Bitcoin’s bumpy ride in the virtual currency race

Does the term symbiosis mean anything to you?

“FORTUNE – In recent weeks, the arrest of Bitcoin Foundation’s Charlie Shrem and the near collapse of Mt. Gox, the world’s largest Bitcoin exchange, have added plenty more debate over the virtual currency’s survival and future. Of all the talk, however, what’s often overlooked is that the payment and verification technologies that bitcoin has spawned can be separated from the crypto-currency itself.

Investing in startups developing products and services that support bitcoin is different (and potentially less risky) than actually buying the digital currency. Why? Because these startup firms are preparing for a revolution in transfer technology, which may be through bitcoin, but may also be through a competing virtual currency or, potentially, through no currency at all.

When you buy bitcoins, the value of your investment is tied to the bitcoin currency. If a competing virtual currency – say, a “superbitcoin” – wins the virtual currency race and becomes dominant, the bitcoin currency loses its value. However, companies building technologies that support and complement virtual currencies can still be valuable in a “superbitcoin” world, since they are often impartial to any one virtual currency.

The obvious question is then will bitcoin – the first iteration in virtual currencies – become the dominant one?”

via Bitcoin’s bumpy ride in the virtual currency race – The Term Sheet: Fortune’s deals blogTerm Sheet.

Thanks to Fortune (and a host of others)