Bitcoin Bonanza Rolls On

Matt Thalman - INO.com Contributor - ETFs


As the Bitcoin phenomenon rolls on, we continue to see new prospectuses for possible Bitcoin funds despite the Securities Exchange Commission denying the creation of one Bitcoin Exchange Traded Fund due to the lack of market surveillance and regulation. Oddly enough, the currency was started to give its user autonomy from governments and other regulatory agencies.

So the main reason why the currency grew in popularity is the reason why investors are finding it difficult to invest in the asset. Thus far two different proposed Exchange Traded Funds have been denied in the US, but it would appear the once denied Winklevoss Bitcoin ETF might have a chance of being approved the second time around. What is interesting is that the Winklevoss Twins were not the ones who filed the petition for reconsideration of their ETF, it was the Bats exchange, which the proposed ETF would trade on if approved. Continue reading "Bitcoin Bonanza Rolls On"

Bitcoin ETF Rejected

Matt Thalman - INO.com Contributor - ETFs


Late Friday afternoon the Securities and Exchange Commission released their ruling on the proposed Winklevoss Bitcoin Trust, what would have been the first Bitcoin ETF. Bitcoin's had traded as high as $1,300 per coin on Friday prior to the announcement from the SEC, but following the ruling, the price had fallen more than 20% at one point, leveling off down 10%.

What Happened?

The Security and Exchange Commission released their ruling denying the proposed Bitcoin ETF and within the ruling, the SEC's reasoning for denying the application follows below.

"As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated."

In plain English the SEC is saying the Bitcoin ETF was rejected because the underlying commodity, in this case Bitcoin, needs to be regulated, which that’s the whole purpose of Bitcoin, it's not regulated. Bitcoin was designed to be unregulated, with no ties to banking institutions or governments. With relationships with either of those entities, the currency therefore is an unregulated form of investment. The reason this matters is because at the end of the day, the SEC is required to do its best at protecting the general investing public from fraudulent and easily manipulated investments. And because Bitcoin is unregulated in some terms, the SEC can't allow the ETF. Continue reading "Bitcoin ETF Rejected"

Bitcoin Is NOT The New Gold

Lior Alkalay - INO.com Contributor


Last week, the price of one Bitcoin surged above $1,227, the price of an ounce of Gold. And the headlines soon followed, screaming, “Bitcoin worth more than Gold.” The implication, of course, that Bitcoin is the new Gold in the world. In reality, however, Bitcoin is hardly the “new” Gold, real or digital.

In arguing for Bitcoin’s allure, enthusiasts tend to fall back on one singular point; like real Gold, there is but a finite number of Bitcoin that could be mined (21 million to be exact). But that is hardly the case. Bitcoin’s allure is not a factor of its rarity, but rather its ecosystem. That ecosystem enables financial transactions between two parties, both anonymously, and at very low costs. The fact is that that ecosystem could be easily replicated with an alternative to Bitcoin. So, while the number of Bitcoins we can mine is limited, the amount of alternative ecosystems that could emerge for Bitcoin wannabes is not. In fact, even today, there are already 12 different alternatives to Bitcoin, including Litecoin, Peercoin and Primecoin.

However, there is one area in which Gold and Bitcoin have something in common and, unfortunately, for Bitcoin bulls, it is in their vulnerability rather than strength. Both Bitcoin and Gold do not pay interest like a currency, nor a dividend like a stock. And when interest rates rise the allure of Bitcoin and Gold quickly fades. Because, simply put, there are better alternatives. Continue reading "Bitcoin Is NOT The New Gold"

If The Bitcoin ETF Is Approved, Should You Buy It?

Matt Thalman - INO.com Contributor - ETFs


On March 11th, the Securities and Exchange Commission will release its ruling on whether or not a Bitcoin ETF will be approved. Back in 2013 the Winklevoss twins, you may remember them from the story on how Facebook Inc. (NASDAQ:FB) was started, filed for their Bitcoin Trust ETF to be approved. Others have been submitted since then, but that ETF will be the first to be approved or denied by the SEC.

Some experts believe the Bitcoin ecosystem could attract as much as $300 million within the first week of the ETF being approved. That sort of cash flow would certainly help the currency move higher from its current $950 per coin value. But, with all the secrecy surrounding the cryptocurrency is this something you want to be involved in from either owning Bitcoins outright or from the convenience of an ETF? Continue reading "If The Bitcoin ETF Is Approved, Should You Buy It?"