Bitcoin is a bubble, but the technology behind it could transform the world | Will Hutton

Blockchain poses as big a threat to banks as Facebook and Amazon did to conventional media firms

Humanitys earliest, truly transformative general purpose technologies were the ability to cross-fertilise plants and cross-breed animals. Suddenly, it made more sense to farm than to hunt and gather. The surge in agricultural output meant humans could do other things than worry about survival; they could live in cities. Human civilisation began.

The story of the subsequent millennia has been how some 30 general-purpose technologies of equal power, ranging from the printing press to the steam engine, have driven similar leaps in transforming our economy, our lives and our civilisation. Today, we are living through another.

Digitisation is, if anything, even more powerful: it is a meta general-purpose technology. No area of human activity will be left untouched by the translation of the physical into digital data. Already, it has created astonishing new capacities: the chances are that you are reading this on a smartphone or tablet. But the adventure is only just beginning. Everything from banking to health is about to experience similar transformations.

Last week, the growing impact of blockchain and the price of one of the crypto-currencies it underwrites bitcoin hit the front pages. Regulators stopped the US stock market trading in the Crypto Company (a tiny penny stock whose main asset is its name) after its shares jumped 2,000%, so that it briefly, and stunningly, joined the Fortune 500 with a value of $12bn. As extraordinary, when the Long Island Iced Tea Corp yet to make a profit announced that it was changing its name to Long Blockchain Corp, its shares jumped 500%. The price of bitcoin itself $1,000 at the start of the year briefly hit $19,000 per coin last week before falling to $11,000 and then recovering to $14,000 yesterday. A crazy wildness, emulating every financial bubble in history, has settled on US investors.

But bubbles dont come out of nowhere. Peoples animal spirits are sparked by something real that collectively captures their imagination: blockchain and crypto-currencies are that something. Blockchain is a foundational digital technology that rivals the internet in its potential for transformation. To explain: essentially, blocks are segregated, vast bundles of data in permanent communication with each other so that each block knows what the content is in the rest of the chain. However, only the owner of a particular block has the digital key to access it.

So what? First, the blocks are created by miners, individual algorithm writers and companies throughout the world (with a dense concentration in China), who want to add a data block to the chain. There is no government or central direction; no permission is needed to create a block and unless the law is broken, no government, regulator or police authority can close the block down.

Just as the web once promised freedom, so does blockchain. The chain is self-policing. Anyone who attempts to launch an exchange of data outside the protocols of the chain will immediately be spotted by the other blocks and the exchange will be aborted. Suddenly, the world has acquired a system for the fast, trusted exchange of vast amounts of data without intermediaries or supervision.

In the way that Facebook, Amazon, Netflix and Google (the Fangs) replaced conventional media and communication companies, that prospect faces banks, insurance companies and many public services. Our health data can be given to the whole chain for it to assess, rather than an individual doctor, and the chain can then assess and price an insurable risk. No intermediary is safe. No wonder investors are salivating at the prospect of old, analogue organisations being driven out of business and mega fortunes being made by the companies replacing them, perhaps by the Crypto Company or Long Blockchain Corp. If you had bought Facebook 13 years ago you would now be very rich.

An
An array of computers in Siberia mining for crypto-currency. Photograph: Vyacheslav Prokofyev/TASS

One of the first casualties could be banking. Already, you can present your card to make a contactless payment in a store, pub or taxi. Cash has become digitised, although the payee wants to know that a bank has validated the creditworthiness of the payer before accepting the transaction.

But blockchain changes everything. It becomes a means to transfer digital cash or crypto-currencies, of which the best known is bitcoin in vast amounts, across any border, instantaneously. The blockchain makes sure bitcoin is spent once; indeed, blockchain was first invented by the originators of bitcoin to make sure there was no fraud. No 30 limits. No credit or debit card necessary; no central bank or government needed to guarantee the value of the money. Just buy your bitcoin from an online broker and you have buying power in your digital wallet: better still, it may go up in value, giving you more buying power still. The whole analogue apparatus of the financial system could be as severely challenged as newspapers and retailers are by online reading and internet shopping.

