September 14, 2016

Florida to draft a legislation recognizing Bitcoin as a currency

Posted on September 14, 2016 | by [email protected]

September is turning out to be a positive month for Bitcoin enthusiasts. Widespread mainstream adoption is driving the currency’s prices high. US congress has pretty recently passed a resolution that prompts for an innovation policy supporting cryptocurrencies. More positive news is underway as the state of Florida is planning to treat Bitcoin as currency. Let’s look into how and why the sunshine state is planning to do this:

Miami-Dade Circuit Court Ruling:

Michell Espinoza’s Miami-Dade trial recently made headlines when the judge ruled that Bitcoin was not money and dismissed the case. Shortly after that, the state appealed the decision. Florida Senator Dorothy Hukill says the state is planning to file legislation about cryptocurrencies. Since Florida law hasn’t defined Bitcoin yet, lawmakers are researching ways to regulate its use.

The senator believes the state needs a law because of Bitcoin’s popularity, and the many Florida court proceedings that involve the currency. After the Espinoza case dismissal by Judge Teresa Pooler, many people are expecting changes in laws to accommodate cryptocurrencies. Hopefully the legislation would be such that the currency grows in an unaffected manner.

Third largest Bitcoin Mining group launches second pool:

China-based Bitmain announced the launch of its second mining pool on 13^th of September. The new offering would be open sourced to its community users. Bitmain’s Antpool platform is popular across community for its 13% share of the network. In an interview, Nisthant Sharma, international marketing manager at Bitmain, explained the goal behind the launch. The software is to “promote decentralization of the bitcoin mining network”.

Sharma told:

“We hope that this open-source mining pool will set new benchmarks in terms of stability, efficiency, and service for all mining pools.”

By utilizing the global community, the company believes it can set new technical standards for mining.

Romanian Bitcoin Exchange shuts down:

Romania’s first order-book exchange has announced that it is closing down. The BTCXchange website informed users of a possible sale of the service on 18th August. On 4th September, the exchange asked users to withdraw funds ahead of an expected 12th September shut down. According to Romanian news source Bihon, whether the exchange is up for sale is still unclear.

In past statements, owner Horea Vuscan expressed his hope to successfully sell the exchange as it was “highly profitable”. They would be accepting offers for the platform starting 16^th September. While Horea believes that the venture is profitable, he has expressed reservations about security. How successfully would the exchange reincarnate is to be seen.

Why to Think Twice About Investing in Bitcoin ETFs

Posted on September 14, 2016 | by [email protected]

What are ETFs?

An ETF is a type of fund, traded on stock exchanges, that hold assets tracking the value of an index. Authorized participants, which are generally large financial institutions, buy and sell large creation units of the ETF to break up and distribute in smaller quantities. ETFs were created in 1993 as a tool for investors to track the value of market sectors, niches, and trading strategies.

Why ETFs? Why Bitcoin?

ETFs can help reduce costs, improve liquidity, strategize against capital gains taxes, diversify portfolios, and improve transparency for investors.

Financial professionals are racing to be first to market with an ETF for emerging market sectors. Bitcoin has grown to the point of receiving this attention. Leading the charge are the Winklevoss brothers, who introduced Bitcoin ETFs to the SEC in 2014. If readers are interested in the prospectus, it’s available on the SEC website.

Drawbacks of a Bitcoin ETF

Although the benefits of ETFs have contributed to their rising popularity, ETFs have drawbacks that can be exaggerated in their developmental stages. In 2011, Fidelity published a piece on the drawbacks of ETFs. Of those that Fidelity listed, buying high and selling low, management fee creep, and tracking error seem as though they could be particularly pronounced when evaluating a Bitcoin ETF.

Buying high and selling low describes the spread between bid and asking prices for ETFs. If this spread is
high, the cost of purchasing (or the benefit of selling) may not accurately reflect the value of the ETF. In an ETF with few transactions, it’s likely that the spread will be greater than in an ETF with regular, or practically constant transactions as the curve of people’s willingness to sell/buy will be smoother.

Management fee creep describes the administrative costs of ETFs. In a developing fund, the costs of marketing could be reflected in the management fees. Given the uncertainty and slow adoption of Bitcoin across traditional financial markets, marketing costs could be higher for a Bitcoin fund.

Tracking error describes the deviations in a fund’s investment performance from the index that it tracks. Given the volatility of Bitcoin, it could prove difficult to accurately align with the indexes of choice. This can be a cost to investors.

Broader Implications for Bitcoin

If the Winklevoss Bitcoin ETF is approved, it would signal faith in Bitcoin from the U.S. federal government. This faith could improve investor confidence and the value of Bitcoin itself. As a byproduct of a legitimizing a cryptocurrency investment vehicle, Bitcoin investment would likely be subject to a greater degree of scrutiny from the federal government and regulatory agencies. This could incentivize greater transparency for other methods of Bitcoin investment, improving access to the Bitcoin market.

Blockchain Support Bill takes wings in US Congress

Posted on September 14, 2016 | by [email protected]

The US Congress has passed a pioneering resolution in the favor of the crytpocurrencies and blockchain on 12th September. While this would have a positive implication on prices, let’s look into the details of the Bill:

Resolution passed by firm backing:

The US House of Representatives has passed a resolution that will support the growth of digital currencies and blockchain technology. The non-binding resolution calls for a national technology innovation policy that includes supportive language for digital currencies and blockchain technology.

This resolution was first introduced in July, prompting the US government to craft a national policy for technology. It has specific mentions for digital currencies and blockchain. The bill, written by Illinois Representative Adam Kinzinger, passed by a voice vote from backers late noon on September 12th. The measure is perhaps the most significant to emerge from Congress to date on digital currencies and blockchain tech. The resolution emerged months after the House Committee on Energy and Commerce discussed and proposed the technology. The comments from supporters on the debate floor indicated that there was genuine interest in the issue among House members.

Michael Burgess, a Republican from Texas, said at the hearing:

“There’s no doubt that blockchain innovations are on the cutting edge today.”

What remains is to see whether the next session of Congress, will continue to focus specifically on bitcoin and blockchain.

SEC Delays Decision on SolidX Bitcoin ETF:

The Winklevoss twins are in the same loop with SEC for their ETF

The deputy secretary of the SEC, Robert W Errett, has pushed back the date to approve SolidX’s request to list a bitcoin ETF on the New York Stock Exchange. Typically, the SEC has 45 days from the time an application is filed in the federal register to approve the measure. The situation closely resembles Winklevoss brother’s Bitcoin Trust on Bats Exchange. The financial regulator has the power to extend the time till 240 days. In line with this, SEC deputy secretary Robert W Errett pushed back the deadline to approve the SolidX bitcoin ETF. The date was shifted from 16th September in the federal register, tentatively for a period of additional 45 days.

Circle Brings Blockchain Payments to iMessage With iOS 10 Update:

Blockchain payments firm Circle has integrated with Apple’s iMessage. This move allows users to send payments in dollars, euro, pound sterling and bitcoin through the popular texting platform. Circle executives said the launch marks the end of preparations that began in June. That was when Apple announced it would open up iMessage to third-party developers.

Android compatibility

The announcement also hinted the benefits of technology standards, in this case, the short message service (SMS). As a result of iMessage’s use of Blockchain, Android users will be able to receive payment requests via the integration.