26 Jul
0
Bitcoin has passed the tipping point
Products and services that are first-to-market often take such a battering that they lose out to competitors with copycat products. Business history is littered with wildly successful products with ultimately spectacular collapses because they lost out to competitors that found a better way of doing things – things they learned at the trailblazer’s expense.
The Sony Betamax is the poster child for products that created a market and lost out to a rival – in this case VHS. Sony created a market for recording TV, but because the tapes where an hour long VHS grabbed the movie rental market.
More recently, Friendster was the first social network to explode, with millions of users in the first 3 months. But it couldn’t manage its growth and lost out to MySpace and of course Facebook.
There are many more examples. Some lost slowly, like the Atari 2600 game console, and some crashed spectacularly like Rio MP3 player. Palm lost to Apple, Netscape to Internet Explorer, WebCrawler to Google, Tivo to the cable companies, and on and on.
So far Bitcoin is an exception to this model. And though it’s been battered by ruinous headlines, including one just this week where the World Bank is calling it a naturally occurring Ponzi scheme, Bitcoin remains resilient.
Kaushik Basu, World Bank economist and author of ‘Ponzis: The Science and Mystique of a Class of Financial Frauds’ argues that most Ponzis today are not always obvious and that today’s Ponzi schemes often don’t have a puppet-master pulling the strings. Bitcoin, he says, is just such a Ponzi. The speculation on the currency raises the demand for Bitcoin making it a bubble.
Bitcoin has hundreds of competitors all built on the Bitcoin model. A handful are gaining some success, like Litecoin which is currently trading at $9, and Darkcoin (I’m not kidding) which is trading now trading at $7.50.
Darkcoin was built to cover perceived flaws in Bitcoin’s anonymity. One reason for the early success of Bitcoin was that it was as anonymous as passing dollars on the street. And while there is a far greater level of anonymity with this electronic transaction than making a purchase with a credit card or PayPal, Bitcoin is not anonymous to those forces who really want to know.
Unlike Bitcoin, Dash mixes up users’ transactions so that it’s nearly impossible to trace a payment to a person. But the promise of Dash’s privacy features solves a problem for only a small subset of Bitcoin users.
Few have heard of other crypto-currencies. If people barely understand Bitcoin, then any competitor has the impossible task of differentiating itself.
In his paper Basu mentioned Bitcoin by name, so did the IRS when it said it was a taxable asset. And this week Benjamin M. Lawsky, the superintendent of financial services for the State of New York, proposed regulations to create a “BitLicense” to include rules on consumer protection, the prevention of money laundering and cybersecurity. That’s akin to Apple successfully rebranding the MP3 to a podcast.
Just search “20 USD in BTC” on Google and you’ll get the exchange rate. It works for any fiat currency. You can’t do that with any other crypto-currency.
Bitcoin is currently trading at $600. Not bad for a five year old Ponzi scheme.
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26 Jul
0
Crowdfunding campaign aims to promote Bitcoin at NASCAR
(CoinDesk) Following the dogecoin community’s sponsorship of NASCAR driver Josh Wise at Telledega, bitcoin may soon boast its own promotional racer in the iconic US series.
Rookie driver Alex Bowman and his team, BK Racing, have announced their involvement in a crowdfunding campaign called ‘Bitcoin23’ that aims to bring a bitcoin-themed car to the NASCAR Sprint Cup.
The campaign kicks off today and runs until 20th August, with the aim to promote bitcoin while supporting the 21-year-old driver.
With the support of the bitcoin community, the organisers hope to raise $100,000 for a full sponsorship.
If successful, the team and driver will run the bitcoin-branded car during the Labor Day weekend race at Atlanta Motor Speedway on 29th-31st August.
“Bitcoin is changing the way people think about how they spend money and pay for things,” said Bowman.
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23 Jul
0
Bitcoin like the Internet In 1995
At only five years old, bitcoin
is receiving more venture capital investment than early stage Internet
companies were in 1995. Remember what the Internet was like in 1995?
is receiving more venture capital investment than early stage Internet
companies were in 1995. Remember what the Internet was like in 1995?
If you have 27 minutes to refresh your memory, YouTube has a Computer Chronicle video showing what the 1995 Internet
looked like. If not, the piece discusses how hard it was to stream
video, how there was no safe way to process credit cards, how ugly the
websites looked and how slow the Internet was.
looked like. If not, the piece discusses how hard it was to stream
video, how there was no safe way to process credit cards, how ugly the
websites looked and how slow the Internet was.