The question is whether banks are going to reinvent themselves using the blockchain as a key tool and become crypto-currency brokers before others. The trouble is that bitcoin, like other crypto-currencies, is not a reliable way of storing value a key function of money when its price can nearly halve in a week, as it did last week. Better not to think of bitcoin as money; rather, as a commodity that uses blockchain to make settlements faster, but it cant and never can be a way for the mass of workers to get paid or make their purchases. It could take millions of transactions away from banks and badly wound them, but its unlikely to replace them.

But it could still represent a huge shock. Blockchain will administer similar shocks to insurance, healthcare and all mass payment systems. Intermediaries in the service industries will face a new world in which their routine functions will be performed by machines, programmed by artificial intelligence, while the blockchain becomes the new means to do business safely, faster and less riskily. There will be new concentrations of economic power because, like the Fangs, the blockchain economic model is more efficient and more effective the larger the network. Moving ever more economic activity into this universe, with its anonymised transactions and secret keys, may please the ultra libertarians but there remains a public interest in ensuring accountability, justice and fairness. We have, in short, to understand and shape this new world before it shapes us. There are precious few signs of that.

Read more: https://www.theguardian.com/commentisfree/2017/dec/24/bitcoin-is-a-bubble-the-technology-behind-could-transform-world

How the Winklevoss twins became the worlds first bitcoin billionaires

The entrepreneurs sued Facebook founder Mark Zuckerberg years ago, and they invested their (supposedly) meagre payouts wisely

Name: Tyler and Cameron Winklevoss.

Also known as: The Winklevii.

Age: 36 and 36.

Appearance: Handsome, enormous, similar.

Because theyre identical twins? Yup. You might remember them from The Social Network in 2010.

Vaguely. So theyre actors, are they? No. Theyre venture capitalists and entrepreneurs. In 2008, they rowed for the US at the Beijing Olympics, finishing sixth. In the film, Armie Hammer played both of them as a kind of two-man master race. As one of them put it in a memorable line of dialogue, Im 6ft 5, 220 pounds and theres two of me.

Nice. But why make a film about them? Because they were at Harvard with Mark Zuckerberg, who they later sued, claiming he stole their idea for a website that they called Harvard Connection, but which he called the Facebook. (Dramatic music.)

And did he? Steal the idea, I mean? Oh, God, thats just too complicated to get into. The Winklevii launched numerous lawsuits about it, and got about $65m (48m) worth of Facebook stock, which wasnt much at the time.

Oh, yeah. Sure. These guys probably spend $65m on lunch. In fact, they spent $11m of it on bitcoin, so theyve probably cheered up a bit.

Bitcoin. Theres a word I dont understand. Its a crypto-currency.

Theres another one. Think of it as an electronic token, which can be owned and traded. Like normal money, it has value because other people consider it valuable. The number of bitcoins in circulation is strictly controlled by a clever bit of software that nobody can hack, called the blockchain.

Thank you. And the Winklevoss twins like having lots of bitcoins, do they? Im sure they do at the moment. In March 2013, they bought about 100,000 of them, when each coin was worth roughly $120. After a strong year, and a wild couple of weeks, each bitcoin is now worth lets see $11,826.

Holy moly! Thats right. Not counting the value of their other investments, the Winklevoss twins have just become the worlds first bitcoin billionaires. Apart from Satoshi Nakamoto, bitcoins mysterious inventor, of course.

Please dont explain who he is. Well, there are lots of intriguing theories

Do say: Theyre not billionaires theyre half a billionaire each!

Dont say: Just $73bn to go and theyll catch up with Zuckerberg.

Read more: https://www.theguardian.com/technology/shortcuts/2017/dec/04/winklevoss-twins-bitcoin-billionaires-mark-zuckerberg

Why Ripple, the Bitcoin alternative, could be huge

Economists have claimed that Bitcoin is just the beginning of the cryptocurrency boom. If you went all-in after seeing Sheldon get hyped on Bitcoin on Big Bang Theory, maybe it’s time for you to expand your horizons and invest in a cryptocurrency you believe will succeed. Ripple is a great place to start, and it’s different enough from Bitcoin that it could break through the uncertainty held by big banks. In fact, many major financial institutions have already gotten on board with Ripple, and many will follow.

