Banking, finance, and taxes
Another Bitcoin Virtual Currency Crush from China, via Baidu
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Baidu, Inc. (NASDAQ: BIDU) is likely one of the key reasons that Bitcoin has been able to rise handily and gain more adoption. After all, when the largest search engine site in China started accepting Bitcoin payments it was a mark of adoption. Now we have word that Baidu is suspending the acceptance of Bitcoin for payments.
The news is running on the ticker on Bloomberg TV that on Baidu has suspended accepting Bitcoin due to volatility in its value. A suspension may not be a permanent ban, but it is far from a more widespread adoption.
Just on Thursday came word that Bank of America Corp. (NYSE: BAC) even tried to project an upside fair value of up to $1,300 based upon numerous calculations and a maximum valuation of $15 billion. As a reminder, there are a maximum of 21 million Bitcoins allowed and the coins are still being mined.
The Mt. Gox website is an exchange for Bitcoin and the last trade we have seen was at $877.46 after having been at a high of $1,155.00 earlier on Friday. That is a drop of 30% in a single day. For a real nation’s currency to rise or fall 30% in any one day it would require one of two likely scenarios: 1) a massive government currency devaluation or 2) a major war or a nuclear event.
Earlier this week we also saw former Fed Chairman Alan Greenspan come out of the crypt for an interview were he called Bitcoin a bubble.
24/7 Wall St. has been more than puzzled by Bitcoin’s rise, and it fall. Bitcoin is still operating without its buyers and sellers knowing who created it. It has no nation behind it, so it cannot tax people, it has no laws protecting it from outsiders, it cannot issue laws, and it has no armed forces to defend its interests.
Baidu may have just smartened up here by realizing that it cannot adequately shield itself from Bitcoin volatility. The currency markets are the most liquid markets in the world. The same might not prove to be true for a virtual currency that still has international regulators undecided upon how to treat it.
Our inquiries into Baidu have not yet been answered. Does this look like a currency chart to you below?
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