Things seemed so grim. In 1995 Newsweek ran a piece: “Why the Internet will Fail.”
Sound familiar? These are the same arguments against bitcoin: hardly
anyone uses it, it isn’t safe, and it is hard to use. However digital
currencies are so much cheaper, more convenient and more powerful than
their analog counterparts that, like the Internet, their widespread
adoption seems assured.
anyone uses it, it isn’t safe, and it is hard to use. However digital
currencies are so much cheaper, more convenient and more powerful than
their analog counterparts that, like the Internet, their widespread
adoption seems assured.
Which digital currency will triumph? Hundreds or even thousands of
competing digital currencies have entered the market. So far none has a
clear shot at overtaking bitcoin. Bitcoin’s network effect is growing at
a fast rate, making its dominance even more likely.
competing digital currencies have entered the market. So far none has a
clear shot at overtaking bitcoin. Bitcoin’s network effect is growing at
a fast rate, making its dominance even more likely.
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20 Jul
0
Under the microscope: conclusions on the costs of Bitcoin
Hass McCook is a chartered engineer and freshly minted Oxford MBA. He has been researching bitcoin over the past several months and recently joined the Lifeboat Foundation’s New Money Systems advisory board.
This, the final instalment in his five-part series, evaluates the relative sustainability of the bitcoin network against the costs of gold production, the printing and minting of physical currency and the legacy banking system.
Under the Microscope has aimed to cast a critical eye over the social, environmental and economic impacts of the way we currently transact and transfer wealth, be it through legacy systems like gold and fiat currencies, or through newer digital cryptographic ones.
The series has also endeavoured to give readers a clearer idea of the human and environmental impacts associated with both current and future monetary systems, and allow them to draw their own conclusions on the relative sustainability of the old and new systems when viewed from a holistic “triple-bottom-line” approach.
Although it is not necessarily fair to compare bitcoin to the entire legacy banking system, there was doubt in the community about the impact of the legacy banking system, and thus, it has been quantified for completeness.
It should be noted that the only thing involved in bitcoin mining is electricity use, and as the world moves towards clean and renewable energy, Bitcoin will have even less of an impact on the environment (See Koomey’s and Moore’s Laws). There is also much larger scope for energy efficiency improvements in integrated circuits and computing than there are in gold recycling.
As can be conclusively seen, the relative impact of the bitcoin network does not even register on the radar of the fiat and gold-based monetary systems, representing a very conservative relative environmental impact of just over 0.13%, and a relative economic impact of just under 0.04%. When one considers Koomey’s Law, we can expect energy/GH to continue to half every 18 months until 2048.
This means that we can expect our current industry best efficiency of 0.733 W/GH to reach 0.0000000873804 W/GH. Thus – armchair academics take note – in the event that bitcoin scales to a million times its current size and market cap over the next 30 years, it’s environmental impact will still be insignificant compared to existing systems.
When considering Moore’s Law, we can expect $/GH to continue to half every 18 months until at least 2020. When we consider the advent of decentralised emission-free renewable energy, we can expect tCO2/GH, and possibly even $/kWh, to tend towards zero.
The more agile and dynamic bitcoin companies can take advantage of these trends, but the sluggish, inert and over-encumbered incumbents simply cannot. As time goes on, bitcoin only becomes more sustainable, while legacy systems continue to bloat year-on-year.
There are no negative social externalities as a result of bitcoin proliferation, and any money laundering and shadow economy dealings that currently happen on the network will reduce drastically in proportion as adoption grows and regulations firm up on the on-and-off ramps into the bitcoin economy.
Rome wasn’t built in a day, and the crypto-currency space will take time to evolve to ensure that the issues faced and created by our legacy monetary systems do not continue to plague us for the next century and beyond.
It has been demonstrated that institutional fraud is a problem systemic to humans, and not to monetary systems. However, transactional fraud is only a problem in legacy systems due to the infallibility of the fact that 2 + 2 will always equal 4.
Although this paper has shied away from all of the ideological and philosophical debates surrounding bitcoin, what is clear is that the argument that bitcoin is superior monetary system – from the benefits and protections it provides to merchants and consumers, to the relative lack of negative impact it has on our planet and humanity in general – is a strong one.
