Dino Londis (Invests.com) – If you believed that the future of bitcoin was doomed, events in the last week alone will change your mind.
If you’ve been even casually following the events surrounding the crypto-currency, you’d know that it has faced some existential challenges since its hockey stick rise in value in 2013. It rose from $20 to $1,200 almost overnight, then crashed to $350 even faster, leaving users to wonder where the bottom was.
What was pointing to an imminent collapse just a few months ago? Well a lot of disparate forces: the theft at Mt. Gox in Japan, China closing bitcoin exchanges, Russia declaring it illegal and the IRS saying it was taxable to name just a few.
Even more challenging for bitcoin is the compelling evidence of market manipulation from inside Mt. Gox . The block chain revealed that a purchasing bot named Willy may have manipulated the value of the currency, causing that meteoric rise in December 2013.
According to an anonymous post on WordPress, “a hacker gained access to the system or database, was able to assign himself accounts with any amount of USD at will, and just started buying and withdrawing away.” It could have been done externally, but it’s not likely.
But other than in the circles of the bitcoin community, that story hasn’t gained much traction. And in fact bitcoin has surged to $650.
Why? Big names are getting on board.
Amazon just filed a patent so, “Various types of digital cash, electronic money, or crypto-currency can be used, such as Bitcoins provided by the Bitcoin P2P Currency System.” Amazon is the largest online retailer and it may be eying the success of Overstock.com which began taking bitcoin earlier this year.
E-Bay’s CEO John Donahue is hinting that the company – which owns PayPal – sees a role for crypto currencies in future. He said, “I think there’s no doubt [that] digital currency is going to play an important role going forward. At PayPal, we’re going to have to integrate digital currencies into our wallet.”
At its developer conference, Apple – which had all but banned bitcoin – hinted that it will start accepting the currency.
Apple added a section to its developer guidelines regarding apps for virtual currencies. The guidelines state: “Apps may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions.” That doesn’t mean you’ll be able to buy Tiny Wings with bitcoin any time soon, but you may be able to make micro-transactions at a drug store with Bitcoin Wallet like you can with Android.
The trouble with a phone app allowing for purchases though, is that the drug store also needs to accept bitcoin. If the drug store accepts electronic purchases only in the form of debit/credit card, then the app will do no good. And in 2014 that is still the vast majority of cases.
But XAPO will soon launch the first bitcoin debit card which can be accepted anywhere debit cards are accepted because the XAPO will convert customers’ bitcoins and fund the vendors account in the local currency.
The XAPO debit card is does not operate without its own set of fees because the conversion process is backed by MasterCard. Still as competitors to XAPO come on line, we’ll see those fees drop.
Big financial players like Citi see it as a true threat saying, “The essential innovation in bitcoin is that it can eliminate the need for a ‘trusted intermediary’ when the principals in a transaction do not trust each other. There are many such transactions but money transfer/ credit/ debit card transactions stand out.”
The immediate value of a XAPO debit card is that it is simple enough for your mom to use and she can use it at a Mom & Pop grocer.
The Winkelvoss twins who have been vocal advocates of bitcoin have filed SEC documents to register the first bitcoin-related ETF – called the Winklevoss Bitcoin Trust. How would it work? A bitcoin ETF would allow investors to participate in the daily price movement of an index the twins created and call the Winkdex.
So just as the XAPO debit card would give the average customer access to spend bitcoins, the Winkelvoss Bitcoin Trust would give average investors access to bitcoin speculation.
Just half way through 2014 and the biggest merchants are entering the bitcoin conversation.