Bitcoin Goes Live On The Futures Market; What Does This Mean?

Eight years ago a new worldwide digital currency or cryptocurrency was introduced to the world. Since its inception, what we now call Bitcoin, has polarized the world as it has risen exponentially in value. Think of Bitcoin like the Nike of cryptocurrency, it is the most well known and valuable of the cryptocurrencies. One does not need to look back very far to see how quickly Bitcoin has risen in value. At the top of 2017 Bitcoin was about $1000, By October it was $5,000 and just last week it rose above $20,000 before settling at about $17,000 on Thursday December 7th. But just what exactly is Bitcoin and why so much hype?

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We first need to dive in to the blockchain. The blockchain is where the power of all cryptocurrencies lie. The blockchain is the digital ledger for every transaction made between cryptocurrencies.This allows for the elimination of oversight by federal governments, making cryptocurrency transaction solely between sender and receiver. Each transaction is supposed to be safe as a result of sophisticated encryption to protect both parties in any particular deal.

Things get tricky with cryptocurrencies because of the fast jump in values as of late. This signals a bubble that is sure to burst, but the question is when? Do governments recognize Bitcoin and other cryptocurrencies as formidable alternatives to money currently in use? If so, and the bubble does burst, it could spell trouble for many countries. Amsterdam has welcomed Bitcoin with open arms as it accepted everywhere across the country. There are other questions that arise about the real security of Bitcoin after a reported $60 million was hacked and stolen through a cryptocurrency site last week.

On Sunday December 10th the Chicago Board Options Exchange will debut its first Bitcoin future contracts available at 5:00 pm. This is big news for the future of Bitcoin and the rest of the digital currency world. Now investors, most of which will be large firms are able to bet on the future of bitcoin. The first contracts will expire January 15, 2018. Let’s say you bet the value will rise at the conclusion of the contract, than you will make a profit. If it goes down, than you will lose money. As a result of Bitcoin’s volatility, investors must have 44% of it’s settlement price set aside for the bet.This first step in Bitcoin going mainstream is significant because other institutions may begin to roll out other Bitcoin products like ETF’s and bring more attention to the already hot currency.

Will you invest in Bitcoin or wait on the sideline? Me personally, I want to see how Bitcoin is affected by being traded on the CBOE now. BUT I will not sit on the sideline for much longer. Remember if you can not afford to lose it, do not invest it!