The world is currently crippled by several issues, and the human race faces several existential threats such as climate change, the global ageing population demographic crisis and wealth and income inequality.
It is also unacceptable in 2014 to still have tens of millions of people forced into labour, and current monetary systems are somewhat responsible for several of the social ills brought about by corruption, money laundering and the black market.
For those who are willing to back their principles and morals with their money, bitcoin provides the opportunity for socially, environmentally and economically conscious global citizens to choose to no longer participate in the fragile and rotten legacy monetary system, and voluntarily participate in the open and wondrous bitcoin ecosystem.
Due to the several benefits and significantly reduced burden on our planet and society, there is a certain feeling of inevitability about digital currencies, whether it be bitcoin, or a future currency that proves to be even more sustainable and beneficial for humanity.
You can read Hass McCook’s paper ‘An Order-of-Magnitude Estimate of the Relative Sustainability of the Bitcoin Network‘ (on which this series is based) in full here.
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20 Jul
0
Bitcoin: Education can make a difference
(TheHill) Every so often, a transformative new technology emerges that has the potential to affect everyone on the planet. But whether the technology’s potential is realized or or not depends heavily on public opinion. Positive coverage can encourage people to embrace innovation, while negative stories can make them avoid something new — or even encourage governments to legislate against it.
We’ve seen such controversies around issues like stem cell research or genetically modified foods. Some people praise their potential for curing diseases or feeding billions of people. Other people warn that these allegedly unsafe and untested technologies could be hugely damaging.
A similarly polarized dynamic has now arisen around Bitcoin, a new technology that has the potential to become a global money for a global economy. Bitcoin combines the advantages of instant online payment (like PayPal) with being a store of value (like gold). At its core is a powerful cryptographic technology called the “blockchain,” which Jeff Garzik, one of the Bitcoin protocol’s core developers, describes as an elegant and unexpected solution to distributed systems: how computers talk to each other, and how to keep them coordinated.
Many people believe that Bitcoin can make our financial system cheaper, faster, and safer. Yet, coverage rarely focuses on these benefits. Instead, stories about money laundering, drug trading, exploded exchanges, and price crashes predominate the news cycle, to the point where many people are inclined to see Bitcoin as an undesirable phenomenon. A recent Reason-Rupe poll shows that although only a small minority (8 percent) of people say that they really understand Bitcoin, the majority (56 percent) want the government to ban it.
So why are some people so positive, and others so negative?
Support for Bitcoin often comes from tech visionaries. Paul Graham, a prominent venture capitalist, refers to Bitcoin as a paradigm shift that is unfortunately “derided as a toy, just like microcomputers.” Entrepreneur Marc Andreessen has written that the potential of Bitcoin today is analogous to personal computers in 1975 and the Internet in 1993. Today, it’s the preoccupation of “nerds,” but tomorrow it can change the life of everyone. Indeed, Bitcoin is already starting to become a mainstream phenomenon, with tangible benefits for ordinary people.
Bitcoin’s critics commonly mention its role in money laundering and corruption, epitomized by the infamous underground online market Silk Road. But they often fail to mention that any currency can be used for socially undesirable purposes. In theory, Bitcoin is easier to track and regulate than paper cash, so we have legitimate reason to believe that Bitcoin’s wide adoption would lead to less criminal activity, not more.
Consider, too, that there are 2.5 billion unbanked people in the world, equivalent to eight times the population of the United States. Just by giving them access to a cell phone and Bitcoin, we have potentially added 2.5 billion people to the global economy. Furthermore, with Bitcoin, people can send money anywhere in the world, without crippling bank fees or fear of government extortion. When we consider that the World Bank expects migrants to send $436 billion in remittances to their home countries this year, the advantages could be enormous.
On top of this, you can now use Bitcoin at an increasing number of retailers. Seemingly every week, a new brand-name retailer is added to the list of merchants who accept Bitcoin, which now includes the likes of Overstock, Expedia, and OkCupid. This makes Bitcoin a credible and desirable currency in the developed world, as well.
In response to the fearmongering and lack of credible information about Bitcoin, I started an educational platform called “Bitcoin Girl” — but that’s really just the start of what we should be doing. If we want to prevent negative public opinion and uninformed legislation from crippling Bitcoin in its infancy, we need to educate the people who understand humans better than computers.