Ripple is like Bitcoin’s younger sister who went to business school: She’s corporate-minded, forging her own space in the crypto world, and everything she talks about sounds legit. According to Coinmarketcap.com, Ripple is the fourth-ranked cryptocurrency in the world, with a market cap of $29 billion.

If you’re looking to add a little Ripple to your life in 2018, here’s everything you should know before diving in. As you’ll see in the video below, not even Ripple can explain Ripple in under two minutes, so strap in!

What is Ripple?

Ripple is the name of both the cryptocurrency (symbol: XRP), and an open payment network in which the currency is transferred. Ripple’s system aims to enable people to break free of the “walled gardens” that financial networks create with fee structures, currency exchanges, and processing delays. Bitcoin also aims to do this with blockchain technology, but Ripple takes it a step further and uses completely different tech.

Instead of working on a public blockchain, like Bitcoin, Ripple works with a network of nodes that are actually participating banks and financial institutions. In doing so, Ripple’s blockchain isn’t public; it operates on a completely internal ledger called the “Enterprise blockchain.”  

This decidedly less-centralized, less-cyberpunk attitude is what has made Ripple so popular with investors and large companies. Early investors included Pantera Capital, Google Ventures, IDG Capital Partners, and Santander InnoVentures.

For a more detailed explanation of how Ripple’s technology works, Coindesk has broken it down by comparing the system to an ancient Arabic banking method called “hawala.” Without getting in too deep, if I want to send money to my friend Jane, I log into my preferred Ripple gateway or site, deposit money into it, and instruct the site to release funds to Jane via her preferred gateway. Jane collects her funds.

Coindesk

READ MORE: 

How else is Ripple different from other cryptocurrencies?

In order for bitcoins to come into existence, they had to be mined, and there will only be a maximum of 21 million bitcoins (BTC). XRPs, on the other hand, have never been mined; they were simply issued by the founders of Ripple Labs (Jed McCaleb, Arthur Britto, and Chris Larsen). The founders released 100 billion XRP at once, and kept 20 percent for themselves to “incentivize market maker activity to increase XRP liquidity and strengthen the overall health of XRP markets.” Retaining the bulk of one’s company’s shares while going public is a standard business practice, but this naturally polarized the crypto-mining community. As a result, the founders agreed they would be selling their shares at a mediated rate over several years, in hopes that it will help stabilize the currency.

Ripple is also known for its instant payments because of the immediate validation by Ripple nodes. Compared to BTC, XRP is able to perform 1,000 transactions per second, compared to 3 transactions per second when trading Bitcoin. International transactions are confirmed in 10 minutes on average using BTC, but if you use Ripple, international transfers only take 3 seconds.

The Ripple network is designed to work for B2B transactions. It works with most bank’s risk and privacy requirements, and Anti-Money Laundering (AML) and Know Your Customer (KYC) compliances are built into every transaction. Ripple also considers itself a full end-to-end payment service by handling foreign currency exchange conversions and calculating the cost of the transaction down to the nearest cent.

Another advantage to investing in Ripple: Because Bitcoin is decentralized and Ripple has the centralized Ripple system, it’s unlikely they will be rivals.

Ripple/YouTube

The pros and cons of investing in Ripple

Although mostly internal, a substantial number of financial institutions have already begun collaborations with XRP. “We’ve reached the stage where a significant number of these banks are moving to commercial production,” Ripple CEO Chris Larsen told Coindesk in a 2016 interview about the currency. “What’s significant here is the space is moving beyond experimentation and moving into actually deploying Ripple’s blockchain.”

