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Policymakers and law enforcement should work with the Bitcoin community to realize the potential benefits of censorship-resistant moneyand to develop tools and techniques to address the technologys potential misuse.
August 21 -
Much must still be clarified about the new currencies and few have developed viable or secure business models that warrant defensive movement from the traditional banking sector just yet.
June 25 -
To survive, Bitcoin businesses will have to do more than "de-anonymize" their operations. They will also have to cope with the loss of the digital currencys most fundamental characteristic: irrevocability.
June 5
Editor's note: This post originally appeared on
Does bitcoin need a standardized three-character symbol? Only if it has a future as a tradeable instrument with a physical spot market and a robust derivatives market. I argue that bitcoin does indeed have such a future.
The
The Geneva-based
Although not necessary for market adoption, as the Bloomberg testing demonstrates, recognition of a bitcoin code by a market-based standards organization such as ISO would set the stage for increasing market depth and liquidity of bitcoin trading. That in turn would tend to reduce volatility and lead to some basic risk management and hedging strategies for merchants that accept bitcoin and maintain some balances in bitcoin (rather than immediately converting to a national fiat currency). Additionally, the enhanced trading liquidity provides more reliable outlets for exchanging bitcoin thereby facilitating overall consumer and merchant adoption.
Only four non-national units that do not require the backing of any third-party institution have ever made the list gold (XAU), silver (XAG), platinum (XPT), and palladium (XPD). Bitcoin as XBT would be the fifth. This would be an important milestone for the cryptographic money and for the
A lower court
Early indications are that bitcoin will soon be included in this 4217 standard under code symbol XBT. It is unlikely bitcoin would be listed under the abbreviation popular among its users, BTC. Thats because in the ISO standard, the first two alpha characters represent the country code whereas the "X" prefix is reserved for special, non-country-specific currencies.
Interestingly, XBT would be the first code to have more than 3 digits to the right of the decimal separator (
The global network of retail and wholesale foreign exchange dealers relies on the ISO 4217 code system. A robust spot market for bitcoin requires broad integration of bitcoin as a unit within existing electronic trading platforms. Platform market leaders like
The market depth and liquidity of this robust spot market is what would eventually underpin a derivatives market for bitcoin futures contracts and options. Without a deep spot market, there is no credible and reliable method to offset risk in derivative positions, which otherwise place too much emphasis on pure counterparty risk. Free market derivatives exchanges with sufficient and verifiable inventories evolve to manage the trade clearing and settlement process.
At that point, the jurisdictional race would be on for becoming the domicile with the world's deepest bitcoin futures exchange.
While not apparent at first, the significance of this XBT milestone would have a lasting impact on Bitcoin and its role in the global monetary system. No other non-State digital currency has ever achieved bitcoin's level of market penetration and overall market capitalization ($1.2 billion as of Aug. 19), which is even more remarkable considering that bitcoin is barely four and a half years old.
Jon Matonis is the executive director of the Bitcoin Foundation and an e-money researcher and crypto economist focused on expanding the circulation of nonpolitical digital currencies.
