Welcome to the second edition of my Weekly Bitcoin Update. Two main themes dominated this week in bitcoin. First, the number of governments that is aiming to restrict cryptocurrency trading, and hence use, is increasing. This week South Korea stated that local ICOs are no longer allowed. Russia’s deputy finance minister stated that bitcoin payments are likely banned in the foreseeable future. Click on the links below to read more:
Second, a withdrawal of the Van Eck bitcoin ETF filing and the new filing of two ProShares bitcoin ETFs have underpinned the importance of bitcoin derivatives for further investor adaptation.
CME, the world’s largest futures exchange is not launching such derivatives any time soon. the CBOE, however, still expects bitcoin futures to start trading before Q2 of next year.
The launch of bitcoin futures would not only be another step in becoming a credible alternative asset class (surely we are not there yet) but also a necessity given bitcoin’s size. With a market cap of USD 70 billion only so much investors could add bitcoin to their portfolio. For example, the total market cap of gold is USD 7.5 trillion.
Still combining the two central bitcoin themes of this week makes me worry a little. Restricting bitcoin transactions, while developing more investing opportunities, could hamper bitcoin’s development as a fast, cheap and easy accessible means of exchange. So much for the ‘let’s cut out the middle man / banks story’ if bitcoin become a HODL asset. Something to think about.
Meanwhile, bitcoin still has to crack the scaling issue. Right now, the number of possible transactions is just too low. I traded and used both bitcoin and litecoin this week, and the difference is still remarkable, both time and cost wise.
Let’s move on to another hot topic, energy use. I’m still trying to figure out if this is really ridiculous as the post below suggests, or if these numbers are greatly exaggerated. I read a lot of posts on energy-saving improvements in data ware houses and have seen mentions of massive energy spikes popping up in bitcoin hubs, but I could be wrong here. Obviously, mining bitcoin needs the necessary computing power. I you have any information on this topic, please let me know.
Another interesting trend this week was the number of bank CEO’s that felt the urge to tell us that bitcoin is not a fraud like JP Morgan’s Jamie Dimon suggested earlier. The definite positive here is that bitcoin has caught the eye of major finance institutions, something that is necessary to reach critical mass. Fidelity seems an interesting case to watch as they expanded their business into mining as well.
That bitcoin’s influence on Wall Street is increasing was emphasized by Overstock. Its shares rose more than 20% as the company announced it would launch a SEC approved ICO trading platform.
To conclude this week’s update. I’m again impressed by the enormous amount of effort put in to make bitcoin a success. A lot of clever of people are truly engaged and I continue to believe that bitcoin could have a bright future. I do think that bitcoin believers should continue to emphasize the core characteristics of bitcoin and blockchain to increase its use. Bitcoin’s potential lies predominantly in the fact that you can send money around very quickly and safely, with very low cost, without the need of a bank account. Enjoy your weekend.