We are a country that embraces technology. And a currency that is easy to trade and can be transacted 24/7 in any location, perfectly suits those ideals.
So it shouldn’t come as a surprise that the institutional and retail markets have yielded to Bitcoin and accepted it as a viable commodity.
Indeed, whether you like it or not, both Wall Street and Main Street are working to make Bitcoins easier to trade and use for payments.
And new technologies in both spheres are emerging as a result.
From Wall Street…
Wall Street is backing a myriad of new tools and instruments designed to make trading the digital currency more user friendly.
Now, what’s so interesting about these new products and services is that rather than being pushed out by Bitcoin technologists, they’re being developed on Wall Street. This further validates belief in their longevity.
There are applications that can now track, chart, and analyze Bitcoin as a financial instrument, rather than just a unit of account.
In the past year, several new trading instruments were developed to increase “hashing power,” the act of making Bitcoin a tradable instrument. New robust margin capabilities, high-frequency trading algorithms, and derivative contracts – such as options, swaps, and contract for difference platforms. Contract for differences allows Bitcoin to be used as collateral against global equities.
In October, LedgerX applied with the Commodity Futures Trading Commission to become a swap execution facility and a derivatives clearing organization. If approved, LedgerX would be the first U.S. regulated derivatives exchange and clearing house where institutions could obtain Bitcoin assets and hedge digital currency fluctuations.
But it’s not just the Wall Street wolves that are interested in Bitcoin. Mainstream consumers are, too, and the market is responding accordingly.
To Main Street
Big business is accepting Bitcoin as a payment method more and more. Increasing regulation in the Bitcoin market has steadily paved the way for businesses to accept Bitcoin payments, predominantly as a means toward casting a wider customer net.
For instance, PayPal, with nearly 150 million users, is the largest financial payments business to embrace Bitcoin to date. And even charitable organizations, like The Mozilla Foundation, are turning to the digital currency to facilitate donations, while also removing costs associated with legacy payment methods.
But it’s not just large companies and organizations that are getting on board with Bitcoin. As new services become available, it becomes much easier for merchants to accept payments in Bitcoins.
Enter BitPay, the world’s first Bitcoin payment processor.
In the past few years, businesses could accept Bitcoins in exchange for goods and services, but the merchant would be responsible for exchanging the Bitcoins for cash. This meant the merchant also had to take on operations and technology risks, as well as currency risk, since the Bitcoin exchange rate fluctuates just like any other currency.
But now, BitPay can facilitate this step.
According to its website, BitPay will accept Bitcoin from anywhere in the universe with no chargebacks, no volatility risk, and in-cash settlement in multiple currencies. And to alleviate some of the currency risk, BitPay provides an online checkout window with a 15-minute time period to lock in the going rate.
Thus, BitPay reduces the risks of conversion and sends cash directly to the merchant’s bank account.
There’s even familiar banking infrastructure to support the currency. Robocoin installed the first Bitcoin ATM last October. The company has also created a virtual wallet that facilitates acquisition, storage, sending, and converting of Bitcoins.
Now, all of these developments might have you itching to get some Bitcoins for yourself. And you can do so by going to Bitcoin exchanges such as Bitstamp or OKCoin.
Whatever you do, it’s probably wise for retail investors to stay away from Bitcoin “mining.”
The Bitcoin mining process is complicated. But essentially miners are paid in Bitcoins to secure the network, which self-adjusts every 10 minutes.
A mining operation requires hefty upfront capital to fund expensive hardware and software infrastructure, along with electrical and human resources. As Bitcoins become increasingly popular, entities that can mine want to get more of them out on the market.
Unfortunately, the greater the number of participating miners, the more difficult it becomes to solve the Bitcoin algorithm.
About 13.5 million Bitcoins have already been mined – leaving 7.5 million remaining (only 21 million exist). With less than half left waiting to be accessed, the mining rate will drop until the last coin is discovered.
Update: Confidence in Bitcoins is up due to an announcement made just before the holiday last week. Bankruptcy trustee for the Bitcoin exchange, Mt. Gox, which closed its doors in February, said it would work with a California-based Bitcoin exchange, Kraken, to return the money left in the estate to the company’s 127,000 creditors.
P.S. Wall Street Daily Founder, Robert Williams, has discovered an emerging currency that retailers are now accepting. Millions of this currency are being transacted every day in America. And no, it’s not Bitcoin. Go here for more details.