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While bitcoin’s ability to deliver on its potential is still an open question, the number of Wall Street supporters for the technology grew this week, a development that was not lost in the headlines.
Wall Street’s new interest in bitcoin was the talk of many major publications, spurred by the news that major American stock market Nasdaq had licensed its technology to Noble Markets and further cemented by news the Bitcoin Investment Trust, the OTC Markets investment vehicle spearheaded by investor Barry Silbert, would finally open to retail investors.
Still, the week had its share of bitcoin bashing and odd announcements.
With this in mind, CoinDesk takes a look at the top bitcoin related headlines from across the globe.
Again with the tulips
You’d be forgiven for not knowing what the Dutch Tulip mania was. To be clear, it was a period of the Dutch Golden Age during which the contract prices for tulip bulbs reached extraordinarily high levels, only to suddenly collapse thereafter.
Why is this relevant to bitcoin you ask? Well, the currency floats on the open market, meaning its price (like all currencies) is continuously fluctuating in value.
This volatility is what led Sebastian Mallaby, a British-born journalist and the senior fellow for international economics at the Council on Foreign Relations, to compare the event with the digital currency.
Mallaby’s opinion was clear, “bitcoin is nuts”. What’s also clear is the fact that he sees is it more as a passing fad, rather than an underlying cultural shift.
Featured in Bloomberg‘s Market Makers, Mallaby defended what the bitcoin faithful may consider an ‘anachronistic’ stance, saying that the cryptocurrency was a hangover from the financial crisis and commented:
“I get why people are frustrated with the status quo, but I don’t get why they think that this other thing [bitcoin] is any better. The new idea now is, I know what, we’ll have something backed with nothing more than the credibility of an anonymous hacker.”
Despite his initial reservations, the journalist said that bitcoin could cheapen the electronic payments system and make them more efficient. “Visa, Mastercard and American Express, these guys are probably too powerful, so I am in favour of competition.”
“Digital things are cool, but I don’t get why people are so believing and so credulous”, he said, playfully adding: “Get the Winkelvoss brothers on the show, and ask them why I am crazy”.
Wall Street moves in
Mallaby might not be crazy, but he does seem a world apart from some big Wall Street players.
This week, we welcomed the news that major American stock exchange Nasdaq was entering into a first-of-its-kind partnership with Noble Markets, a New York-based bitcoin startup. The deal will see Noble use Nasdaq’s X-stream technology.
Fortune and The Wall Street Journal were just two of the publications that echoed the news. At the time of press, a Google news search for the terms “bitcoin” and “Nasdaq” brought up more than 90 articles.
Writing for The Wall Street Journal Michael J. Casey said:
“The agreement follows other Wall Street initiatives that could pave the way for financial institutions to own and trade digital currencies, which fans say have the potential to make the global financial system more efficient but which have also been marred by price fluctuations, investment scams and cybersecurity concerns.”
In his Fortune piece, Ben Geier, spoke about how bitcoin was getting help from a major financial player. But, would it be legitimate to claim that it was the other way round? Or could this be a team effort?
“Bitcoin has skyrocketed to national attention over the past few years as the leading player in the emerging digital currency space […] it earned a bad reputation early on for being a favoured currency of thsoe to buy and sell illegal goods online, but as the Nasdaq deal highlights, it’s become increasingly accepted as a legitimate financial product.”
This is certainly the latest crossover with traditional finance, but will it be the last?
Geier is right in saying that bitcoin is the leading player, but there’s a new – and perhaps over-enthusiastic – competitor in town.
This week saw the launch of LEOCoin, an altcoin created by UK-based Learning Enterprises Organisation. What’s puzzling, however, is the fact that media outlets such as CNBC saw it as an encroachment of bitcoin’s market, with “Bitcoin gets a rival – how will it fare?” as the chosen headline.
The company, notes CNBC, claims that it has “31,176 registered businesses ready to use LEOCoin, potentially making it the “second largest digital currency”.
To put these comments into perspective, LEOCoin is not the only altcoin trying to compete with bitcoin. Secondly, it is not even in-market – trading is due to start next week in a Hong Kong-based exchange.
Whether LEOCoin can push bitcoin out of the water remains to be seen. One thing is for certain though, it’s certainly trying.
CoinDesk contacted Learning Enterprise to request a list of merchants which had signed up to use its altcoin as well as LEOCoin’s white paper, but at the time of press no reply had been received.
Pete Rizzo contributed reporting.
Newspaper image via Shutterstock
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