Bitcoin Bubble Tracker: January 17

By PYMNTS | January 16, 2014

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Bitcoin Bubble Tracker | Week 7

Frenzied doesn’t even begin to describe the week that was bitcoin this past week. So, we now have a few more places, as in legitimate places, to use bitcoin including the IRS! Does anyone else catch the irony of that? Here’s a currency that appeals to non-speculators because of its untraceability and untrackability and who just might also be the sort of peeps who like it because their business is, ahem, stuff (and sales from stuff) that they don’t want tracked and traced back to them.

Seems a bit of a stretch to think that these same peeps would be chomping at the bit to pay the tax man. Course, if enough people do it and the value of bitcoin does reach $100k as Andressen Horowitz suggests, then we’ve got ourselves a deficit reduction plan made in digital currency heaven. Banks are dipping their toes in the water around how to address compliance issues around crypto-currencies.

But, we’re starting to sense a bit of shift. The “smart money” seems to be taking a page from our book and separating the notion of digital currencies from bitcoin as the only digital currency prospect to invest in. Those conversations, along with the skeptical regulators worldwide, sort of threw a wet blanket on bitcoin last week.

Hope you enjoy, and if you have any news you’d like to share, please send it our way at contactus@pymnts.com.

Bubble Builders

It isn’t just Bitcoin fanatics spreading positive rumors about Bitcoin. Overstock.com saw $130,000 in payments from Bitcoin within the first 24 hours of acceptance. Bitcoin operators in India and China have begun to see a bit of relief and have resumed operations, however cautious.

January 16, 2014 – Snapcard enables bill pay and users may pay the IRS with Bitcoin.

January 16, 2014 – Chris Dixon, a partner with Andressen Horotwitz, says that the price of Bitcoin could jump as high as $100,000.

January 16, 2014 – The Sacramento Kings will be the first NBA team to accept Bitcoin for ticket and team gear purchases.

January 16, 2014 – The French Senate gathered virtual currency market participants and regulators for a hearing on how the country’s authority should approach Bitcoin. The rumors are that the tone of the meeting was generally positive.

January 15, 2014 – Wells Fargo is calling upon financial experts to discuss how to handle cryptocurrencies.

January 15, 2014 – Bitcoin operators in India have begun to cautiously resume operations.

January 14, 2014 – There may be a light at the end of the tunnel for Bitcoin regulation in China as Beijing authorities have said that individuals are free to trade the currency at their own risk.

January 14, 2014 – The Chicago Sun-Times is testing out a Bitcoin Paywall.

January 14, 2014 – BitPay released Bitcoin Payroll API for employees which may help to alleviate issues with reporting to the IRS.

January 14, 2014 – The Royal Canadian Mint is unveiling the next step in MintChip that is looking into a digital replacement for pocket change. MintChip is different than Bitcoin because there is a limit to funds that can be transferred and there is a cap on the account.

January 13, 2014 – Leading Bitcoin exchange, Coinbase, has strengthen the storage of Bitcoin and taken it offline.

January 13, 2014 – Overstock.com reports $130k in Bitcoin sales in 24 hours.

January 10, 2014 – Coinbase released a SDK to enable Bitcoin payments in Android apps.

January 10, 2014 – Verotel, the internet payment service provider for high-risk merchants, announced that it has started to accept Bitcoin payments with BitPay

Bubble Busters

Government regulators, in Europe this time, have started to express their distrust of Bitcoin and warned investors of the volatility of the cryptocurrency. If other European States join France, Sweden and now Belgium, the EBA may have to take a firm stance, making more than just a warning. And, while the CEO of PayPal expressed support of the concept of Bitcoin, he stopped short of extolling bitcoin’s virtures, per se.

January 16, 2014 – The National Bank of Belgium and the Belgium Financial Services and Markets Authority have issued a joint statement, warning investors about the pitfalls of investing in digital currencies.

January 15, 2014 – A member of the Teachta DÃ¡la, the lower house of Ireland’s Parliament, has urged fellow lawmakers and the parliamentary communications committee to investigate the effect of digital currencies on illicit financial transactions and called for more controls on payments made using digital currencies.

January 15, 2014 – The adult entertainment industry has taken a small step into Bitcoin acceptance when Wicked Pictures announces plans to accept Bitcoin in the future. Sure, it’s merchant acceptance, but it does nothing to really counter bitcoin as the currency of well, let’s just say, high risk merchant categories.

January 14, 2014 – A Ukranian mining pool known as GHash.io and run by CEX.io began to sell a set of shares in a high-tech operation with specialized hardware, then would be miners pay for their piece of computing power and collect the income. GHash.io grew so large that it controlled 45% of the Bitcoin network’s processing power and had to slow down in accepting miners to not execute a “51 percent attack”.

January 13, 2014 – PayPal CEO says that the company believes in the concept of Bitcoin. Note, the concept of bitcoin, not bitcoin itself.

January 10, 2014 – Bitcoin is not going to save the unbanked, as many of the unbanked are illiterate, put off by new technologies and struggle to adopt new technology.

January 10, 2014 – A report by the International Institute of Finance which represents more than 450 banks and financial institutions warned that Bitcoin’s value in other currencies is particularly volatile.