Bitcoin receives some validation
The original founders and users of bitcoin saw the digital currency as a means of exchange that transcends big banks and big governments.
However, recent events suggest that the involvement of the banks and governments in bitcoin will eventually give the currency validation needed to succeed. To that end, Digital Asset Holdings recently hired the former head of JP Morgan's global commodity business, Blythe Masters, as chief executive officer. This startup company aims to be a venue for buyers and sellers of financial assets to meet and transact, converting currencies to bitcoin to cut the cost and time of settlement and making use of the decentralized "block chain" as a secure record of transactions.
In another sign that bitcoin is achieving some degree of critical mass, Goldman Sachs is one of two lead investors in a $50 million funding round for a bitcoin startup, Circle Internet Financial Ltd. This Boston-based company uses bitcoin-based systems to allow customers to digitally store money and transfer it to and from other people and merchants.
Other banks are also getting into the act, making investments in bitcoin-based companies. A researcher at the U.S. Federal Reserve recently published some positive comments on bitcoin: "people see in the long run that the supply of bitcoin is capped and they see its demand growing, so in the long run you have to expect that it might be a good investment vehicle."
Currency volatility via Bitcoin
Bitcoin has certainly had its ups and downs over recent years and the recent injection of validation by virtue of investment in bitcoin enterprises or those that wish to use bitcoin technology means that the price of bitcoin is likely to be volatile in the weeks, months and years to come.
As the chart illustrates, there has been a lot of volatility in the U.S. dollar versus bitcoin exchange rate. There is every reason to believe that this volatility will continue. When it comes to trading, volatility is a key ingredient for a successful market vehicle.
NADEX offers Bitcoin contracts
NADEX, the North American Derivatives Exchange, offers binary options on the U.S. dollar-bitcoin exchange rate. In other words, the options are based on the exchange rate and don’t involve owning actual bitcoins. This product is ideal for those who wish to position on this new market but don’t want to get involved in actually holding bitcoins themselves.
Binary options are a yes-no proposition and your maximum possible profit or loss is set when you enter the trade. Nadex offers daily and weekly binary options on bitcoin that expire at 3 PM ET, based on the traded prices just before expiration of the Tera Bitcoin Price Index.
NADEX binary options are amazing tools that will allow you to trade the value of bitcoin as the digital currency continues on the rocky road to wider acceptance.
Futures, options and swaps trading involve risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results.