Bitcoin has long been a favorite for those looking for an alternative to centralized fiat money. Although I always thought bitcoin was promising, the technological aspect always held safety and liquidity concerns. Due to the fact that it is hard to prove peer-to-peer transactions, financial institutions - especially in the U.S. - have strict policies and layers of purchase authenticity that make buyers wait from a few hours or longer to actually receive the bitcoin.
Could the inception of other bitcoin trading products add to liquidity or the general acceptance of bitcoin? Recently, the Commodity Futures Trading Commission (CFTC) has designated that bitcoin is a commodity. By doing so, adding bitcoin derivatives is an attempt to regulate the bitcoin market.
Some find it strange that the CFTC has said that bitcoin, among other digital currencies, has the same properties as physical commodities like gold or oil. It is true that there is a defined supply of bitcoin, but it is more than likely that the designation is more of an attempt to regulate than to legitimize bitcoin as a true commodity.
Furthermore, the addition of bitcoin derivatives could simply open up the bitcoin market to more traders. Because let's face it, on a day-to-day period, trading bitcoin can be a snooze-fest. With futures trading being as digital as bitcoin, less than five percent of futures are ever exercised for delivery which may lead to more bitcoin speculation.
One thing is certain: bitcoin could an alternative to traditional safe-haven assets. For the last year, I have been the only one, that I know of, that has noticed that bitcoin has been trading the inverse of the most traditional safe-haven - gold. Bitcoin's largest movements seem to stem from money flowing in and out of gold.
Unfortunately, in a crisis situation, I believe gold would win because it is tangible and that is physiologically comforting. If gold garners support from another central bank led financial crisis, bitcoin could see dark days.
Please follow me on Twitter @Lemieux_26
Check my posts out at:
bullion.directory/ab...christopher-lemieux/
www.investing.com/members/200193197
www.teachingcurrencytrading.com
oilpro.com/chrislemieux
Could the inception of other bitcoin trading products add to liquidity or the general acceptance of bitcoin? Recently, the Commodity Futures Trading Commission (CFTC) has designated that bitcoin is a commodity. By doing so, adding bitcoin derivatives is an attempt to regulate the bitcoin market.
Some find it strange that the CFTC has said that bitcoin, among other digital currencies, has the same properties as physical commodities like gold or oil. It is true that there is a defined supply of bitcoin, but it is more than likely that the designation is more of an attempt to regulate than to legitimize bitcoin as a true commodity.
Furthermore, the addition of bitcoin derivatives could simply open up the bitcoin market to more traders. Because let's face it, on a day-to-day period, trading bitcoin can be a snooze-fest. With futures trading being as digital as bitcoin, less than five percent of futures are ever exercised for delivery which may lead to more bitcoin speculation.
One thing is certain: bitcoin could an alternative to traditional safe-haven assets. For the last year, I have been the only one, that I know of, that has noticed that bitcoin has been trading the inverse of the most traditional safe-haven - gold. Bitcoin's largest movements seem to stem from money flowing in and out of gold.
Unfortunately, in a crisis situation, I believe gold would win because it is tangible and that is physiologically comforting. If gold garners support from another central bank led financial crisis, bitcoin could see dark days.
Please follow me on Twitter @Lemieux_26
Check my posts out at:
bullion.directory/ab...christopher-lemieux/
www.investing.com/members/200193197
www.teachingcurrencytrading.com
oilpro.com/chrislemieux