First U.S. Bitcoin Exchange To Open Today

[engine]

Virtual currency is still popular news, and, although its value has dropped in recent weeks and months, each announcement such as this gives it credibility.

On Monday, the bitcoin startup Coinbase is set to open the first regulated bitcoin exchange based in the U.S., in a move that industry observers have long said could increase trust in the digital currency among consumers and perhaps bring more stability to the price of each unit of bitcoin.

The launch comes a few days after the Winklevoss twins, of Facebook notoriety, announced plans for their own U.S. exchange. Last week Coinbase announced a $75 million investment from investors including the New York Stock Exchange and Spanish bank BBVA.

The exchange will be open to individuals and institutional investors in the two dozen or so states in which Coinbase has received regulatory approval.First U.S. Bitcoin Exchange To Open Today [recode.net]

[Tonearm]

This will bring in institutional investors/traders.

[physics]

I have mixed feelings about this. On the one hand, it adds a presumably more secure way to exchange Bitcoin for USD and more credibility to Bitcoin itself. It, along with the Winklevoss exchange (when it goes live), could cause the much anticipated Bitcoin price rise (or the next Bitcoin bubble, take your pick). The real news here is that Wall St. is coming to Bitcoin at the same time that Bitcoin is coming to Wall St. Exciting times.

On the other hand, I'm kind of getting fed up with Bitcoin/USD exchanges because, when your coins are in one of these exchanges, your Bitcoins aren't really in your "possession" and are more vulnerable to theft. Basically, if Bitcoins are in an exchange, they're not your Bitcoins ... they belong to the exchange or whoever steals them. With Bitcoin, possession is 10/10ths of the law.

Also, Coinbase as a wallet has some questionable practices, such as keeping track of how you spend your coins and possibly banning your account based on what you spend your coins on.

I think veteran Bitcoin users know all of this, but newcomers will hop on the bandwagon of whatever service is getting press, and that's when Kaizer Sose (Mark Karples?) disappears with all the coins.

My advice is: use services like Coinbase to buy coins or sell coins if you want, but get your coins into and out of there as soon as possible, be aware that your coins are at risk, and don't spend your coins directly from there.

[J_RaD]

OH BOY, now the price of video cards is going to skyrocket again.

maybe we'll have another rash of shady coin mining hardware sites that will take orders but never deliver the hardware!

[Tonearm]

physics, it's a tradeoff between security, privacy, convenience, etc. Everyone has to make that evaluation for themselves (most without realizing they're making it).

J_RAD, not maybe.

[engine]

Security is an issue i've always had in the back of my mind.

Is the fact that there's now an exchange helping increase confidence that the currency is far more legitimate?

[Tonearm]

There have been exchanges for a long time but this one is insured, VC-backed by very high profile companies, and registered with the US federal government and many US states. The fact that it exists is probably increasing confidence in Bitcoin to some degree. I think many are expecting that it will allow institutional investors to enter the market which will itself increase confidence, decrease volatility, and cause the price to rise.

[J_RaD]

I hope not!

the last bubble sure did a number on a few card models, everyone was rushing to build 6 card SLI mining rigs.

hate to see their electricity bill!

[physics]

J_RaD - not to worry, you can't mine Bitcoin with GPUs anymore (and haven't been able to for a while), unless you want to flush your money down the toilet.
Anyone who's mining Bitcoin now is using ASICs (Application Specific Integrated Circuits) developed specifically for Bitcoin mining (the only function they perform is doing a double sha256 hash very quickly, many times). Since these are custom designed by start up companies typically, yes we have seen some pretty sketchy business practices.

You can blame the altcoins for any GPU shenanigans going forward. Many altcoins are designed to be ASIC resistant but can still be mined with a GPU.

Regarding electricity bills, yes that is a problem. Some are even turning to geothermal power (think a shipping container full of ASICs on a volcano in Iceland) and liquid immersed cooling systems.