The eye of big finance is finally turning towards cryptocurrency. Responding to requests from clients, Goldman Sachs has put out an early assessment of Bitcoin that says little about the bank’s official position on BTC investment.

So far, the financial services firm is neutral regarding the currency and is not actively recommending it to clients in its broad assessment of the currency and its impact for merchants and consumers. The bank’s take on Bitcoin attempts to tamp down on some of the hype around the currency.

The document, which we acquired through a source close to the bank, states: “2013 was the year when Bitcoin became a mainstay in mass media, to the extent that it has become hard to separate the effect of hype surrounding the currency from its fundamentals.”

Goldman also found that “there is no liquid derivative market for Bitcoin; nor a large market of B2B suppliers which companies can use for spending Bitcoin” and reiterates that Amazon has no current plants to accept Bitcoin. Both of these facts point to little traction in the BTC markets for big banks. Without the imprimatur of a big name, Goldman warns, the currency is a bit dangerous to offer to the serious investor.

Longtime followers of BTC will find nothing surprising in the document, but the fact that it exists at all – even in the guise of a discussion document – is an important step in mass acceptance.

Their investor recommendations are particularly interesting:

For investors, there are a number of ways to gain exposure to value creation in the Bitcoin ecosystem

— Speculation: Holding Bitcoin with the view that the currency will appreciate over time

— Mining: Purchase computers capable of mining Bitcon, and earn newly minted Bitcoins
— Enterprise: Provide value-add services to participants in the Bitcoin ecosystem, for a fee

Their analysis also splashes cold water on its rate of adoption, noting that “despite media coverage and current trading levels, bitcoin remains orders of magnitude away from widespread adoption.

“As a full suite of financial services build up around Bitcoin, there will be numerous (mostly commission- based) revenue opportunities investors can focus on, including providing exchanges, wallets, payment processing, lending, derivatives and other services,” the document notes.

Final analysis: The jury’s still out.

Underlying Value: While difficult to value the underlying currency, value of Bitcoin comes in its use as a payment method that removes credit card processing costs for merchants (especially important in micropayments) and adds anonymity, security and a natively digital experience to online transactions for consumers

* Merchant Use: For businesses today it is not yet feasible to hold Bitcoin given its volatility, and so merchants must convert into fiat currencies immediately (and incur commission charge)

— In the future when both hedging Bitcoin positions and committing to expenditure in Bitcoin is viable for merchants, this will help Bitcoin’s use as a store of value for merchants

Consumer Behavior: Currently there are more speculators in Bitcoin versus participants in commerce. As the currency begins to gain mainstream relevance as a payment method, this balance should shift. Overstock.com are joining Zynga and others who already take Bitcoin as a means of payment

Opportunity: We are currently in the first innings of a shift to natively digital transactions

— Bitcoin may emerge as the reigning standard, or others may compete for the crown

— Positioning investments in the companies striving to provide value-add services around cryptocurrencies will be key to participating in this cycle of value creation

It’s not much, but to BTC fans, it’s definitely a start.

Source: http://techcrunch.com/2014/02/21/goldman-bitcoin/

Originally posted 2014-02-22 03:05:15.

After the weekend’s 20 percent plunge and Monday’s flash crash, columnists and pundits discussed the idea that this is the end of bitcoin (BTC) and the cryptocurrency market. Bitcoiners scoffed at the notion because it’s a four-year-old currency and electronic payment system and there is still a lot of work to be done.

Yahoo! Finance, for instance, published an article titled “Bitcoin crashes again: Is it over for the cryptocurrency?” The Wall Street Journal also attempted to undermine the digital currency by pointing out its “fragility.” Essentially, the finance community believes volatility has returned after a one-month hiatus and that bitcoin is on the verge of collapse.

Despite the recent activity, there is still plenty of optimism. For everything that has transpired in the past week, the Bitcoin Foundation issued a statement in which it blamed Mt. Gox for the drop in price. The organization argued that one of the world’s largest exchange platforms should have prepared for its technical matters.

“This is something that cannot be corrected overnight,” the Bitcoin Foundation said. “This is a good reminder that Bitcoin is still young and experimental.”

Mt. Gox has yet to issue a response.

bitcoinTechnology enthusiasts in Silicon Valley have made it clear that they aren’t interested in bitcoin’s currency capabilities but rather its electronic payment technology, which could very well compete against the likes of Visa, MasterCard and PayPal. Does bitcoin have a bright technological future?

During the 7th annual Crunchies Awards in San Francisco, California on Monday, bitcoin was awarded the Best Technology Achievement. Since Satoshi wasn’t in attendance (or was he?), the Crunchie was given to everyone who has been involved in the process, the individuals who have maintained, mined and improved the bitcoin model.

