Bitcoin: From Most Popular Cryptocurrency To Legitimate Financial Asset

A lot of corporations don’t think so. Jamie Dimon, CEO of JPMorgan Chase, has previously referred to the currency as a “fraud” and until recently, CME, the world’s largest futures exchange, stated that the company would not be working with Bitcoin any time soon. We know it’s here to stay, and we know that it was the catalyst for the creation and implementation of hundreds of other popular virtual currencies.

We also know that it’s expensive. Trading at almost $7000 per coin makes it high on everyone’s wish list, but low on everyone’s affordability list. In addition, market volatility and unpredictability make would-be investors as bit hesitant to hedge their bets. Until now.

CME, in a seemingly immediate change of heart, announced on Tuesday that they are planning to introduce Bitcoin futures contracts by the end of the year. This is a great option for individuals who do not want to invest by buying actual Bitcoins. Investing in Bitcoin ETFs, which will likely be backed by futures, allows fractional investing, making it more affordable.

In addition, Bitcoin exchanges are prone to hacks. Because CME will allow for trading and settling in USD, investors will be able to trade without fear of their Bitcoins being compromised. Also, the company’s trading venue will eliminate counterparty risk. By lowering and removing some of the common risks of virtual trading, the amount of interested parties could potentially increase.

It is however important to note that there is a risk of the value of Bitcoins increasing exponentially. This would happen if aggressive investors inundate CME with their investments thereby pushing the price up of the cryptocurrency.

However, this risk should definitely not to deter CME in their efforts to make Bitcoin more mainstream in its applications. The virtual currency is here to stay, and if the numbers are anything to go by, its popularity will continue to soar. On average, approximately $350 million worth of Bitcoin transactions were completed on a daily basis over the last six months. This amount could even be as much as $800 million in recent weeks.

CME is not the only company hoping to hop onto the Bitcoin bandwagon. A number of banks, including Goldman Sachs Group Inc., are investigating trading with the currency. However, these banks may create obscure trading contracts. With CME, investors can look forward to clear and comprehensive contracts to foster safer investing.