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17 Jul
0
Bitcoin: the future of payments
The implications of bitcoin’s effect on consumer finance, investment and banking are not fully understood, a new report from Innopay suggests.
(CoinDesk) The payments and transaction service consulting firm explored the nature of digital currency and its impact on a broad range of market sectors, tapping everyone from European central bankers to core members of the bitcoin community for insight. At its heart, the Innopay report points to a broad awakening within the global economy to the benefits of bitcoin and its underlying technology, but acknowledges that ignition remains held back by and large.
Apprehension about the security and stability of bitcoin, especially among banks, large companies and a broader subset of consumers keeps the clear benefits of digital currencies from achieving mainstream usage. The experts interviewed by Innopay agree that bitcoin will deeply affect how people transact with one another, but remained split on how digital currency technology will manifest in the years ahead.
Economist and CoinDesk contributor Tuur Demeester told Innopay:
Digital currencies were also seen through the lens of regional financial crises, consumer technology and the future of the internet. The rules of global finance, the Innopay report explores, could be fundamentally rewritten by the likes of bitcoin and other currencies.
Payments networks revisioned with bitcoin
One area explored in the report is the concept that bitcoin can change how businesses and consumers pay one another. At the center of this, Innopay notes, is the change in how financial parties trust one another. The evolving nature of this trust structure carries the potential for significant benefits – and complications.
As Demeester remarked, the number of bitcoin transactions continues to grow steadily but this fact does not preclude traditional payments networks from maintaining a significant role by comparison. However, he said that many of the core services offered by banks may be facilitated more cheaply and efficiently with digital currencies, suggesting that banks are at risk of market loss for their inaction.
He said:
Others who spoke with Innopay were less convinced.
Kim Gunnink, an official with the Dutch Central Bank’s Payments Systems Policy Department, said that the central bank views bitcoin usage today as “a fad”. Gunnink argues that bitcoin’s performance as a type of money is poor overall, citing its fluctuating value as a critical flaw that makes it ineffective as both a unit of account and a store of value. As well, the official said that the future of bitcoin transaction fees could pose a long-term issue.
On the other hand, Gunnink noted the growing influence of digital economies among businesses and consumers, leaving the door open for the technology to grow in usage. Gunnink added that the addition of new services and avenues for digital currency acquisition would ease adoption, saying:
Why bitcoin is held back
Innopay’s report also confirmed what many other observers have said about the barriers to bitcoin’s success. A mixture of uncertain regulation, poor consumer information and complicated means to acquire bitcoin makes it difficult for broader use to take off.
Dave Birch, a director for IT advisory firm Consult Hyperion, remarked that governments remain cautious about passing definitive legislation about bitcoin because they both lack understanding of its underlying technology and fear missing out on future tax revenue. However, he predicted that governments will eventually see bitcoin’s potential to create “a dynamic and efficient economy”.
A lack of bank participation makes the situation even more untenable, but according to the report, bitcoin technology may one day find a strong ally in the global banking sector. Owing to the need to update legacy money networks worldwide – and the possible erosion of their core services – banks may have little choice but to embrace bitcoin.
However, it’s likely that this shift will manifest in the utilization of the protocol itself rather than bitcoin or another digital currency. But this isn’t necessarily a problem for bitcoin, as Innopay itself notes in the report’s conclusion:
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13 Jul
0
Bitcoin vs. banking: an infographic
There’s no denying that Bitcoin is changing the way we think about the financial market and investors are finally getting on board.
Companies that specialize in buying and selling gold have made announcements that they will be expanding into Bitcoin. According to Richard Waters, a writer in the Financial Times, reported A-Listers in Silicon Valley are climbing onto the bitcoin bandwagon.
Perhaps even more notable is what Hikmet Ersek, the CEO of Western Union, had to say during an interview with Bloomberg. Mr. Ersek expressed a willingness to accept Bitcoin into Western Union’s portfolio if, and that’s a big if, bitcoin becomes regulated like other currencies.
Right now Bitcoin transactions are equal to only 0.7% of the credit card transaction in the U.S alone.
There is still plenty of room for cryptocurrency to grow into. In 2013, there were $11.2 billion dollars worth of transactions in the U.S per day, compared to bitcoins $78.2 million worldwide. That number is up 183% from last year and a whopping 437% from two years ago.
