In the first issue of CRYPTO TREND, we introduced cryptocurrency (CC) and answered a few questions about this new market space. There is a lot of NEWS in this market every day. Here are some highlights that give us an idea of how new and interesting this market space is:
The world’s largest futures exchange to create a futures contract for bitcoins
Terry Duffy, President of the Chicago Mercantile Exchange (CME), said: “I think that in the second week of December our “bitcoin futures contract” will be closed for listing. Today you can’t sell bitcoins, so there’s only one way. that it could happen. You buy it or sell it to someone else. So you create a two-way market, I think it’s always much more efficient.”
CME plans to launch bitcoin futures by the end of the year pending regulatory scrutiny. If successful, this will give investors a viable way to open a “long” or “short” position on Bitcoin. Some exchange-traded fund providers have also requested bitcoin ETFs that track bitcoin futures contracts.
These developments can allow people to invest in cryptocurrency space without direct ownership of CC or the use of CC exchange services. Bitcoin futures can make digital assets more useful by allowing users and intermediaries to hedge their currency risks. This may increase the spread of cryptocurrency by traders who want to accept payments in bitcoins, but fear its unsustainable value. Institutional investors are also used to trading regulated futures contracts that do not suffer from money laundering problems.
The CME decision also suggests that bitcoin has become too big to ignore, as in the recent past the exchange seemed to exclude cryptocurrency futures. Bitcoin is almost everything everyone talks about with brokers and trading companies that have been hit by growing markets, but unusually quiet. If futures were to experience a boom on one exchange, it would be almost impossible to catch up with another exchange, such as CME, because scale and liquidity are important in derivative markets.
“You can’t ignore the fact that this story is increasingly becoming a story that’s not going anywhere,” Duffy told CNBC. He said there were “major companies” wanting to access bitcoins and there was “huge deferred demand” from customers. Duffy also believes that marketing for institutional traders can make bitcoin less volatile.
Japanese village to use cryptocurrency to raise capital to revive municipal education
The Japanese village of Nishiawakura is exploring the idea of holding a primary coin offering (ICO) to raise capital for the revival of municipal education. This is a completely new approach and they may seek support from the government or private investment. Several ICOs have serious problems, and many investors doubt that any new token is valuable, especially if the ICO turns out to be another joke or fraud. Bitcoin definitely wasn’t a joke.
FIRST COIN OFFER – (ICO)
We didn’t mention the ICO in the first issue of Crypto Trend, so let’s mention it now. Unlike an initial public offering (IPO), when a company has a real product or service for sale and it wants you to buy shares in their company, the ICO can belong to anyone who wants to start a new Blockchain project with the intention of: a new token on their channel. ICOs are not regulated and many of them are full simulations. However, a legitimate ICO can raise a lot of money to finance a new project and a new Blockchain network. For an ICO, it is typical to first generate a high token price and then soon return to reality. Since the ICO is relatively easy to hold, if you know the technology and have a few dollars, there were a lot of them, and today we have about 800 tokens in the game. All these tokens have names, all of them cryptocurrencies and with the exception of very famous tokens such as Bitcoin, Ethereum and Lightcoin, they are called alt-coins. Currently, Crypto Trend does not recommend participating in an ICO because the risks are extremely high.
As we mentioned in Issue 1, this market is currently the “Wild West” and we recommend caution. Some investors and early adoptees have made big profits in this market; however, many have lost many or all of them.
Until now, the cryptocurrency market has avoided many of the financial problems and pitfalls inherent in traditional government and banks, and Blockchain technology can solve many more problems.
A remarkable feature of Bitcoin is that its creators have chosen the finsuest amount of coins that can never be generated – 21 million, which means that this cryptocurrency is impossible to blow up. Governments can print as much money (fiat currency) as they want and blow up their currency to death.
The following articles will develop specific recommendations, but make no mistake: investing in this industry early on is only your most speculative capital, money that you can afford to lose.