However, the biggest news came Monday, which was larger than any award that could be bestowed upon bitcoin: Bill Gates stated on Reddit that he believes the digital currency industry could be immense, a game changer. When asked about bitcoin from a user, Gates responded with this:

“The foundation is involved in digital money but unlike Bitcoin it would not be anonymous digital money. In Kenya M-pesa is being used for almost half of all transactions. Digital money has low transaction costs which is great for the poor because they need to do financial transactions with small amounts of money. Over the next 5 years I think digital money will catch on in India and parts of Africa and help the poorest a lot.”

This is huge news from an individual who has been a pioneer of the past four decades, a man that has revolutionized the world. Whether or not it’s bitcoin or litecoin, dogecoin or RonPaulCoin, the founder of Microsoft believes digital currencies will change the world in the future, particularly in the poorest of nations. This is an important statement and endorsement of the cryptocurrency market.

Many bitcoiners have a wide range of reasons they want to hold virtual currency: a message towards the establishment, a measure to destroy the United States dollar, a way to make profit or a method to take part in a technological revolution. Whatever the case, an endorsement from Bill Gates is a sign that bitcoin might not just be a flash in a pan, a speculative asset whose bubble is on the verge of bursting. Instead, a piece of technology that will, yet again, help those who are most vulnerable in the world.

Source: http://www.pfhub.com/bitcoin-is-the-technology-of-the-future-bill-gates-may-agree-366/

Originally posted 2014-02-11 06:23:25.

Scotland has oil, it’s small and can adopt the same regulatory measures as Singapore or Switzerland. That’s everything it needs to eventually join the list of the richest nations of the world, Dominic Frisby, author of ‘Life After the State’, told RT.

“Scotland has the oil, it’s small, its population is less than 5 million and it has the same record. It has the opportunity to install the same regulatory and legislative [measures], to take the same options as Singapore or Switzerland. No other country in the world has the triple: the oil, regulatory issues and the fact that it is small,” Frisby told RT’s Max Keiser on his show, the Keiser Report.

While writing his book “Life After the State,” Frisby researched the list of the richest nations in the world based on GDP per capita. He explains that some of the states got onto the list because of their huge oil stocks, others due to their favorable regulatory legislation, but all of them have something in common – they are relatively small in size.

“In first place it’s Qatar, in second place it’s Luxemburg, and then you have the likes of Switzerland, Norway, Singapore, Hong Kong (that counts as a country on those lists), Brunei, etc. Some of these countries have got rich because of their oil. But in that case, why isn’t there Saudi Arabia on the list? Why isn’t Russia or Venezuela? Saudi Arabia is, by the way, 28th. Some of the countries have got there because of their oil, some because of the favorable legislation regulation, which means people either want to base themselves there or operate out of there, they are very tax-friendly. But these are regulatory and legislative options that are available to other countries in the world, they just haven’t been adopted,” Frisby said.

“The one thing all these countries on the list have in common is that they are small. They all have populations below 5 million, only Switzerland has above 7 million people, with the exception of the US which is at the 7th or 8th position. But in 1950-1970 the US topped that list, but as its state has grown and government has become more centralized, the US has slipped,” Frisby said.

Scotland’s First Minister Alex Salmond and Deputy First Minister Nicola Sturgeon pose for picture during a press conference to launch their regional government’s long-awaited “white paper” ahead of next year’s historic independence referendum, at Glasgow Science Centre in Glasgow, Scotland, on November 26, 2013. (AFP Photo / Andy Buchanan)

Scotland’s First Minister Alex Salmond and Deputy First Minister Nicola Sturgeon pose for picture during a press conference to launch their regional government’s long-awaited “white paper” ahead of next year’s historic independence referendum, at Glasgow Science Centre in Glasgow, Scotland, on November 26, 2013. (AFP Photo / Andy Buchanan)

Frisby argues that Scotland combines all the necessary characteristics to become one of the richest countries in the world. Moreover, Scotland has “a huge history in finance and banking,” he said.

Talking about the advantages and disadvantages of keeping the British pound, if Scotland votes for independence in a referendum in September, Frisby said that would be “the dumbest decision that Scotland will make.”

“It will be exactly the same dynamic of Southern Europe that Greece faces. You have interest rates set in Westminster that suit London and England in the same way the interest rates set in Brussels suit Germany, and then in the process Greece or Spain have been absolutely annihilated by that. The same thing could happen to Scotland. If it is going to be independent, be independent. They have to learn to live off their tax base as well,” Frisby told Max Keiser.

Frisby said that he favors crypto-currencies such as bitcoin, stating that “technology of electronic cash is infinitely superior” and it’s pretty obvious that that’s the way money is going.

“Here is Scotland with an opportunity to be the trailblazer and be the first government to use cryptocurrency. Well, Icelanders are already doing that now,” Frisby said.

Source: http://rt.com/op-edge/independent-scotland-to-be-rich-551/

Originally posted 2014-02-11 05:23:03.