In November, it was announced that American Express and Santander would team up with Ripple Labs to experiment with faster cross-border payments by routing transactions through Ripple’s platform. These two institutions represent only a fraction of the companies that have already (publicly) signed on to partner with Ripple. Deloitte, Mitsubishi Financial Group, UBS, Royal Bank of Canada, Western Union, and Accenture have all joined forces with the platform in the last two years.

While XRP’s validation by big banks definitely puts it ahead of other alt-currencies, it’s also one reason people may be wary to invest in XRP in the first place. Cryptocurrency’s utopian roots support decentralization and a removal of big brother. Many existing crypto investors are suspicious of Ripple’s attachment to these big institutions and placement of the Ripple platform as the central bank of XRP.

Then there’s the fact that researchers at Purdue University found security vulnerabilities in Ripple’s platform that could put 50,000 wallets at risk. Still, these system flaws haven’t prevented angel investors like Google from getting involved, so it’s up to you if you want to take the risk.

READ MORE:

How to invest in Ripple

After an influx of subscribers to the r/Ripple subreddit this month, one moderator commented, “To answer the most frequently asked question in the past couple of days: we don’t know of a reputable exchange that verifies immediately or without a SSN that we can recommend. Most exchanges have very stringent Know Your Customer rules in place, requiring various forms of ID and 48hrs+ to verify you.”

BitStamp

Ripple’s value in 2017

So, if you’re looking to buy XRP totally anonymously, you’ll have to wait until technology catches up to your stealth ways.

Bitstamp is a great site for trading EUR, USD, and bitcoins to XRP by using a SEPA deposit (if you’re paying in euros) or a wire transfer. After going through a couple rounds of verification, you’ll be able to deposit funds into your Bitstamp account. You can then purchase XRP by selecting the correct market for your currency and completing an order. It’s that simple!

Read more: https://www.dailydot.com/debug/what-is-ripple/

bitcoin dad

Read more: https://imgflip.com/i/20vnpq

One bitcoin is now worth $10,000

It happened. One bitcoin is now worth $10,000.

The milestone was hit on international exchanges earlier in the day (where prices are normally a few percent higher) and was just crossed on U.S exchanges like Coinbase and Gemini a few minutes ago.

This comes two days after bitcoin hit $9k, and eight days after it crossed $8k.

This $10,000 marks a bull rally essentially never before seen in modern financial markets. For perspective, bitcoin is now up 1,258% over the past year, with the cumulative value of all cryptocurrencies up 2,174% to a total of $316B. Bitcoin alone currently represents about 54% of this total market cap.

BTC 1y price graph, from coinmarketcap.com

It’s a strange time in bitcoin land. There’s never been an asset, with the exception possibly being Tulips, that’s risen so much in such a short amount of time. So without any precedent or way to assign a “book value” to the currency, no one really knows what to think or do.

Some say this is the nascent start of a trillion dollar industry and the biggest thing to happen in technology since the internet was invented. Some think that bitcoin will replace gold and U.S dollars and every monetary instrument in between. Yet others say that this is the biggest speculatory bubble the world has ever seen, and that bitcoin will crash to zero tomorrow.

And of course there’s the majority of us who think something in between, or really just don’t know what to think. It’s hard enough to predict how technology will develop, and even harder when you add the emotions attached with trying to independently value and assess a tradable, liquid asset like bitcoin.

So the question likely on your mind right now…what’s next?

No one knows. Even the most passionate cryptocurrency believers admit that we’re very likely in a bubble, and that some type of correction will happen. Of course no one knows if this will be a 20% or 2,000% correction, or if it will even happen at all. But don’t be surprised if it eventually happens on some scale.

But despite the fact most of us can’t open Twitter or turn on CNBC without hearing about bitcoin, it’s adoption is still relatively small. Many Americans still have no idea what a bitcoin is, what it does or how to purchase one. The same goes for Wall Street, and even though there have been over 100 cryptocurrency-focused hedge funds opened in the last year many institutional investors still haven’t take a stake in bitcoin.

So this could just be the beginning. Or the end. Either way, this milestone is a perfect time to step back and look just how crazy the last year has been in the world of cryptocurrencies.