Credit Cards go through four processes before a transaction is approved while bitcoins go through only three. If you store your money in a traditional bank, you risk bank runs, inflation and deflation due to government actions. Bitcoins main concern for risk is someone breaking into a wallet without proper preventative measures, such as encrypting your wallet, and your coins being taken.
All this information and numbers can get confusing and are difficult to find. Thank to Visual Capitalist, you can have it all in one place. Visual Capitalist merge art, data and storytelling to create a coherent and continuous infographic. Recently the people at Visual Capitalist have created an infographic that explores and explains the difference between Bitcoin and traditional banking. The infographic is entitled “Bitcoin vs. Banking” and sports the bold subheading, “How cryptocurrency can and will disrupt the current financial system”.
That’s not the only infographics that the people over at Visual Capitalist have made regarding the subject of Bitcoin. Back in February of this year Visual Capitalist released an infographic entitled, “The Definitive History of Bitcoin” which explores the history of Bitcoin ranging from; the Bitcoin design paper by Satoshi Nakamoto that was published back in October of 2008, the first real transaction with bitcoins, the rise and downfall of Mt.Gox, and ends in December when China announced they would not allow banks to handle bitcoins.Regardless of how much you do or do not know about Bitcoin, these infographics are helpful for everyone. The majority of us are visual learners and infographics like this help bring information and statistics to us in a visually appealing and memorable way. You can share their infographics via Facebook and Google+, tweet or pin it. For myself, I will be forwarding these onto my friends who keep asking the same question every time, “So what is a Bitcoin?”
Check out Bitcoin vs. Banking below:
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13 Jul
0
How the Bitcoin landscape is evolving in 2014
The bitcoin landscape is evolving so rapidly that it’s hard to believe we’re already halfway through the year.
(CoinDesk) Like any new industry, there are so many areas to explore in the bitcoin space that sometimes make a week’s worth of developmentsit feel like a month or two have gone by.
Bitcoin has certainly seen a lot of action in 2014. The collapse of Mt. Gox, hefty venture capital investments in bitcoin startups and the US government auction of 30,000 bitcoins seized from the Silk Road all generated buzz in the mainstream media.
CoinDesk’s recent State of Bitcoin Q2 2014 report highlights some of the key developments that have influenced bitcoin’s journey over the past few months, providing context for the digital currency’s ever-changing position in society.
While only time will tell what’s in store for bitcoin’s future, a number of trends have emerged in the industry this year that could shape the direction and velocity of bitcoin’s growth.
Here are five bitcoin trends that have emerged in the first half of 2014:
1. Big-name retailers jumping on board
The year started with a bang when Overstock became the first major retailer to accept bitcoin. News of Overstock’s success with the digital currency served as a signal for other large companies to follow suit.
Electronics retailer TigerDirect integrated bitcoin as a payment option by the end of January, and other household names like the Sacremento Kings, Lord & Taylor and REEDS Jewelers got on board soon after.
By the end of June, three companies with at least $2b in annual revenue had begun accepting bitcoin: DISH, Expedia and Newegg.
With smaller businesses also continuing to accept bitcoin at a fervent pace, we estimate that around 100,000 merchants will accept bitcoin by the end of 2014:
2. A warming regulatory climate
While it certainly hasn’t been all smooth sailing between governments and bitcoin this year, it seems like tides are changing and regulators around the world are starting to take a more open-minded approach to the digital currency.
In the beginning of 2014, China’s stance on bitcoin was ambiguous at best. By April, China’s Central Bank Governor said that banning bitcoin was “out of the question,” referring to it as more of an asset than a currency.
Russia, after releasing stern warnings about bitcoin early this year, recently reconsidered its stance on the digital currency.
Gerogy Luntovsky, the deputy chairman of Bank of Russia, explained that his agency is going to take time to examine bitcoin as the industry continues to evolve:
Progress has also been made in places like California, where Governor Jerry Brown has granted bitcoin ‘legal money’ status, and Switzerland, where similar ‘legal money’ regulations are being considered.
Regulators seem increasingly willing to hold off on impulsive legislation in favor of working with the bitcoin community to find the best resolutions to prevent money laundering and fraud without stifling innovation.
3. VC firms keep betting big
Not everybody is as slow as governments to embrace bitcoin.
Serious venture capital investments in bitcoin companies were already taking place in 2013, but VCs have certainly kicked it up this year, with a total of $150m having already been invested in 2014.
