait from a Canadian artist. It wasn't exactly easy. "For now, I'll probably stick with cold hard cash," Roy wrote about her future purchases.
The website Reddit debated the idea
of Bitcoin as a Christmas gift recently, and users were split. "Knowing my friends and relatives, I think it would be a terrible gift," wrote one user. "I would seriously be bummed if I actually got you a nice gift and in return got a piece of paper with a number on it that most people won't be able to understand," wrote another. "Do NOT do this if you have any social life."
David Smith of Lansing, Mich., who created the Bitcoin gifting website GoGiveCoin.com
, has a different perspective. "Bitcoin can be a great Christmas gift for the right person," he told CBS MoneyWatch. It's perfect for people who like to learn or people who are interested in computers, finance and political systems."
Smith also made a prediction. "Bitcoin is going to be the financial superhighway -- enabling users to send value to each other anywhere in the universe nearly instantly."