Digital currency Bitcoin hits new high before losing S$200 in value in one day

Since the liquidity is low, is the fund the main market force to sustain the Bitcoin value?

(not vested in Bitcoin)

Bitcoin fund raises US$65m after first two months, founder says

[NEW YORK] A fund established to offer investors exposure to Bitcoin is holding around US$65 million in the digital currency after two months in operation, its creator, SecondMarket Chief Executive Officer Barry Silbert, said on Wednesday.

Silbert told a group of journalists at his company's New York headquarters the fund, named the Bitcoin Investment Trust, has 90 investors, among them hedge fund traders and private family investment firms.

Using investor contributions and seed money of more than US$2 million from SecondMarket, the BIT, as it is known, has been buying Bitcoins from a wide array of sources, including exchanges, merchants and individual users. The fund is also buying the digital currency from "miners", who are producing it by running programs that interact with Bitcoin's software to make new units of the currency.

The BIT is structured like an electronically traded fund and modeled, according to Silbert, after one of the most prominent gold ETFs, but it is not publicly traded and will not be for several more years. SecondMarket launched the fund at the end of September.

As the value of the floating currency, which is not governed by any central bank or company, increases, shares in the BIT will increase in value too.- Reuters

Source: Business Times Breaking News

Bitcoin tumbled on its attempt in Europe too...

EU banking watchdog warns of risks from Bitcoin

[LONDON] People using Bitcoins are on their own when it comes to losses, the European Union's banking watchdog said on Friday in a formal warning to consumers on the risks of using unregulated online currencies.

The European Banking Authority said there was no protection or compensation for people whose "digital wallets" are hacked, a transfer of virtual money goes wrong or a platform is shut.

The warning follows similar announcements from the Bank of France and the Chinese central bank.- Reuters

Source: Business Times Breaking News

Dec. 13 (Bloomberg) -- Bitcoins were dealt a blow in Norway
as the government of Scandinavia’s richest nation said the
virtual currency doesn’t qualify as real money.
“Bitcoins don’t fall under the usual definition of money
or currency,” Hans Christian Holte, director general of
taxation in Norway, said in an interview. “We’ve done some
assessments on what’s the right and sound way to handle this in
the tax system.”

-snip-

http://www.bloomberg.com/news/2013-12-12...ation.html

[SHANGHAI] Bitcoins were trading Wednesday at less than half their value at the end of last month after Chinese authorities took steps to rein in transactions in virtual currency, which had soared in recent months.

Prices on BTCChina, the country's biggest Bitcoin trading platform, stood at 3,060 yuan (US$504) each, down almost 60 per cent from their high of 7,588 yuan in November.- AFP

Source: Business Times Breaking News

Looks like we now know who are speculating bitcoin in this recent run up

Bitcoin Drops as China to Denmark Seek to Control Digital Money
2013-12-18 19:32:00.891 GMT


By Frances Schwartzkopff and Olga Kharif
Dec. 18 (Bloomberg) -- Bitcoin prices plunged against the
yuan and the dollar after China’s largest online market for the
virtual currency stopped accepting Bitcoin deposits and
Scandinavian authorities said they will impose regulations.
Bitcoin fell as much as 49 percent to 2,011 yuan ($331) on
BTC China, which said its payments subsidiary YeePay would no
longer offer deposit services. Against the dollar, Bitcoin
declined as much as 43 percent on the Bitstamp, an online market
where the digital money can be traded for legal tender.
Since the digital money isn’t controlled or authorized by
any country or banking authority, Bitcoins have also attracted
the interest of authorities concerned that they can be used to
trade in illicit goods or evade financial controls. While
Bitcoins have been around since 2008, their growing use has
lured speculators, fueling a rally that drove up the price
of the virtual currency more than 80-fold this year.
“Every day brings a new twist and turn,” said Gil Luria,
an analyst at Wedbush Securities Inc. “Longer term, the
technologies that have been introduced, innovations that have
been involved in Bitcoin will have a very big impact. What the
actual value of Bitcoin is going to be is far harder to
determine, particularly since the market is illiquid.”
More nations are taking an official stance on virtual
currencies. Norway said this month it won’t recognize Bitcoins
as legal tender and will impose a capital gains tax. BTC China’s
decision to stop taking deposits follows a move by China’s
central bank to bar financial institutions and payment companies
from handling Bitcoin transactions.

