Daily Archives: January 26, 2015

Markets have the unique ability to make even the smartest people in the room look silly. It was barely a month ago that the Guardian newspaper wrote this: "Bitcoin halved in value over 2014. That's a pretty bad investment, and could spell doom for the currency."

Read MoreBitcoin gets first regulated US exchange

To be fair, at the time, the price of bitcoin had crashed and sentiment was at an all-time low, but the Guardian made the classic investment error of confusing perception with reality. When I first read the article, I was reminded of the BusinessWeek cover in August 1979 that declared "The Death of Equities." That was right before the stock market entered the greatest bull market of a generation. The Dow Jones Industrial Average closed at 882 that year and within 20 years had climbed above 11,000. For mathematically challenged, that is a 1200-percent return. What a way to die!

So, what's next for digital FX?

The launch of a regulated U.S.-based exchange opens the door for bitcoin and digital currencies to fulfill their destiny. In my view, this destiny includes becoming a new asset class for investors. Digital currencies need not be limited to a single blockchain. In fact, multiple digital currencies would add to the decentralized appeal. As the institutional investment community becomes acquainted with digital currencies, they will begin to see the multiple use cases for these new assets. Moreover, these new assets will be uncorrelated with more traditional investments, which will enhance the diversification of investment portfolios.

Read MoreRussians move into bitcoin as ruble tanks

Some of these use cases have been well documented, including solving micro-payment problems within the music industry and serving the under-banked. A regulated U.S.-based exchange will encourage more investment dollars to enter the space and will lead the discovery and launch of bitcoin's first 'killer app." That is to say, the app that allows everyone to finally see the promise of this technology. There are well over 400 digital currencies in existence with a market cap of $4.9 billion yes, billion with a "B." Each of these currencies should be thought of as its own app. Larger cap currencies like Ripple and Stellar are taking aim at the international payment systems, while (currently) smaller cap currencies like Digibyte have been developed to tackle micro-payments. The investment opportunity lies in the ability to buy into the "app" or currency before widespread acceptance.

In 1994, few predicted that the Internet would enable live video streaming on a handheld computer that doubled as a phone but that's exactly what we have. The arrival of institutional investors in digital currencies is a big bang event. If you have doubted the viability of digital currencies, today may be a good day to re-evaluate this emerging asset class.

Read more from the original source:
Bitcoin is done with its 'tumultuous teen' years

Markets have the unique ability to make even the smartest people in the room look silly. It was barely a month ago that the Guardian newspaper wrote this: "Bitcoin halved in value over 2014. That's a pretty bad investment, and could spell doom for the currency."

Read MoreBitcoin gets first regulated US exchange

To be fair, at the time, the price of bitcoin had crashed and sentiment was at an all-time low, but the Guardian made the classic investment error of confusing perception with reality. When I first read the article, I was reminded of the BusinessWeek cover in August 1979 that declared "The Death of Equities." That was right before the stock market entered the greatest bull market of a generation. The Dow Jones Industrial Average closed at 882 that year and within 20 years had climbed above 11,000. For mathematically challenged, that is a 1200-percent return. What a way to die!

So, what's next for digital FX?

The launch of a regulated U.S.-based exchange opens the door for bitcoin and digital currencies to fulfill their destiny. In my view, this destiny includes becoming a new asset class for investors. Digital currencies need not be limited to a single blockchain. In fact, multiple digital currencies would add to the decentralized appeal. As the institutional investment community becomes acquainted with digital currencies, they will begin to see the multiple use cases for these new assets. Moreover, these new assets will be uncorrelated with more traditional investments, which will enhance the diversification of investment portfolios.

Read MoreRussians move into bitcoin as ruble tanks

Some of these use cases have been well documented, including solving micro-payment problems within the music industry and serving the under-banked. A regulated U.S.-based exchange will encourage more investment dollars to enter the space and will lead the discovery and launch of bitcoin's first 'killer app." That is to say, the app that allows everyone to finally see the promise of this technology. There are well over 400 digital currencies in existence with a market cap of $4.9 billion yes, billion with a "B." Each of these currencies should be thought of as its own app. Larger cap currencies like Ripple and Stellar are taking aim at the international payment systems, while (currently) smaller cap currencies like Digibyte have been developed to tackle micro-payments. The investment opportunity lies in the ability to buy into the "app" or currency before widespread acceptance.

In 1994, few predicted that the Internet would enable live video streaming on a handheld computer that doubled as a phone but that's exactly what we have. The arrival of institutional investors in digital currencies is a big bang event. If you have doubted the viability of digital currencies, today may be a good day to re-evaluate this emerging asset class.

More:
Bitcoin is over 'tumultuous teen' years

Bitcoin wallet provider Coinbase will launch the first U.S. licensed exchange for the digital currency on Monday, according to a Wall Street Journal report.

While pointing to a Lunar teaser website with a clock counting down to 9 a.m. Eastern Time Monday, Coinbases Twitter account also posted a link to documentation for Coinbase Exchange, calling them API docs for our new project.

The move by Coinbase follows plans announced last week for Gemini, a regulated Bitcoin exchange in New York that is backed by Cameron and Tyler Winklevoss, and reflects a movement to get financial authorities behind Bitcoin amid continued price declines, hacking and criminal cases as well as the collapse of mammoth Japan-based exchange MtGox 11 months ago.

That would go against Bitcoins founding philosophy as an unregulated, anonymous currency, but if Bitcoins latest price movements are any indication, traders dont seem to mind. Bitcoin jumped over US$30 on Monday, touching a high of $290 on tracking site CoinDesk. It hit $177 earlier this month, its lowest in over a year.

