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BitBlotter: US Government Holds Bitcoin Auction Tomorrow; Chinese Bitcoin Exchange Launches Algorithmic Trading Tools

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The price of Bitcoin stablized in the $560 to $600 range this week.

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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 (CURRENCY:BTC) prices found some solid ground in the $560 to $600 range over the week, after the Bitcoin network faced a major vulnerability in the week prior. The "51% attack" threat, where one Bitcoin miner gains control of the Bitcoin network and has the ability to commit fraudulent activities (see last week's BitBlotter for a more in-depth explanation), became a hot topic after the Bitcoin mining pool GHash reached the critical 51% level of control on June 13. The day before, Bitcoin prices plummeted. But the fear was not sustained. Why? There's little economic incentive for a company like GHash to harm the Bitcoin network, since that in turn would devalue the Bitcoins GHash has mined.


Source: Bitcoincharts.com

Here's what's happened in the Bitcoin space over the past week.

The US government will auction off its $17 million worth of Bitcoin tomorrow. SecondMarket -- well-known for selling shares of Facebook (NASDAQ:FB), Zynga (NASDAQ:ZNGA), and Tesla (NASDAQ:TSLA) before those companies went public on its private company stock market -- has allowed qualified customers to join an aggregate bid. That means investors who aren't looking to bid on any one of the ten 3,000-Bitcoin tranches the US Marshals Service is selling can now participate with smaller bids. SecondMarket CEO and Founder Barry Silbert has been vocal since the US Marshal announced the sale, most recently going on Bloomberg to discuss his company's involvement in the auction. Other companies revealed to be participating the sale include Pantera Capital Management and Fortress Investment Group.

Canada has become the first country to directly regulate Bitcoin businesses. Once enforced, a new law passed by the Canadian parliament on Monday will regulate digital currency businesses as money services businesses (MSBs) and will impose strict record keeping and reporting requirements. The law not only targets Bitcoin businesses within Canada, but any Bitcoin businesses dealing with Canadians. The law, however, has been criticized as being too vague, and many questions on how these new rules will be enforced have yet to be answered.

Canada wasn't the only country to speak up about digital currency this week: British MP Douglas Carswell compared Bitcoin to an early mainstream personal computer release in 1982 called the ZX Spectrum; the Swiss federal government adopted a wait-and-see approach to Bitcoin; Japan's ruling party decided to hold off any regulation on Bitcoin for now; Bolivia's central bank banned Bitcoin; Russia said it is close to clarifying its Bitcoin policy; the deputy secretary of the People's Bank of China's Survey and Statistics department said that there is "significant space for Bitcoin to exist"; and the Treasury Minister of Jersey, a tiny, self-governing Island located in the English channel, has said he wants to turn his country into a pioneer in the use of digital currencies and has created a campaign to create the first "Bitcoin Isle."

Chinese Bitcoin exchange launches algorithmic trading. OKCoin, which is one of China's largest Bitcoin exchanges, has launched a suite of algorithmic trading tools including iceberg orders, modified time-weighted average price orders, and trigger orders. In a press release, OKCoin says it hopes to "boost the growth and maturity of Bitcoin trading" and appeal to the "sophisticated" investors involved in Bitcoin markets. Seems appealing, but as Michael J. Casey and Paul Vigna put it in a column for the Wall Street Journal: "...is this a technological advance that is destined to bring stability to the price of Bitcoin or merely a means for China's notoriously speculative investment community to double down its risky bets?"

US congressman throws his weight behind Bitcoin. Congressman Jared Polis, of Colorado's second district, has pledged to protect Bitcoin in Congress. He told Coindesk that he plans to use his powers in Congress to fight off any attempts by the US government to restrict the growth of Bitcoin and the start-up businesses that have built themselves around it.

Twitter: @brokawbrokaw
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The author of this article owns bitcoins.
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