Bitcoin Sees Wall Street Warm to Trading Virtual Currency (24crypto.de) points by vthallam on May 8, | hide and she mentioned they do see bitcoin as a clear competitor to gold. For what that's worth. hudon on May 8, I understand the claims . May 8, Paul Technology Comments Off on Bitcoin Sees Wall Street Warm to Trading Virtual Currency SAN FRANCISCO — Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to . May 10, · Bitcoin sees Wall Street warm to trading virtual currency 10 May by OneStopBrokers Some of the biggest names on Wall Street are warming up to Bitcoin, a virtual currency that for nearly a decade has been consigned to the unregulated fringes of the financial world.
Bitcoin sees wall street warm to trading virtual currencyBitcoin sees Wall Street warm to trading virtual currency – Impact Lab
The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential. The news of the virtual exchange, which has not been reported before, came after Goldman Sachs went public with its intention to open a Bitcoin trading unit — most likely the first of its kind at a Wall Street bank.
The moves by Goldman and Intercontinental Exchange, or ICE, the parent company of the New York Stock Exchange, mark a dramatic shift toward the mainstream for a digital token that has been known primarily for its underworld associations and status as a high-risk, speculative investment. The new interest among Wall Street power brokers also represents a surprising new chapter in the renegade history of Bitcoin. So just what is cryptocurrency, and how does it work? Instead, these currencies operate in a completely decentralized system that uses so-called blockchain technology to track transactions.
Say that Alice wants to buy a bike from Dan using Bitcoin, her cryptocurrency of choice. Alice begins by logging into her Bitcoin wallet with a private key, a unique combination of letters and numbers. With a traditional financial transaction, the exchanges get sent to banks on each side who record the money being subtracted from one account and added to another.
But remember, in this scenario, there are no banks or middlemen. Every 10 minutes, the newest block of transactions is added on, or chained, to all the previous blocks. And if they solve it first, their record of the block of transactions becomes the official record. This entire process is known as mining. The fact that many computers are competing to verify a block ensures that no single computer can monopolize the Bitcoin market.
To ensure the competition stays fair and evenly timed, the puzzle becomes harder when more computers join in. The Bitcoin protocol says mining will continue until there are 21 million Bitcoins in existence. The virtual currency was created after the global financial crisis by a still-anonymous programmer who used the name Satoshi Nakamoto. But instead of being replaced, the old banks are beginning to assert their own role in the unorthodox financial world of virtual currency, sometimes called cryptocurrencies.
While Bitcoin was originally intended to be used by consumers for all sorts of transactions — without any financial institutions getting involved — it has mostly become a virtual investment, stored in digital wallets and traded on mostly unregulated exchanges around the world.
People buy Bitcoin in the hope that its value will go up, similar to the way they purchase gold or silver. Details of the platform that Intercontinental Exchange is working on have not been finalized and the project could still fall apart, given the hesitancy among big Wall Street institutions to be closely associated with the Wild West of virtual currencies.
A spokesman said that the company had no comment. Many corporations and governments have expressed interest in the technology that Bitcoin introduced, particularly a form of database known as the blockchain. Many corporations and governments have expressed interest in the technology that Bitcoin introduced, particularly a form of database known as the blockchain.
Some large financial exchanges, including the Chicago Mercantile Exchange, have already created financial products linked to the price of Bitcoin, known as futures. ICE has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day — with the backing and security of the exchange, according to the people familiar with the project.
The swap contract is more complicated than an immediate trade of dollars for Bitcoin, even if the end result is still ownership of a certain amount of Bitcoin. The chief executive of Nasdaq, Adena Friedman, recently said her company could also create a virtual-currency exchange if regulatory issues are ironed out. While several hedge funds have been buying and selling Bitcoin, most large institutional investors, such as mutual funds and pensions, have avoided it largely as a result of similar regulatory concerns.
Bitcoin still faces plenty of skepticism in the mainstream financial world. Over the weekend, Warren E. Some Bitcoin enthusiasts have said that its increasing integration into the existing financial system has pulled it away from its founding ideals.
Paul Chou, a former trader at Goldman Sachs who set up LedgerX, a regulated Bitcoin exchange that would compete with Intercontinental Exchange, said his company has made a point of focusing on large Bitcoin holders, rather than financial institutions.
Chou said, using the shorthand for cryptocurrencies. But Goldman executives said they were looking at moving in the direction of buying and selling actual Bitcoins. Several big corporate names, including the giant technology investor SoftBank, which has stakes in Sprint and Uber, have been in discussions about being involved with the exchange in some way, the people familiar with the project said.
But a spokesman for SoftBank said this week that it was no longer involved. LedgerX, the exchange founded by Mr. Chou, is the only exchange that now offers the kind of swaps that ICE has discussed. LedgerX has experienced increasing trading volume in recent months, but ICE would start with an edge because essentially every large financial institution is already hooked into it.
The interest in Bitcoin trading illustrates how the reputation of the virtual currency has, after a rocky start, improved. Regulators are currently looking at whether many virtual currencies, including the second most widely used digital token, Ether, have been issued and traded in violation of securities regulations.