Bitcoin futures trading begins on CBOE exchange in Chicago
Bitcoin has begun trading on a major exchange for the first time.
It launched on the CBOE futures exchange in Chicago at 23:00 GMT Sunday, allowing investors to bet on whether Bitcoin prices will rise or fall.
In the lead-up to its futures debut, the value of the digital currency has surged.
Bitcoin’s introduction to the CBOE has been seen by some as a step towards legitimising the currency.
The move is expected to be followed next week by a listing on the rival Chicago Mercantile Exchange.
Futures are a type of derivative contract that allows trading based on movements in Bitcoin prices, without requiring ownership of the currency itself.
CBOE trading saw the Bitcoin futures contract expiring in January rise 17% from $15,000 to above $18,000.
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An exchange insider said its start was low key, with “no champagne”. However, CBOE tweeted to warn that its website was running slowly and could be temporarily unavailable.
Anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. The price of Bitcoin stood at about $16,600 on Monday, according to Coindesk.com.
‘Out of the shadows’
Nick Colas, of Data Trek research, said the futures listings gave Bitcoin “legitimacy – it recognises that it’s an asset you can trade”.
Chris Ralph, chief investment officer at St James’s Place told the BBC’s Today programme that he remained cautious about the currency.
“I refuse to use the word legitimate, but it’s probably moved out of the shadows into the open,” he said.
“But what I think it means is more people in the conventional investment banking market will take a look at Bitcoin.
“It has been described as the asset class of 2017 but when we went into the year no one would have called it an asset class.”
What is Bitcoin?
- It is a digital “alternative” currency that mostly exists online and is not printed or regulated by central banks
- Bitcoins are created through a complex process known as “mining” and then monitored by a global network of computers
- About 3,600 new Bitcoins are created each day, with about 16.5 million now in circulation
- Like all currencies, its value is determined by how much people are willing to buy and sell it for
The CBOE and CME launches were made possible following approval by the US Commodities and Futures Trading Commission (CFTC).
However, the regulator has warned investors about the “potentially high level of volatility and risk in trading these contracts”.
Its supporters include the Winklevoss twins, who have been called the first Bitcoin billionaires, while critics include CNBC financial commentator Jim Cramer.
He argues that futures trading opens the door to “short sellers” that bet on downward moves in asset prices.
Bitcoin is not regulated by any country’s central bank and has no universally recognised exchange rate.
CBOE says trading will be suspended for two minutes if Bitcoin prices rise or fall by 10%, in an attempt to reduce wild fluctuations.
“We are committed to continue to work closely with the CFTC to monitor trading and foster the growth of a transparent, liquid and fair Bitcoin futures market,” CBOE said.
The Futures Industry Association, which includes some of the world’s biggest derivatives brokerages, has criticised the CFTC’s decision, arguing that insufficient attention has been paid to the risks involved.
Written by the BBC News
Dave Chapman: Bitcoin $100,000 And ETFs Are Probable
Dave Chapman, managing director at Octagon Strategy, was interviewed by CNBC’s Squawk Box after the futures market had opened regarding Bitcoin. His comments included a six-figure price point by the end of 2018, and more interesting use cases forthcoming.
The digital asset trader made it clear that the recent run up in values only indicates the potential for more in the future, with mainstream adoption just beginning to come online. Crossing over $100,000 would be a massive psychological barrier, but Chapman believes it’s possible. He said:
“In terms of looking forward, I would say that throughout the continuation into 2018, I wouldn’t be surprised to see a six-figure headline.”
Don’t miss the big picture
However, Chapman also indicated that the most interesting aspects of Bitcoin were not its price, but its many use cases as the market continues to mature. Because of the inclusivist nature of Bitcoin, the bigger picture about access to financial applications should predominate thinking. He said:
“The price to me is probably the most uninteresting component of Bitcoin. I’m more excited about the applications…about what this means to people who don’t have access to financial inclusion. And I think that if we focus on the price, we’re losing track of the big picture.”
Finally, Chapman concluded the interview with a chuckle, saying that he would ‘happily’ go on the record to bet that a Bitcoin ETF was in the near future, as the Securities and Exchange Commission (SEC) has approved the futures markets.