Read more: https://techcrunch.com/2017/11/28/one-bitcoin-is-now-worth-10000/

Bitcoin Futures Deliver Wild Ride as Debut Brings Rally, Halts

Bitcoin has landed on Wall Street.

Futures on the world’s most popular cryptocurrency surged as much as 26 percent in their debut session on Cboe Global Markets Inc.’s exchange, triggering two temporary trading halts designed to calm the market. Initial volume exceeded dealers’ expectations, while traffic on Cboe’s website was so heavy that it caused delays and temporary outages. The website’s problems had no impact on trading systems, Cboe said. Bitcoin’s spot price rose.

“It is rare that you see something more volatile than bitcoin, but we found it: bitcoin futures,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.

The launch of futures on a regulated exchange is a watershed for bitcoin, whose surge this year has captivated everyone from mom-and-pop speculators to Wall Street trading firms. The Cboe contracts, soon to be followed by similar offerings from CME Group Inc. and Nasdaq Inc., should make it easier for mainstream investors to bet on the cryptocurrency’s rise or fall.

Bitcoin wagers have until now been mostly limited to venues with little or no oversight, deterring institutional money managers and exposing some users to the risk of hacks and market breakdowns. About 20 trading firms actively participated, Cboe Chairman Ed Tilly said in a Bloomberg Television interview.

QuickTake: You Can Trade Bitcoin Futures. But Should You?

Bitcoin futures expiring in January were 18 percent higher at $17,710 as of 12:25 p.m. in New York from an opening level of $15,000, on 3,561 contracts traded.

“It was smooth, and bitcoin traders don’t seem to be put off by futures,” said Craig Erlam, senior market analyst in London at online trading firm Oanda. “There was a fear that short selling would have an adverse impact on price, but we haven’t seen that yet.”

The spot price climbed 4.7 percent to $16,383 from the Friday 5 p.m. close in New York, according to the composite price on Bloomberg.

The roughly $1,300 difference reflects not only the novelty of the asset but also the difficulty of using the cash-settled futures to trade against the spot, strategists said.

“In a normal, functioning market, good old arbitrage would settle this,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Hellerup, Denmark, said by email. “If they were deliverable you could arbitrage the life out of it.”

Proponents of regulated bitcoin derivatives say the contracts will increase market transparency and boost liquidity, but skeptics abound. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has called bitcoin a “fraud,” while China’s government has cracked down on cryptocurrency exchanges this year. The Futures Industry Association — a group of major banks, brokers and traders — said this month that contracts in the U.S. were rushed without enough consideration of the risks.

So far though, trading has kicked off without any major hiccups.

Dealers said volume was high for a new contract, even though it was tiny relative to more established futures. And the trading halts took effect just as Cboe had outlined in its rules. Transactions stopped for two minutes after a 10 percent gain from the opening price, and for five minutes after a 20 percent jump. Another five-minute halt will take effect if the rally extends to 30 percent, Cboe said in a notice on its website.

“It was pretty easy to trade,” Joe Van Hecke, managing partner at Chicago-based Grace Hall Trading LLC, said in a telephone interview from Charlotte, North Carolina. “I think you’ll see a robust market as time plays out.”

For now, Cboe futures account for a tiny slice of the world’s bitcoin-related bets. The notional value of contracts traded in the first eight hours totaled about $40 million. Globally, about $1.1 billion of bitcoin traded against the U.S. dollar during the same period, according to Cryptocompare.com.

Some people who would like to trade futures are having a hard time accessing the market because not all brokers are supporting it initially, said Garrett See, chief executive officer of DV Chain. Participation may also be limited because of higher capital requirements and tighter risk limits, See said.

“We’re in the early stages here, and there’s not enough professional liquidity from the big market makers who can provide depth and hold in the movements,” said Stephen Innes, head of trading for Asia Pacific at Oanda Corp. “It’s going to be a learning curve.”

It’s been painful for investors stuck on the sidelines. This year alone, bitcoin is up more than 17-fold. The surge has been driven largely by demand from individuals, with technical obstacles keeping out most big money managers like mutual funds.