The Coinbase founders have regulatory approval in half of U.S. states including jurisdictions with big cities in New York and California, according to the Journal. The API (application programmer interface) documents show that the exchange will have no trading fees during a promotional period, after which it will charge 0.25 percent.

Coinbase already claims 2.2 million consumer wallets, 38,000 merchants and 7,000 developer apps. Last week, it announced it had raised $75 million from investors including The New York Stock Exchange, calling it the first time financial institutions made a major investment in a Bitcoin firm.

2015 will be the year when institutional investors began moving into Bitcoin in large numbers, Jeff Garzik, a Bitcoin developer, said via email.

Buying and trading bitcoins in the United States has always been a hassle, with many using overseas exchanges.Buying local is always more efficient, involves fewer fees, and is more likely to be compliant with the laws of your jurisdiction.These two exchanges will make Bitcoin more accessible to a huge target market.

Coinbase did not immediately respond to a request for more information.

Tim Hornyak reports on IT, telecommunications, science, and technology in Japan for the IDG News Service. More by Tim Hornyak

Originally posted here:
Coinbase to launch first licensed U.S. Bitcoin exchange

About that big price drop: Well, Tyler Winklevoss said there's no reason to fear.

Read MoreBitcoin 'BearWhale' rattles cryptocurrency world

"In the last few weeks the price has been kind of low. I view that as a buying opportunity. We have never sold bitcoin," he said. "For people who love volatility, or like to trade between different markets and stuff, there's plenty there. But we're more taking a long-term view."

The twins have a vested interest in the digital currency's future: They await regulatory approval of a bitcoin-based exchange-traded fund and recently announced the launch of Gemini.com, which will establish a centralized trading platform.

Read MoreBitcoin gets first regulated US exchange

The site would pair with Winkdex.com, which aggregates prices from various bitcoin exchanges currently operating.

"This is our effort to bring bitcoin mainstream, to build it into a regulatory box," Cameron Winklevoss said. "When we think of Gemini.com, it will be like a Nasdaq for bitcoin."

The currency's biggest obstacle has been overcoming a multitude for bad headlines, from the collapse last year of Mt.Gox, which to that point had been the most well-known trading center, to another issue of bitcoin digital wallets being compromised at Bitstamp.

Read MoreUnique ETFs to spice up your portfolio

Tyler pointed out the difference between those two episodes in particular: Investors lost money when Mt.Gox collapsed, but Bitstamp customers were made whole.

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Winklevoss twins: Bitcoin plunge a buying opp

Bitcoin is a virtual currency that allows users to exchange online credits for goods and services. There is no central bank that issues them. Instead, bitcoins are created online using a computer to complete difficult tasks, in a process known as mining. The digital currency is renowned for its volatility and has been heavily criticized for facilitating illegal activity, given that it can be used anonymously.

Jeffrey Robinson, the author of "BitCon: The Naked Truth about Bitcoin" is one such notable critic. He told CNBC previously that he believed it was a "pretend currency masquerading as a pretend commodity."

The insolvency of Japanese exchange Mt. Gox and the recent trading suspension at Bitstamp, the second-largest dollar-bitcoin exchange, has hurt the reputation of the cryptocurrency and has dented the price, which tanked by around 65 percent in 2014.

Monday's news caused its value to spike, however, and is likely to inject some much-needed trust back into the digital currency. It saw a 16 percent jump on Monday morning and was trading close to $300 for one bitcoin, according to industry website CoinDesk.

"To be clear, it's insurance against bitcoin loss," said Ehrsam "On top of the fact that we've been operating successfully in the U.S. for about 2 1/2 years, the largest bitcoin company has insurance to back it all up."

This is important news for the U.S.-based exchange marketplace, according to Jon Matonis, the founding director of the Bitcoin Foundation, which is a not-for-profit organization which aims to promote and protect the cryptocurrency.

"It will be a true floating-rate exchange with various order types," he told CNBC via email. "U.S.-based floating-rate exchanges contribute less than one percent to overall global trading volume for bitcoin, so I would expect that percentage to increase significantly."

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Bitcoin gets first regulated US exchange

Bitcoin is a virtual currency that allows users to exchange online credits for goods and services. There is no central bank that issues them. Instead, bitcoins are created online using a computer to complete difficult tasks, in a process known as mining. The digital currency is renowned for its volatility and has been heavily criticized for facilitating illegal activity, given that it can be used anonymously.

Jeffrey Robinson, the author of "BitCon: The Naked Truth about Bitcoin" is one such notable critic. He told CNBC previously that he believed it was a "pretend currency masquerading as a pretend commodity."

The insolvency of Japanese exchange Mt. Gox and the recent trading suspension at Bitstamp, the second-largest dollar-bitcoin exchange, has hurt the reputation of the cryptocurrency and has dented the price, which tanked by around 65 percent in 2014.

Monday's news caused its value to spike, however, and is likely to inject some much-needed trust back into the digital currency. It saw a 16 percent jump on Monday morning and was trading close to $300 for one bitcoin, according to industry website CoinDesk.

"To be clear, it's insurance against bitcoin loss," said Ehrsam "On top of the fact that we've been operating successfully in the U.S. for about 2 1/2 years, the largest bitcoin company has insurance to back it all up."

This is important news for the U.S.-based exchange marketplace, according to Jon Matonis, the founding director of the Bitcoin Foundation, which is a not-for-profit organization which aims to promote and protect the cryptocurrency.

"It will be a true floating-rate exchange with various order types," he told CNBC via email. "U.S.-based floating-rate exchanges contribute less than one percent to overall global trading volume for bitcoin, so I would expect that percentage to increase significantly."

The rest is here:
Bitcoin gets regulated US exchange