Written by CoinTelegraph
CryptoKitties Sales Hit $12 Million, Could be Ethereum’s Killer App After All
CryptoKitties, the Ethereum-based digital kitten collectibles game, has processed more than $12 million in sales on its decentralized marketplace.
Essentially, CryptoKitties is a Tamagotchi-like game developed as a decentralized application (dapp) launched on top of the Ethereum protocol. Each digital kitten represents a unique crypto asset and the ownership of it cannot be altered, as it is integrated onto the immutable Ethereum Blockchain.
According to Kitty Sales, five of the rarest digital kittens on the CryptoKitties platform were sold for over $100,000 each, with the most expensive digital kitten being sold at around $120,000. Some analysts and researchers have questioned the value of these digital kittens, and whether the platform itself is sustainable in the long-term.
Something even bigger
While the vast majority of CryptoKitties critics perceive the platform as a simple collectibles game, prominent venture capital investor, Andreessen Horowitz partner, and Earn.com CEO Balaji Srinivasan explained that CryptoKitties has demonstrated frictionless international trading of digital assets on a Blockchain at a large-scale. He believes the game has proven that assets can be traded in a decentralized manner without the involvement of intermediaries.
Using the same mechanism and technology that CryptoKitties uses, a digital asset can be exchanged seamlessly, through a decentralized platform. If the CryptoKitties platform is evaluated as a peer-to-peer digital assets exchange, the technology’s use case becomes more intriguing than a simple collectibles game.
In the long-term, investors and traders will be able to exchange digital assets using decentralized applications on the Ethereum network. They will no longer have to rely on centralized platforms that are vulnerable to a wide array of threats and are equipped with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
No such thing as intrinsic value
Moreover, Bitcoin and the cryptocurrency market have proven that the concept of intrinsic value is flawed. Value is subjective and no asset or currency in the global market is intrinsically worth a particular value.
Ethereum co-founder Vitalik Buterin provided the auction of Leonardo Da Vinci’s Salvator Mundi as an example. The painting by Da Vinci was auctioned off to a Saudi price at $450 million, by Christie’s. The painting could represent $450 million in value to Saudi Prince Bader bin Abdullah bin Mohammed bin Farhan Al Saud, the buyer of the painting, but to others, the painting may not be worth that amount.
Buterin further emphasized that CryptoKitties:
“Illustrates very well that the value of a Blockchain extends far beyond applications that would literally get shut down by banks or governments if they did not use one.”
The value of the digital kittens on the CryptoKitties platform is based on rarity and scarcity, like every other cryptocurrency in the market with a fixed monetary supply. On top of that, CryptoKitties has demonstrated the possibility of frictionless and seamless trading of digital assets, which could be implemented at a larger scale in major industries such as finance.
Written by CoinTelegraph
Deutsche Bank: Bitcoin Crash Among 2018 Financial Worries
The economy globally has continued its strong uptick throughout 2017, partially spurred on by very low interest rates and massive investment into various markets. However, according to Deutsche Bank Chief International Economist Torsten Slok, the major risks for the global economy in 2018 include a crash of Bitcoin.
Slok sees huge potential for volatility in the price of the cryptocurrency, as do other economists, and has indicated that the price may even see huge changes before the close of the current year. His main concerns include regulation, transparency, and disclosure, as well as volatility drifting into the overall market. He said:
“It’s mainly because it (Bitcoin price volatility) is something that I think financial markets so far have been discounting as a small issue,” Slok said. “We do worry a bit that it could become more systemic, in particular, if the current trends continue into 2018.”
One of many
While Bitcoin presents a potential risk for the market going forward, a multitude of other risks may well take down the economy first. Of particular concern are Brexit developments, US inflation rates, North Korea’s nuclear testing plans, and a potential housing bubble in Sweden or Norway.
Of course crypto fanatics would argue that Bitcoin actually hedges against all these other market risks, since it represents a non-fiat connected asset that is not prone to inflationary pressures or market fluctuations brought on by national reserve banks. By internal monetary manipulation, centralized entities produce greater risks.
For example, Mike Costache, an advisor of Hdac says:
“Bitcoin is anti-trust money that is that antidote to [economic crisis]. The US dollar after several rounds of Quantitative Easing (the exact equivalent of a Corporation purchasing its own bonds, which is self-dealing and more or less illegal) is a bubble. This is why I say ‘Bitcoin isn’t the bubble, it’s the pin.’”