Money Controls

“China represented a lot of the incremental demand for
Bitcoin over the last few months,” Luria said. “Removing that
demand lowers the price very substantially, and creates the
perception that maybe other countries won’t allow trading.”
The Treasury Department’s Financial Crimes Enforcement
Network has said that Bitcoin businesses may be considered money
transmitters for the purpose of complying with anti-money
laundering laws. The agency sent letters to “about a dozen”
Bitcoin-related businesses last month asking them either to
register or explain why they are not subject to its
jurisdiction.
“Fincen often sends letters to banks, credit unions,
jeweler, casinos and the like,” said Steve Hudak, a spokesman
for the Financial Crimes Enforcement Network “This should not
be surprising to anyone.”

Gaining Credibility

Introduced five years ago by a programmer, or group of
programmers, going under the name of Satoshi Nakamoto, Bitcoins
exist as software and can potentially reduce banking-transaction
fees, making it an attractive option for trading via the Web or
in stores. Bitcoins are being used to pay for everything from
Gummi bears and digital cameras to Tesla electric cars on the
Web, with more than 12 million in circulation.
The virtual currency gained credibility last month after
law enforcement and securities agencies said in U.S. Senate
hearings that Bitcoin could be a legitimate means of exchange.
The U.S. government shut down in October the Silk Road Hidden
Website, where people could obtain guns, drugs and other illicit
goods using Bitcoins. That generated optimism the digital money
would become more widely used for legal purposes.
The price of Bitcoins topped $1,000, and have since dropped
to trade around $562 today on Bitstamp, one of the more active
online exchanges where Bitcoins are traded for dollars and other
currencies.
The jump in Bitcoin prices prompted former Federal Reserve
Chairman Alan Greenspan this month to call the market a
“bubble.”

European Level

Denmark is the latest nation to prepare standards to
protect its consumers from risks associated with virtual
currencies after the regulator found it lacked authority to
prevent a company creating an exchange for the software.
The most likely outcome would be an “amendment to existing
financial legislation so that we have regulation covering it,”
Michael Landberg, chief legal adviser at the Financial
Supervisory Authority in Denmark, said yesterday in a phone
interview. “It is also important to have this included in money
laundering acts.”
Denmark plans to “align” itself with other nations in
designing a framework that deals with gray zones created by the
use of Bitcoins and its competitors, Landberg said. The FSA is
preparing draft legislation for lawmakers to consider, he said.
“We’ll seek to follow the mainstream,” Landberg said.
“Bitcoins are not forbidden in the U.S. and the U.K. It is out
there and will continue to be out there. It just needs to be
regulated. The challenge for us is how to do that.”

For Related News and Information:
Bankers Balking at Bitcoin in U.S. as Real-World Obstacles Mount
NSN MXCTD16KLVRD <GO>
China Said to Consider Bitcoin Regulations After Investor Losses
NSN MXBNKU6JTSE8 <GO>
Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value
NSN MXB06J6S972R <GO>
On Norway’s Economy: TNI NORWAY ECO BN <GO>
Top Nordic Stories: TOP NORD <GO>
Top Economic Stories: TOP ECO <GO>

--With assistance from Peter Levring in Copenhagen and Carter
Dougherty in Washington. Editors: Tasneem Brogger, Reed
Stevenson, James Callan

To contact the reporters on this story:
Frances Schwartzkopff in Copenhagen at +45-33-457-125 or
fschwartzko1@bloomberg.net;
Olga Kharif in Portland at +1-503-471-1359 or
okharif@bloomberg.net

I just feel like to ask a question, anyway to short?

(19-12-2013, 03:29 PM)valuebuddies Wrote: I just feel like to ask a question, anyway to short?

"Markets can remain irrational longer than you can remain solvent."

Bitcoin stumbled in India too. Imaging one day, all trading platforms are suspended, what will be the fate of the currency? It is unlikely to pay with a Bitcoin, worth thousand dollars, and expecting a change? isn't it?

Bitcoin exchanges shut shop in India

India’s biggest Bitcoin trading platform, BuySellBitCo.in, on Thursday, suspended its operations, citing a recent Reserve Bank of India public advisory that highlighted the risks involved in dealing with virtual currencies.

