Sunday, 29 December 2013
Banking center Switzerland gives a big boost to Bitcoin
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Paypal’s Director sees it as a store of value, adds that regulation will boost merchant adoption
As hectic volatility on the Bitcoin exchanges goes on, we are on a mission to explore recent factors behind the latest batch of dramatic moves. Yesterday Swiss lawmakers have given the needed “governmental” boost to the crypto-currency with a group of 45 members (out of 200 possible) of the Swiss Parliament signing a postulate that argues for Bitcoin to be treated just as any other foreign currency would be.
Only days after China has slapped investors in the face, Swiss authrities are coming to the rescue, and this one is rather big!
If such a measure passes through the Parliament it would be up to the Federal Council to agree and decide how to implement the postulate according to a recent article by Coindesk. This could ultimately bring a benefit to the traditionally strong financial system in Switzerland and could turn the country into a hub for Bitcoin dealings.
Switzerland's renowned worldwide reputation as a solid and secure base of operations will could once again come into play. However significant measures need to be undertaken before it all becomes feasible – prevention of money laundering and regulation of VAT application are few of the challenges faced.
The main difficulties lie within the nature of the currency – along with legal issues come technological ones and both frameworks will need a lot of proper analysis and thorough considerations before invoking appropriate legislation marks and formally recognizing Bitcoin as a legitimate foreign currency.
Coindesk proceeded to quote Luzius Meissier who is the president of Bitcoin Association Switzerland who said that the proposed action could be revolutionary in providing Bitcoin with additional legitimacy and serve as a precedent for other countries.
Recently representatives of the University of Nicosia in Cyprus have issued a proposal to their financial authorities to make the island as a hub for crypto-currency dealings. Well it remains to be seen whether authorities have even considered it, however with competition such as Switzerland they stand little chance to get a part of this pie.
On a separate note we have bumped into set of surprising comments coming from no other but the President of Paypal at eBay – David Marcus. Speaking at a start-up conference in Paris he expressed his positive attitude towards Bitcoin and has brought his insights into the highly controversial topic of the digital currency.
In fact he stated that the main reason that makes people confused about Bitcoin is that it is called a currency. According to Mr. Marcus it is not a currency so far, it is a store of value especially in countries with high inflation rates such as Argentina where fiat paper money have completely lost this function. He proceeded to say that he considers investments in Bitcoin to be associated with a big appetite for risk. The main obstacle in his opinion is the daily volatility that is accompanying the crypto-currency and the uncertain regulatory framework.
As soon as the framework becomes clearer many merchants will start seeing it as a good alternative. Speaking of which recent media reports about a Tesla Model S sedan being bought in Bitcoins turned out to be a lot of fuss. In an interview with CNBC, the general manager of the dealership that sold it, said that the company has never actually put its hands (or cursors) on Bitcoins. The transaction went through BitPay and the company received the payment in US dollars.
It is a tough going to follow all news about Bitcoin these days. Its ever increasing popularity will certainly make us here, at LeapRate put in our better efforts to stay in tune with this exciting market. Stay tuned for more!
Saturday, 28 December 2013
Bit Coin at tipping point
The 1 Thing Bitcoin Needs to Succeed
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"We are nearing a tipping point for broad adoption of Bitcoin -- what we at Coinbase believe to be one of the most important shifts in the global economy in our lifetime," the firm said in a blog post. Coinbase is an international digital wallet that allows you to securely buy, use, and accept Bitcoin currency. Bitcoin has been attracting a lot of interest, and its value surpassed $1,000 at the end of November. Backers of the currency have been pushing for its increased usage.
The company said last week that the number of people using its Bitcoin wallet crossed the 650,000 mark.
(Click to enlarge.)
Virtual currencies are accepted at a growing number of merchants. Even Snoop Doggannounced that he plans to sell his next album for Bitcoins.
Going crazyIn October, many Bitcoin users and traders were going crazy thanks to an announcementfrom China's main search engine Baidu (NASDAQ: BIDU ) that one of its subsidiary services now accepts the virtual currency.
Baidu, China's domestic substitute of Google, is the fifth most-visited website in the world. The company's announcement two months ago has rallied China's demand for the virtual currency.
