December 22, 2015- In This Issue:

 

  

'Blockchain' feature could move bitcoin from the fringe to the mainstream
Finance has always been driven forward by technology, from the invention of double-entry bookkeeping by a Renaissance monk to the 20th-century quants who served up securitization, derivatives and high-speed trading. The next few years will be dominated by an attempt to reimagine money itself.
 
The European Union's highest court has recognized bitcoin as a currency. The Bank of England has praised the potential of the blockchain. Nasdaq has started to experiment with it, and more than two dozen global banks have banded together to forge common blockchain standards for financial services.
 
Money has typically been based on a tangible, scarce and portable substance-often gold-or on tokens backed by the full faith and credit of a government. Today, proponents of the digital currency called Bitcoin urge that money can be nothing but computer code housed in a distributed network of heavy-duty servers, many of them in reassuring places like Inner Mongolia.
Why the Bitcoin Price Chart Is Showing So Much Strength Today
Over the past three months, the Bitcoin price chart doesn't look much like the charts for other investments, many of which - especially commodities - are way down.

Bitcoin-price-chartSince Sept. 15, the Bitcoin price is up a stunning 93.5%, rising from $230 to about $445 today (Monday), according to the CoinDesk Bitcoin Price Index.

This sharp rise in the price of Bitcoin suggests the digital currency has recovered from the 2013 bubble and is poised for bigger gains in 2016.

Since hitting a 2015 low of $173.06 on Jan. 14, the Bitcoin price spent much of the year stabilizing between $200 and $300.


Three Major Banks Serious about Embracing Bitcoin
Since the beginning of 2015, an increasing number of banks and financial institutions have focused on the development of unique blockchain networks and distributed ledgers to create "decentralized" transaction and asset settlement systems.

Despite their interest in the blockchain technology, these banks have demonstrated a hostile view toward bitcoin, claiming that bitcoin is not viable as a currency or a medium of exchange.

"Governments like to control (currencies). They have central banks. They like to control the supply. They also generally like to know where it (currency) is and where it goes... They will not support major currencies that go around borders that they don't have control over. It's just not going to happen," said JPMorgan CEO Jamie Dixon.

Established financial organizations and banks participating in blockchain conferences like the R3 conference and leading programs such as blockchain innovation labs are trying to setup blockchain networks which can settle assets and clear transactions cost effectively and securely.

However, these banks are not interested in the decentralized nature of the blockchain technology nor its core purpose. Their interest derives from their stubbornness to admit that bitcoin is in an important and disruptive technology and that they have been wrong all along about its potential.
"Bitcoin is disruptive, and the reason it is disruptive is precisely why it is so difficult to swallow and swaddle in traditional investment terms," said California-based information security expert and author of Mastering Bitcoin Andreas Antonopoulos.
 
US regulators approve bitcoin derivatives venue
The US Commodity Futures Trading Commission has given its tentative approval for bitcoin options platform LedgerX to operate as a swap execution facility, the first of two hurdles it needs to clear in order to offer trading in cryptocurrency derivatives.

LedgerX has ambitions to offer both options trading and clearing for bitcoin, the digital currency that has made headlines for its boom in popularity since the financial crisis. Its senior management largely comprises former quantitative traders at Goldman Sachs, and it counts former CFTC chairman James Newsome as a non-executive director.

Temporary approval is a mechanism that the CFTC can use to allow a SEF - an electronic platform for trading standardised derivatives - to begin its operations while awaiting the results of a full review by the regulator. The regulator issued its notice late on September 10.

American Express Company, Others Threatened by Bitcoin; or is it the Other Way Round?
Payment processors are struggling to keep up with the fast-paced and revolutionary mode of payments springing up lately. More recently, giants such as Visa and American Express Company (NYSE:AXP) have found themselves impacted by the rising growth of Bitcoin. On the flipside, Bitcoin's flight could be faced with strong headwinds, as stakeholders view the companies as significantly well-grounded to allow new variants in the space.

What is Bitcoin?

Bitcoin is a virtual payment system that incorporates the idea of easy and efficient transactions for users. Users can transact directly without the need for a middleman.

Transactions are recorded in a ledger called a blockchain. A downside of the ledger system is that all recorded transactions are publicly available, which places sensitive user data at risk.

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2016 Disruptive Innovations You Didn't See Coming: Tesla Battery and Bitcoin Blockchain
With a new year only a couple of weeks away, it seems an opportune time to look at what disruptive innovations could shake up established players in 2016 and beyond.

Clayton Christensen, the Kim B. Clark Professor of Business Administration at Harvard Business School, coined the term "disruptive innovation" in a 1995 article he co-authored: "Disruptive Technologies: Catching the Wave." He explains it as an innovation that takes an expensive, complicated product, available only to the few, and makes it more affordable and accessible, so a much larger population has access to it.
 
Technological improvements can spark the innovation, as was the case when cell phones replaced laptops, which replaced desktop computers, which replaced expensive mainframes. But a new technology isn't always required. Two examples on Christensen's website are the discount retailers' impact on full-service department stores and retail medical clinics' challenge to traditional doctors' offices.

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How banks are trying squelch Bitcoin's momentum
There is no question that Bitcoin is causing a lot of worry and hand-wringing in the banking sector - and in national governments uncertain of how to regulate it. It is, after all, a highly disruptive technology - one of very few alternatives the world has seen in centuries to creating and handling money securely and efficiently outside of the government and the bank.

Bitcoin's implementation effectively creates decentralized trust, which is the main asset banks sell, and it challenges the money minting monopoly of national governments.

Regulators and players in the banking sector at first ignored Bitcoin. Many predicted its demise sooner rather than later. However, that has not happened yet. Instead, as time has gone by, it has become apparent that Bitcoin poses a danger to the status quo of money.