With 2014′s Q2 VC investments reaching $73m (up from $57m in Q1), CoinDesk estimates that by the year’s end, 2014 VC investments in bitcoin companies will have surpassed 1995 VC investments in Internet companies:
The venture capital flowing into the bitcoin space supports the industry’s infrastructure both explicitly and implicitly: startups gain access to resources that allow them to build much-needed products and services around the Bitcoin protocol, and the investors’ confidence in the digital currency brings legitimacy to bitcoin’s reputation.
4. Building on the block chain
Most people who take the time to really learn about bitcoin realize that the true genius in Satoshi Nakamoto’s invention is not the coins themselves, but rather the block chain.
The term ‘Bitcoin 2.0′ is often used to describe applications that use the technology of the block chain to address issues like smart contracts and identity verification that were once impossible to solve in a decentralized way on the Internet.
Jeff Garzik, one of the bitcoin protocol’s core developers, described the significance of the block chain beyond the scope of digital currencies:
Block chain-focused startups like BlockScore and BlockCypher have already secured funding this year from investors. As 2014 rolls on, expect to see new uses of the block chain technology solving problems in a uniquely decentralized manner.
5. New emphasis on transparency
The collapse of Mt. Gox, once the biggest bitcoin exchange in the market, was a wake-up call to many in the community.
The former exchange’s CEO Mark Karpeles was notoriously opaque in the months leading to its bankruptcy, causing confusion among users who held bitcoins on Gox.
Ultimately many people lost BTC through the course of Mt. Gox’s downfall. Outcries from the community started pouring in, demanding other big exchanges prove their solvency with professional audits.
Exchanges like Bitstamp, Kraken and Coinbase all agreed to be audited in the aftermath of Mt. Gox’s liquidation.
The demand for more transparency in the industry doesn’t stop at exchange audits, though. Revered bitcoin evangelist Andreas Antonopoulos recently took to Twitter to announce his departure from the Bitcoin Foundation, citing a lack of transparency as a primary concern:
If the first half of 2014 proves anything, it’s that the technology underlying bitcoin is resilient even under catastrophic circumstances (Mt. Gox), and that the community is willing to rally together in bringing bitcoin to mass adoption.
There’s a reason people call it the “honey badger of money.”
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10 Jul
0
Pantera Launches BitIndex to Track Bitcoin
Pantera Capital, an investment fund that focuses on bitcoin, has announced an index it says will allow investors to track the cryptocurrency over a medium-term timeframe.
(CoinDesk) Dubbed the BitIndex, it takes into account seven different factors that Pantera believes accurately charts bitcoin’s overall progress.
What’s interesting is Pantera Capital is not including price in the BitIndex, instead tracking other data sources that it believes lends to bitcoin’s technological progression.
In the fund’s monthly report for June, Pantera stated:
Components of index
The seven measures that the BitIndex includes, in order of importance, is as follows:
- Developer interest on GitHub.
- Merchant adoption as a measure of consumer adoption.
- Wikipedia views measuring bitcoin education.
- Hashrate by logarithmic scale corresponding to orders of magnitude.
- Google searches captured by the number of times “bitcoin” appears.
- User adoption as measured by wallets.
- Transaction volume on the bitcoin network.
Pantera’s letter does not indicate how it calculates the merchant adoption metric, although statistics for hashrate, user adoption by wallets and transaction volume are publicly available from a number of different data sources.
Information from websites such as GitHub for developer interest, as well as Wikipedia and Google to identify mainstream interest and popularity, is also readily available.
While it appears the BitIndex closely followed pricing movements in the latter half of last year, measurements the fund uses show that, despite negative news events like Mt. Gox and the US Marshals’ BTC auction, bitcoin is on an uptrend.
Always about price
BitIndex offers a different look at technological aspects of bitcoin rather than infatuation with the cryptocurrency’s valuation.
In fact, the firm says that it is value distortions that influenced the creation of BitIndex, specifying, “price manipulation at Mt. Gox and/or the Chinese and in the first quarter of 2014 due to the collapse of Mt. Gox”, as problems defining bitcoin’s true worth.
There is a lot of interest in bitcoin’s value, and the vast number of exchanges with different prices has created a need for composite pricing information.
CoinDesk has its Bitcoin Price Index and the Winklevoss twins, who are major investors in bitcoin and are trying to launch an ETF for the cryptocurrency, also have the creatively named Winkdex.