The new derivatives contracts should thrust bitcoin more squarely into the realm of regulators, banks and institutional investors. Both Cboe and CME on Dec. 1 got permission to offer the contracts after pledging to the U.S. Commodity Futures Trading Commission that the products don’t run afoul of the law, in a process called self-certification.

QuickTake: All about bitcoin, blockchain and the crypto world

Not everyone is happy with the roll out. Exchanges failed to get enough feedback from market participants on margin levels, trading limits, stress tests and clearing, the Futures Industry Association said this month. In November, Thomas Peterffy, the billionaire chairman of Interactive Brokers Group Inc., wrote an open letter to CFTC Chairman J. Christopher Giancarlo, arguing that bitcoin’s large price swings mean its futures contracts shouldn’t be allowed on platforms that clear other derivatives.

Still, Interactive Brokers is offering its customers access to the futures, with greater restrictions. The firm’s clients won’t be able to go short, and Interactive’s margin requirement, or how much investors have to set aside as collateral, will be at least 50 percent. That’s a stricter threshold than both Cboe’s and CME’s.

QuickTake Q&A: Understanding bitcoin’s rapid price rise

The start of futures trading is an important milestone for bitcoin’s shift from the fringes of finance toward the mainstream, but it could be some time before the cryptocurrency becomes a key part of investor portfolios — if it ever does.

“You never say never,” David Riley, who helps oversee $57 billion as head of credit strategy at BlueBay Asset Management LLP in London, said in an interview on Bloomberg Television. “But I do think we’re quite some way from making cryptocurrencies even a relatively small part of some of the funds we manage at the moment.”

    Read more: http://www.bloomberg.com/news/articles/2017-12-10/bitcoin-futures-trading-opens-bringing-crypto-to-wall-street

    Facebook payout turns Winklevoss twins into first Bitcoin billionaires

    The twin brothers who claim Mark Zuckerberg stole their idea for Facebook are now Bitcoin billionaires.

    Cameron and Tyler Winklevoss used the cash they won from a lawsuit against Facebook and invested it in the volatile cryptocurrency, grabbing an astonishing 1 percent of the currency’s 2013 dollar value. Four years later and the $11 million they invested is now worth more than $1 billion after Bitcoin exploded past $10,000 last week. One Bitcoin is now valued at $11,276, according to Coindesk.

    The twins are believed to be the first investors to become billionaires off Bitcoin, though they’ve never sold a single unit. If you’re not familiar, Bitcoin is a decentralized form of digital money that isn’t regulated by any banks or government. It uses cryptography techniques to ensure secure transactions and control the creation of new units.

    The pair made headlines in 2004 when they sued Facebook (and Mark Zuckerberg), alleging the CEO stole their idea to create the popular social media site, an event later dramatized in the film The Social Network. The twins initially won $65 million in 2008 before settling with $160 million in a 2010 lawsuit.

    Bitcoin has turned many early investors into millionaires but the Winklevoss twins are among the few current investors with a 10-figure amount. The two believe the cryptocurrency has yet to reach its ceiling.

    “If Bitcoin is a better gold or seen as a type of gold-like asset, then it could be in the trillions on a market cap,” Tyler Winklevoss told CNNMoney in 2015. “We do feel those are very real possibilities.”

    H/T the Verge

    Read more: https://www.dailydot.com/debug/winklevoss-bitcoin/

    Bitcoin: UK and EU plan crackdown amid crime and tax evasion fears

    Cryptocurrency close to record high despite news Treasury plans to end traders anonymity

    The UK and other EU governments are planning a crackdown on bitcoin amid growing concerns that the digital currency is being used for money laundering and tax evasion.

    The Treasury plans to regulate bitcoin and other cryptocurrencies to bring them in line with anti-money laundering and counter-terrorism financial legislation. Traders will be forced to disclose their identities, ending the anonymity that has made the currency attractive for drug dealing and other illegal activities.

    Under the EU-wide plan, online platforms where bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions. The UK government is negotiating amendments to the anti-money-laundering directive to ensure firms activities are overseen by national authorities.