BTCChina, the first and the largest yuan-to-Bitcoin trading platform, has seen its transaction volume surging since the Baidu announcement.
(Click to enlarge.)
In fact, it was the currency's popularity that motivated Baidu's decision. "In China, Bitcoin is considered quite 'trendy,'" the search giant said in a statement.
Bitcoin's rally was also fueled by positive remarks from the U.S. Department of Justice, which described the digital currency as a "legal means of exchange."
The limited supply of Bitcoins have also been driving the price up.
Chinese interestChinese Bitcoin investors may find the currency attractive for a different reason than just a profitable investment. Bitcoin presents a tool for the Chinese to topple some of China's strict regulations, including those on capital controls. Most directly, China regulates its internal foreign exchanges, and since most online marketplaces don't accept yuan, Chinese consumers have previously been limited in the sorts of online commerce they can enjoy.
Now two months later, Baidu announced that it stopped accepting Bitcoins after the nation's central bank blocked financial institutions from handling transactions.
China's central bank blocked financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency. China's central bank said the public is free to participate in Internet transactions provided they take on the risk themselves. The ban on financial institutions handling Bitcoins signals concerns that the digital currency may threaten capital controls and financial stability.
China's step to start regulating the Bitcoin exchanges could be good for the consumer. Recognition of the currency to buy and sell goods and services was the purpose anyway. Using a currency for speculation and illegal purposes is never a good thing.
China's statement on Bitcoin is open for interpretation; you can read it here.
It's not over and out for BitcoinsSome weeks ago, Bank of America predicted Bitcoin will become a "major means of payment for e-commerce" and a "serious competitor to traditional money transfer providers."
"As a medium of exchange, Bitcoin has clear potential for growth," bank analysts stated in a December 5 research report.
The bank estimates that each Bitcoin has a fair value around $1,300, though they warn the currency valuations could create a bubble. The currency's volatility may interfere with its use as a trusted trade currency, according to Bank of America. It also takes nearly an hour to trade Bitcoins on various online exchanges.
Young and immature marketAlthough Bitcoin continues to attract attention and investment dollars, it is still a young market with plenty of kinks to iron out. Most Americans have no patience for the arduous process of setting up an account at any of the dozens of Bitcoin exchanges, as most have lengthy application forms and complicated banking requirements, often requiring offshore accounts.
To bridge the gap between investor interest and difficulty accessing markets, an American company called WPCS International has decided to offer Americans a simple form of exposure through its own common stock.
The company announced on December 17, that they entered into various agreements to acquire BTX Trader LLC (www.btxtrader.com), a multi-exchange bitcoin trading platform. WPCS International offers investors direct exposure to the rapidly growing Bitcoin services market.
AdoptionBitcoin has great potential as a highly secure, low-cost vehicle for electronic transactions in competition with credit cards. It could enjoy a powerful first-mover advantage, allowing it to set the standard for digital currency transactions.
Bitcoin is, of course, reliant on broad-based ecosystem adoption. Consumers need to adopt the currency, but they also need to have somewhere to spend it, which is why merchants' acceptance is critical.
There could be a very powerful incentive for online merchants to accept the currency, particularly if the transaction fees that are incurred with the acceptance and processing of Bitcoin transactions are lower than what they would otherwise pay the payment networks such as PayPal.
One of the significant factors behind the success of Paypal was that eBay (NASDAQ: EBAY ) pushed so hard to make it the payment mechanism of choice for all eBay-related transactions.
Adoption is crucial for Bitcoin to succeed. At this stage, it's mainly a few large Internet properties such as WordPress, Baidu, and a few others. But with the interest of artists in Bitcoin, broad-based adoption is around the corner.
There is very active use of Bitcoin currency as a basis for P2P transactions among consumers and merchants overseas. But it's slowly moving to more active consideration among major retailers.
The first Bitcoin ATM was recently introduced in Canada. The Bitcoin ecosystem is alsostarting to see serious investment or consideration from well-respected venture capital fundssuch as Accel Partners and Andreessen Horowitz.
One thing is for sure: Bitcoin's success hinges on how well it's adopted.
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