However, Pantera states unequivocally in its letter that the BitIndex gives people a longer-range view of bitcoin than what price indexes offer:
Focus on investing
While the BitIndex may provide a glimpse into where bitcoin is going, it is questionable whether it offers insight into the bitcoin economy’s adoption rate as a store of value – seemingly something Pantera’s investment clients would be wanting the firm to do.
“The index looks at the interest level across a couple key populations: general public, users, developers, and merchants, and should be a pretty accurate judge of the overall growth of bitcoin”, said Andy Beal, a lawyer with Crowley Strategy that advises bitcoin startups.
He added, however:
Pantera is backed by Fortress Investment Group, Ribbit Capital and Benchmark Partners. Its focus on bitcoin began in 2013, and the firm invests directly in BTC as well as funds startups that operate within the industry.
Bloomberg’s company overview information indicates that, prior to concentrating on bitcoin, Pantera Capital previously invested in public equity, fixed income, currency and commodity markets.
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9 Jul
0
Polish Finance Ministry says Bitcoin can be used as financial instrument
(CoinDesk) Poland’s deputy finance minister Wojciech Kowalczyk has released a
document confirming that under the country’s existing financial
regulations, bitcoin can be considered a financial instrument.
document confirming that under the country’s existing financial
regulations, bitcoin can be considered a financial instrument.
The statement follows a previous inquiry from Michal Pacholski, an
opposition member of Parliament for the liberal Twoj Ruch (Your
Movement) party. At the time, Pacholski asked Poland’s Ministry of
Finance to explain the legal status of bitcoin transactions.
Specifically, his query focused on whether or not “options and futures
contracts can be considered as a financial instrument” if they are
denominated in a digital currency.
opposition member of Parliament for the liberal Twoj Ruch (Your
Movement) party. At the time, Pacholski asked Poland’s Ministry of
Finance to explain the legal status of bitcoin transactions.
Specifically, his query focused on whether or not “options and futures
contracts can be considered as a financial instrument” if they are
denominated in a digital currency.
The Finance Ministry replied that bitcoin fits within that legal framework, stating:
“Options or futures contracts which are based on
[bitcoin] as a base instrument can be considered as derivative
instruments, and as such, they can be considered as financial
instruments, according to the bill on financial instruments.”
Bitcoin’s legal status clarified
In the notice, Kowalczyk confirmed that bitcoin is not an officially
recognized currency in Poland. He said in the policy document:
recognized currency in Poland. He said in the policy document:
“An analysis of national regulations allows to conclude
that bitcoin … is not a legally defined and universally accepted
currency, because it cannot be classified as either a national currency …
or a foreign currency.”
Previously, Pacholski had pressed the Finance Ministry on the
possibility of issuing options and futures contracts in the form of
derivatives based on bitcoin market indexes. These issuances, he said,
would be similar to the derivatives which are based on stock market
indexes.
possibility of issuing options and futures contracts in the form of
derivatives based on bitcoin market indexes. These issuances, he said,
would be similar to the derivatives which are based on stock market
indexes.
Kowalczyk’s document confirms that these instruments may be made
available to Polish investors. This, the Finance Ministry said, is in
accordance with the country’s banking services regulations.
available to Polish investors. This, the Finance Ministry said, is in
accordance with the country’s banking services regulations.
Regulators accept bitcoin usage
Ultimately, the Polish government statement on bitcoin’s use in
derivatives markets suggests the continued evolution of government
policy toward digital currencies in Poland. While bitcoin can be used as
a medium of exchange and financial tool, it remains unrecognized as a
legal currency by regulators.
derivatives markets suggests the continued evolution of government
policy toward digital currencies in Poland. While bitcoin can be used as
a medium of exchange and financial tool, it remains unrecognized as a
legal currency by regulators.
This policy stance has been stated by Poland’s financial regulators in the past, including officials from the Finance Ministry.
Speaking at a seminar held at the Warsaw School of Economics (SGH) in December,
Szymon Wozniak, a Finance Ministry representative, said that the
ministry does not consider bitcoin to be illegal, but it does not
consider it to be a legal currency either. He remarked:
Szymon Wozniak, a Finance Ministry representative, said that the
ministry does not consider bitcoin to be illegal, but it does not
consider it to be a legal currency either. He remarked:
“What is not forbidden is permitted. However, we certainly cannot consider bitcoin to be a legal currency.”
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