currency backed by intellectual lightweights, but the virtual currency has taken some massive steps towards legitimacy over the last couple weeks.
On Friday morning Sir Richard Branson endorsed bitcoin and announced that his space flight business Virgin Galactic will accept bitcoin as payment. “One future astronaut, a female flight attendant from Hawaii, has already purchased her Virgin Galactic ticket using bitcoins, and we expect many more to follow in her footsteps” Branson crowed on his website.
It’s worth noting that Branson himself owns bitcoins and Galactic has yet to nail down an exact launch date. Regardless, it’s another step towards legitimacy for the currency once best known for being a useful way to buy illicit goods anonymously over the internet.
“It certainly is a validator of a concept that has taken on enormous momentum,” says famed market strategist Peter Kenny in the attached video. Even as he notes we’re talking about a peer-to-peer currency and people willing to put money down on the chance to fly on a still hypothetical, suborbital airplane, Kenny admits it’s certainly another step towards bitcoin becoming a real substitute for what has long been considered “real” money.
One barrier to acceptance facing bitcoin is the wild volatility. In the last 3 days bitcoin traded over $900 on Tuesday, dropped as low as $466 on Wednesday and closed and pushed back to $800 by Friday afternoon.
For the sake of comparison the euro has traded in a range of $1.36 to $1.34 over the same period.
Beyond a snarky comparison point there’s a practical problem for merchants willing to accept bitcoin. There’s simply no way of knowing what a bitcoin is going to be worth from day to day, let alone what a bitcoin will be worth in dollar terms on the day Branson launches a Galactic.
Before mainstream businesses start accepting bitcoins as payment, there is going to have to be either a semblance of stability on the price, or a massive hedging infrastructure in place. “There’s no question that there has to be some ancillary hedging functionality that has to be brought to market in order to hedge this type of currency,” says Kenny. “If this is a currency, there will be a hedge.”
“There’s still a long way to go, but it’s out of the gate,” Kenny concludes.
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- Virgin Galactic
- Sir Richard Branson
- Peter Kenny