    The Treasury said: We are working to address concerns about the use of cryptocurrencies by negotiating to bring virtual currency exchange platforms and some wallet providers within anti-money laundering and counter-terrorist financing regulation.

    Q&A

    What is bitcoin and is it a bad investment?

    Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it’s a bad investment is the $97bn question (literally, since that’s the current value of all bitcoins in existence). Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it’s hard (but not impossible) to trace a bitcoin transaction back to a physical person.

    The rules are expected to come into effect in the next few months. The Treasury said digital currencies could be used to enable and facilitate cybercrime. It added: There is little current evidence of them being used to launder money, though this risk is expected to grow.

    The bosses of Goldman Sachs and JP Morgan have criticised bitcoin as a vehicle to commit fraud and other crimes. But Sir Jon Cunliffe, a deputy governor of the Bank of England, last week said the digital currency was too small to pose a systemic threat to the global economy. He also cautioned that bitcoin investors needed to do their homework.

    Bitcoin was trading at $11,566 on Monday. It hit a fresh record high of $11,800 on Sunday but fell to $10,554 on news of the regulatory crackdown.

    zerohedge (@zerohedge)

    Reason For Bitcoin Sudden Plunge Revealed: UK Plans Regulatory Crackdown On Cryptocurrencies https://t.co/xIxdg6aUkU

    December 3, 2017

    The Labour MP John Mann, a member of the House of Commons Treasury select committee, suggested MPs would look into the regulation of virtual currencies.

    He told the Daily Telegraph: These new forms of exchange are expanding rapidly and weve got to make sure we dont get left behind thats particularly important in terms of money laundering, terrorism or pure theft.

    It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we dont have a regulatory lag.

    Stephen Barclay, the economic secretary to the Treasury, set out the governments plans in a written parliamentary answer in October. The UK government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms activities being overseen by national competent authorities for these areas.

    The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017 or early 2018.

    Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

    Read more: https://www.theguardian.com/technology/2017/dec/04/bitcoin-uk-eu-plan-cryptocurrency-price-traders-anonymity

    Bitcoin futures are now tradable on the CBOE

    Bitcoin futures trading on CBOE, the world’s largest futures exchange, just launched at 5pm CT.

    Within a minute of the launch bitcoin spiked about 10% from ~$14,700 all the way up to $16,200 before settling a few minutes later to around $15,500, up about 5%. Now an hour after launching the actual price of bitcoin is still up, trading around $15,350.

    Currently the settlement price of the January 1st, 2018 futures contract is pegging the digital currency’s future price at $15,700 with relatively little volume being traded. Each contract is pegged at one bitcoin, meaning volume exchanged has totaled about $7.7M with actual dollars traded being less since the contract only requires a 30% margin requirement.

    The circuit breaker was hit at least once after trading started, which stops trading for 2 minutes after a 10% move and 5 minutes after a 20% move up or down.

    516 contracts have traded for the January settlement date, with only a couple of contracts for the March 2017 settlement date have traded so far.

    CBOE’s website went down as futures trading launched, but this was mainly because of a spike in interest and not necessarily trading volume. Trades need to be made through brokerage platforms, so CBOE’s site really only provides quotes and information and not the functionality to actually trade options.

    In a statement provided to TechCrunch, CBOE said “due to heavy traffic on our website, visitors to www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable.  All trading systems are operating normally.”. 

    Regardless, volume has still been low in the 30 minutes since options launched.

    While there’s a chance activity will spike tomorrow when the trading week starts, so far this volume is much less than most expected.

    As a refresher, CBOE is launching three futures contracts, with the settlement price being bitcoin’s trading price on January 1st, February 1st and March 1st, respectably. The CME group will launch their futures product later in December, and as of now these two products will be the only way for investors to trade the digital currency without actually holding it themselves.

    Many think that the futures product will help stabilize the price of bitcoin, as well as hasten its adoption by Wall Street. Others think it’s a sign regulators are easing their view on the digital currency, which could lead to approval for future products like a bitcoin ETF.

