So you've heard about Bitcoins. Since its boom in April 2013, Bitcoins have garnered immense media attention and continued to show impressive strength, rising steadily and finally breaking the $200 psychological barrier today. Even the recent Silk Road closure couldn't dampen the demand for Bitcoins, as prices continued to rally after Baidu (the Google of China) announced its acceptance of Bitcoins as a payment mode.

The popularity of Bitcoins can be attributed to two characteristics of the currency; it is decentralized, and there is a finite amount of bitcoins that can be mined. As such, Bitcoins are very often said to be similar to be Gold. These two characteristics can be said to give Bitcoins their perceived value.

However, the question on everyone's mind is, what gives Bitcoins their intrinsic value (See a Reddit discussion on Bitcoin's intrinsic value here)? As a relatively new commodity that is still in its infancy stage, there have been attempts by a large number of parties to predict it's price, and to reason its market fluctuations with existing Economic theories. However, in attempting to analyse the Cryptocurrency market, we must keep in mind its infancy, and hence the significance of non-economic factors. The real problem is not what the price will be, but whether or not Bitcoin will even be here in five, ten years from now. The question we should be asking then, should be, what factors determine the viability of Bitcoins as an alternative currency?

In my opinion, the most important factor driving the demand of Bitcoins is its adoption by corporations. Basically, the more companies accept Bitcoins as payment for products and services, the better it will be for Bitcoin's future. However, this can turn into a chicken-and-egg issue, because corporations will never consider transacting in Bitcoins because of its instability. Until Bitcoins find a stable price, it is highly unlikely that this will happen. As MeldrumLaw pointed out in this Reddit discussion, "Bitcoin needs to stabilize (or all fiat alternatives need to simultaneously collapse) before widespread commercial adoption occurs."

It is true that Bitcoins have no intrinsic value, in the numismatic sense. Yes, Bitcoins solve some algorithmic problems through the mining process. However, these computations do not generate any kind of useful data, or solve any real life problems; there is a lack of "useful" input/output in solving alogorithms. Cryptocurrency needs to be more "useful" and solve a problem, in the same way that Duolingo translates the web while allowing users to learn a new language. With this in mind, I believe that a new cryptocurrency will emerge and overshadow Bitcoin, that actually solves a real world problem or generate useful data from all the computational data used. Imagine what could happen if Google is currently working on their own decentralized cryptocurrency?

Bitcoin prices skyrocketed during the financial crisis in Cyrpus as a result of people's distrust in FIAT currency and an increasing demand for an ungoverned and limited alternative.  Coupled with the large (and growing) number of services built around Bitcoins, I believe that Bitcoins, or at least Cryptocurrencies, will be here to stay for good.

In my next article, I'll be talking about alternative cryptocurrencies, and why Litecoins are a good buy right now. Stay tuned!

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Jeff Berwick is a Canadian entrepreneur, economics, finance, and investment writer, and libertarian and anarcho-capitalist activist. He believes that we are going through a significant market shift. He goes on to say that the excessive printing of money will lead to hyperinflation, and adds, this is exactly what the Federal Reserve is doing now. They have been printing 10% of the money every year, for the last 5 years. He believes that the economic (US dollar and Stock markets) collpase is imminent, and that we should look towards alternate forms of wealth such as Gold or Bitcoins.

Bitcoin, the first free-market non-localized private money, is seen as a great threat to the Government's monopoly of money. However, the recent economic collapses in smaller regions (think Cyprus), have spurred the rise of Bitcoin and its non-centrality as an alternative to the FIAT currency.

Or watch it on YouTube: US Dollar Collapse, Soon Won't Be Able to Buy Gold at Any Price -- Bitcoin - Galt's Gulch

Dan Popescu, a global markets strategist and gold expert, shares his thoughts about Gold and China. He talks about a 'black swan event' that is at our doorstep and how that can make the price of gold 'explode' in a day. Gold is important because it is a "hard currency" that has value, as opposed to the FIAT currency which is not backed by anything.

China is a major buyer of gold, and their strategy is to gather a large deposit of gold to be able to properly back up their currency, unlike any other currency now. If the Chinese can successfully back up their currency with gold, they will be able to give credibility to their currency.

The world is becoming increasingly dissatisfied with the current system. He believes, within the next 3 to 5 years, that "we'll have a currency crisis with a new international monetary system, and gold will defnitely be part of it." Gold will shoot up in a shock, surprise move, and he "won't be surprised" if gold goes above US$2000/oz within a year.

Or watch it on YouTube: Maybe the most important video you'll ever see on gold - Interview with Dan Popescu

Another video also highlights that 90% of market movement will come in the last 10% of time. Click here to watch the full video: Silver - 90% of the move comes in the last 10% of the time

Last video I want to share with you is from Ned Goodman. Ned is a Canadian billionaire with a unique perspective on the world economy. He starts off in the video by saying that "the dollar is about to be dethroned as the world's de facto currency".

He justifies his claim by explaining how the US dollar is backed by nothing, but still has a strong power in the world, because all oil in the middle east is traded with US dollars. That is how the dollar got to where it is today. However, China has recently made deals with Russia to buy oil in Chinese Yuan (RMB), opening the path to international partnership between these two big players. It was also obvious from the tension in Syria, that China and Russia are on the same side. We are heading into a period of "stag-flation" as the Federal Reserve loses its power to print money at will.

We buy things to protect our future purchase power. To continue doing so today, he emphasizes the need to start buying hard assets.

Or watch it on YouTube: Canadian billionaire predicts end of US Dollar as world's reserve currency - Ned Goodman lecture

For those of you who are still unsure about what FIAT currency means, or how the US dollar is not backed by anything, I'll end of with one of my favourite videos that very aptly answers these questions.

Or watch it on YouTube: When Will The Economy Collapse?

Thank you for reading, and I hope you gained some value from this post. Be safe and all the best!