BitBlotter: Apple Allows Digital Currencies in Apps; Citi Says Bitcoin Could Supplant Traditional Payment Systems

By Alex Brokaw  JUN 05, 2014 11:28 AM

Bitcoin's price continues to rise.

 


Whether you're a Bitcoin fanatic or just beginning to familiarize yourself with the emerging space, BitBlotter gives you a weekly snapshot of all things digital currency.

Bitcoin topped off at $675 earlier this week as a rally in the digital currency extended. The price of a single Bitcoin on the world's largest exchange, Bitstamp, has risen roughly 80% over the past month. It's now formed a similar, albeit more volatile, holding pattern as it had last week at lower levels.


Source: Bitcoincharts.com

What drives the price to break out toward $700 or crash back down to $400- $500 range it had been trading in from late March to late May is anybody's guess. Although those who believe Bitcoin's price is determined purely by speculation should note a new study titled "What Are the Main Drivers of the Bitcoin Price?" The paper's author, Ladislav Kristoufek of the Institute of Economic Studies at Charles University in Prague, applied wavelet coherence analysis to examine Bitcoin market data and determined that "usage in trade, money supply, and price level" play a role in longer term Bitcoin prices. Kristoufek also found no evidence that Chinese markets influence US dollar markets. He also discovered asymmetrical price pressure during upswings and downswings, showing negative interest in Bitcoin had a greater effect on price than positive interest.

Here's what's been going on in the space over the past week.

Apple (NASDAQ:AAPL) will allow the transmission of digital currencies within iOS apps. The iPhone and iPad maker had removed apps like Blockchain.info from the App Store last year. Apple's new terms specify that only "approved" digital currencies will be allowed -- that means the verdict is still out for Bitcoin. Some have speculated that Apple will be introducing its own digital currency iMoney, which it filed a patent for last year.

Citigroup (NYSE:C) analysts said Bitcoin could supplant traditional payment systems. A new report published in Citigroup's corporate publication Citi GPS recognizes what many in the Bitcoin space have been saying for years: Bitcoin could eliminate the need for trusted third-party intermediaries. The report ultimately put forward the argument that Bitcoin's true value is in its blockchain technology, and that this technology should be separated from Bitcoin and tied to fiat currency and other assets.

Bitcoin mining giant BitFury announced a $20 million funding round. The San Francisco-based mining hardware manufacturer is seeking to increase production and expand its international presence. The funding round, which is one of the largest in the Bitcoin industry -- BitPay's $30 million Series A currently takes top prize -- included AD Investment Company, Queensbridge Venture Partners, and Binary Financial. Bitcoin mining is a process where powerful computers update Bitcoin's public transaction ledger in exchange for the chance to win newly created Bitcoins.

New regulation, analysis on Bitcoin comes in from around the world. Canada's Montreal Economic Institute published a paper titled "How Should Bitcoin Be Regulated?" which posited several more conditions had to be met, including concrete benefits for users and clear and uncomplicated taxation rules, in order for Bitcoin to meet its potential. The Central Bank of Argentina warned its citizens of the risks involved with digital currencies as compared to currencies backed by national governments like the Argentine peso. The Netherlands' central bank warned its financial institutions, not end users of digital currencies, to approach digital currencies carefully because of the high degree of anonymity involved. And in Switzerland, regulators blocked Swiss digital finance broker Bitcoin Suisse AG from launching a Zurich-based Bitcoin ATM.

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