The closure of BuySellBitCo.in, which sees about 12 million rupees of Bitcoin transactions every month, spooked other operators and users—with a number of other trading platforms such as INBRTC suspending services indefinitely.
...
http://www.thehindu.com/business/Industr...504407.ece

Malaysia is out for Bitcoin...

Malaysian central bank warns against Bitcoin

KUALA LUMPUR — The Malaysian central bank has become the latest to warn against the use of bitcoin in a statement released last Friday (Jan 3).

“The Bitcoin is not recognised as legal tender in Malaysia,” the statement reads. “The Central Bank does not regulate the operations of Bitcoin. The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”
...
http://www.todayonline.com/world/asia/ma...st-bitcoin

Bitcoin vault offering insurance is 'world's first'

By Joe Miller
10 January 2014
Technology reporter

A Bitcoin storage service that insures deposits of the digital currency against loss and theft has launched in London.

Elliptic Vault uses "deep cold storage", where private encrypted keys to bitcoins are stored on offline servers and in a secure location.

The facility's founders say they are the "first in the world" to offer insurance for Bitcoin owners.

Stolen bitcoins cannot be recovered as all transactions are irreversible.

Online wallets used to store bitcoins have been subject to a number of cyber-attacks and some users have also suffered from accidental loss.

_______________________________________________________________________________________________________________________________________________

How Bitcoin works
Bitcoin is often referred to as a new kind of currency.

But it may be best to think of its units being virtual tokens rather than physical coins or notes.

However, like all currencies its value is determined by how much people are willing to exchange it for.

To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.

For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins.

This provides an incentive for people to provide computer processing power to solve the problems.

To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day.

There are currently about 11 million bitcoins in existence.

To receive a bitcoin a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual postbox to and from which the bitcoins are sent.

Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.

These addresses are in turn stored in Bitcoin wallets which are used to manage savings.

They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bitcoins owned.
________________________________________________________
________________________________________________________________________________________

James Howells lost about £4.6m when he threw away his hard drive, forgetting that he had bitcoins stored on it.

Elliptic co-founder Tom Robinson says the service addresses a 'deep concern' among Bitcoin users Elliptic co-founder Tom Robinson says the service addresses a "deep concern" among Bitcoin users
Unlike money stored in a conventional bank, bitcoins are not insured and there is no way of retrieving them once they are gone.

'Obvious step'

"One of the main concerns people have with Bitcoin is that it's quite difficult to store securely," Elliptic co-founder Tom Robinson told the BBC.

"Offering people insurance seemed an obvious step."

But convincing an insurance firm to trust the nascent currency was not an easy task.

"It was very difficult to find an insurer," said Mr Robinson, an Oxford graduate with a PhD in physics who started the company with two friends.

"The industry is very conservative and they did not understand Bitcoin.

"They were also influenced by the negative publicity Bitcoin received, although this has improved since Silk Road [an online marketplace] was taken down and stopped dominating the Bitcoin agenda."

Layers of security

The company is underwritten by Lloyd's of London, which will give people "more faith in the Bitcoin system", according to Emily Spaven, managing editor of CoinDesk, a digital currency news site.

Insurance payouts will be calculated using the Bitcoin to US dollar exchange rate at the time a claim is made.

Elliptic's focus is on storing bitcoins as securely as possible, using what Mr Robinson calls "deep cold storage" techniques.

Bitcoin keys are encrypted and stored offline. There are multiple copies, protected by layers of cryptographic and physical security.

The copies are accessible only via a quorum of Elliptic's directors.

Illicit financing

Elliptic's launch comes as Bitcoin has been making news around the world, with governments deciding how to legislate for the currency.

Singapore has become one of the first countries to issue guidance on taxation for Bitcoin businesses, although it also said it was monitoring transactions to detect illicit financing by criminals and terrorists.

Bitcoin was less fortunate in China, where the largest online marketplace, Alibaba Group's Taobao, said it would ban virtual currencies.

In December, the country's central bank ordered financial institutions to halt Bitcoin-related services and products.

There was a breakthrough for the currency in the US, however, where Overstock.com became one of the first major online retailers to accept Bitcoin on Thursday.

http://www.bbc.co.uk/news/technology-25680016