Bitcoin surpassed $10 000 for the first time, taking this year’s price surge to more than 10-fold even as warnings multiply that the largest digital currency is an asset bubble.
The euphoria is bringing to the mainstream what was once considered the providence of computer developers, futurists and libertarians seeking to create an alternative to central bank-controlled monetary systems. While the actual volume of transactions conducted in cryptocurrencies is relatively small, the optimism surrounding the technology continues to drive it to new highs.
Bitcoin has risen by more than 50% since October alone, after developers agreed to cancel a technology update that threatened to split the digital currency. Even as analysts disagree on whether the largest cryptocurrency by market capitalisation is truly an asset, its $167bn value already exceeds that of about 95% of the S&P 500 Index members. Cryptosoft website serves as a useful tool.
This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes
“This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes,” hedge fund manager Mike Novogratz said at a cryptocurrency conference Tuesday in New York.
Novogratz, who’s says he began investing in bitcoin when it was at $90, is starting a $500m fund because of the potential for the technology to eventually transform financial markets.
There’s no agreed authority for the price of bitcoin, and quotes can vary significantly across exchanges. In Zimbabwe, where there’s a lack of confidence in the local financial system, the cryptocurrency has traded at a persistent premium over $10 000. Volumes are also difficult to assess. Bloomberg publishes a price that draws on several large bitcoin trading venues. It was at $10 166.98 as of 12:02pm Tokyo time.
From Wall Street executives to venture capitalists, observers have been weighing in, with some more sceptical than others as bitcoin’s rise has grown steeper, sweeping along individual investors. The number of accounts at Coinbase, one of the largest platforms for trading bitcoin and rival ethereum, has almost tripled to 13m in the past year, according to Bespoke Investment Group.
In a move toward mainstream investing, CME Group has said it plans to start offering futures contracts for bitcoin, which could begin trading in December. JPMorgan Chase & Co, the largest US bank, was weighing last week whether to help clients bet on bitcoin via the proposed futures contracts, according to a person with knowledge of the situation.
The rising profile of digital currencies even saw bitcoin feature in the US senate confirmation hearing Tuesday for Federal Reserve chairman nominee Jerome Powell, who’s a current board member. Answering a senator’s question, he said that “cryptocurrencies are something we monitor very carefully”, and that at some point their volumes “could matter” for monetary policy, though not today.
The total market cap of digital currencies now sits north of $300bn, according to data on Coinmarketcap.com’s website.
For Peter Rosenstreich, head of market strategy at online trading firm Swissquote Bank, bitcoin’s surge harks back to the surprises of the UK referendum on European Union membership and US President Donald Trump’s election.
“We have underestimated the populist movements,” he said. “There is growing unease on how central banks and governments are managing fiat currencies. Ordinary people globally understand why a decentralised asset is the ultimate safe haven.” You can click here for more information on stock market trading.
Reported by Todd White and Julie Verhage, (c) 2017 Bloomberg LP. Published on Tech Central
In what its backers are calling “potentially a world first for a major grocery retailer”, shoppers were for a “limited time” able to pay for their groceries using bitcoin at a Pick n Pay retail store in Cape Town.
In a statement posted on its website, Cape Town-based specialist software payments development house Electrum, said customers at Pick n Pay’s campus store at its head office were able to use the bitcoin cryptocurrency to purchase groceries and services.
“The checkout process is as simple as scanning a QR code using a bitcoin wallet app on the customer’s smartphone,” the statement said. See demonstration video from Electrum below.
The checkout process is as simple as scanning a QR code using a bitcoin wallet app on the customer’s smartphoneIt quoted the retailer’s information systems executive Jason Peisl as saying that although bitcoin and other cryptocurrencies are “still relatively new payment concepts”, Pick n Pay has been able to “effectively demonstrate how we are able to accept such alternative payments”.
Pick n Pay did not say when or even if it planned to expand the pilot to other stores. However, Pick n Pay deputy CEO Richard van Rensburg has subsequently told Business Day that the retailer doesn’t expect to begin accepting bitcoin in the near term. He said the trial has since ended.
“We are unlikely to roll out the solution until the payments industry and regulatory authorities have established a framework for managing the risks associated with cryptocurrencies,” Van Rensburg is quoted as having said. “We have proved to ourselves, though, that it is technically possible to roll out a solution very quickly.”
Electrum provided the cloud-based enterprise payments platform used for the transactions, while the bitcoin infrastructure for the project was provided by Luno, a bitcoin company active in Southeast Asia and Africa, and with an office in Cape Town.
According to Electrum’s website, major major retailers and financial institutions use the company’s technology to accept payments, process loyalty transactions and provide value-added services. Click this link to see some of its customers including two out of Africa’s top three retailers.
By Duncan Mcleod for TechCentral
The way that cryptocurrencies have been implemented – with blockchain technology – is absolutely not a viable consumer product, says South African entrepreneur Hannes van Rensburg.
Van Rensburg, who sold his payments platform Fundamo to Visa for $110 million (R1.4 billion) in 2011, was speaking at StartupGrind Cape Town on Thursday evening, reports Ventureburn.
He said that cryptocurrrencies that use the blockchain won’t see the same kind of adoption as credit or debit cards because of the impracticality of settling payments on the blockchain.
“I think there are a lot of things that could happen in the back. I think there’s a lot of things that could happen around settlement of transactions and so forth, but it is a fallacy. I know people are going to shoot me, but I am just a straight shooter,” said Van Rensburg.
One of van Rensburg’s biggest sticking points is the way in which cryptocurrency transactions take place – also arguably one of their biggest selling points.
“If I do a transaction in Bitcoin it means that before it is actually concluded with the text in the distributed ledger, 50% plus one of the participants in this ecosystem have to acknowledge that they have written it into the ledger,” he said
“Now just consider if you were to run it as a global currency where, before you walk out of the shop having bought my packet of chips for a dollar, half the population has to acknowledge that I bought a packet of chips. It isn’t going to work in that environment.”
Van Rensburg said that he still believed that blockchain was an important technology – just not one that is consumer-driven.
Good for business but not for consumers
Van Rensburg’s viewpoint is not a unique one, with many financial experts around the world voicing their concern about the commercial applications of Bitcoin and other cryptocurrencies.
Regulatory uncertainty is a big hurdle, especially in the financial-services industry. Legal frameworks, globally, will have to change to adapt to the growing use of the new technology, said a former former US Reserve official speaking to the Wall Street Journal.
There are also issues of cybersecurity; despite backers of blockchains claiming that they are secure by design, the technology hasn’t been adopted widely enough yet for it to be seriously tested.
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