    Read more: https://techcrunch.com/2017/12/10/bitcoin-futures-are-now-tradable-on-the-cboe/

    Why is bitcoins price so high?

    Bitcoin’s price has risen stratospherically, a fact that leaves many minor players in the market with massive gains and many bigger players millionaires. But is this a bubble? Are the gains real? And are the bitcoin whales in for a sad Christmas?

    First we must understand what drives bitcoin price and, in particular, this boom. The common understanding for current growth leads us back to institutional investors preparing for the forthcoming BTC futures exchanges.

    The primary theory about the astonishing rally being put forward by investors on social media is that bitcoin will soon benefit from big institutional money injections via the introduction of the first BTC futures products. CBOE Global Markets and CME Group are launching new futures contracts on December 10 and December 17, allowing investors to go long or short on bitcoin. This ability makes bitcoin far more palatable to big investors who are currently flooding the market to make profits if and when the bitcoin price falls.

    This move also legitimizes bitcoin in Wall Street’s eyes, an important point considering cryptocurrencies are still suspect.

    Further growth comes from the “bitcoin as a store of value” crowd. This group of enthusiasts bought and held bitcoin and will not sell it at any current price. More and more bitcoin fans are entering into this group and they are driving up demand increases. In a world where people expect bitcoin to be worth $1 million soon this sort of activity – whether rational or irrational – is quite popular.

    We see a common thread between these points: hype and news. All cryptocurrency movements are based on domain specific media and conversations between traders. Bitcoin traders, it can be said, are now akin to the jolly colonists selling stocks under buttonwood tree. This small but influential market is prone to panics based on a single tweet and users work together to at least bolster themselves with cries of “HODL!” The market is so nascent that there are no dark pools, no popular algorithmic trading systems, and no real way to automate your buying and selling activities (although, without futures, there was never a need to). That is all coming and at that point the market will harden itself against panics and booms. Until then we enjoy rises and dips and volatility that puts most bitcoin dilettantes off their lunch.

    Ultimately new and old users are testing the limits of a system that, for a decade, has been untested. The futures market will be a big driver in growth and bust over the next few months as institutional investors begin using the currency. CoinDesk writer Omkar Godbole notes that the price should remain stable but “a pullback to $11,000 cannot be ruled out, but dips below the upward sloping 10-day MA of $11,500 are likely to be short-lived.”

    “As of now, a significant correction is unlikely and could be seen only on confirmation of a bearish price-RSI divergence and/or if RSI and stochastic move lower from the overbought territory,” he wrote.

    Is this dangerous? Yes, to those who are betting big on BTC. Again, I cannot tell you whether to buy or sell but the common expectation is that bitcoin raises to a set point and then fluctuates between a high and a low until the next run up. Many expect foul play.

    “The current price isn’t truly driven by demand. When CME Group went live with Bitcoin futures we saw a sharp increase in demand and an increased number of users in the network,” said Matthew Unger, CEO and Founder of iComplyICO. “Now, some institutional major players are flooding the network with new cash and creating what appears to be market manipulation. Now that Bitcoin futures are available it is easy to buy into futures market first and then create a massive number of buys or sells of Bitcoin to ensure the price swings in favour of your futures contract.”

    “In many jurisdictions, Bitcoin has yet to become subject to regulations, leaving an investor with no recourse or protection from fraud or market manipulation,” said Unger.

    Is this a bubble? Many are disappointed in the moves, believing the rise is happening because of market manipulation. But we must remember that the real value of a cryptocurrency is not driven by price but instead is driven by utility. While bitcoin may always be the proverbial hidden pot of gold for early buyers the future of all cryptocurrencies is still being written. Just as, in 1994, no one could have predicted the prevalence and value of open source projects like Linux and Apache, no one can currently predict what bitcoin and other cryptocurrencies will do for us in the future. Until we know, it’s best to buckle up and enjoy the ride.

    Read more: https://techcrunch.com/2017/12/08/why-is-bitcoins-price-so-high/