The folks on Wall Street are dipping their toes into Bitcoin, and they're looking at creating a big-player Bitcoin stock market. It’s an interesting development for a rebel technology that prides itself on no central control.
That’s
because for the decade-plus that Bitcoin has been in existence—it was developed
in response to the 2008 financial crisis—it’s been mostly ignored, snubbed, and
even shut down by the big players on Wall Street.
Goldman
Sachs announced in May 2018 that it was opening a Bitcoin trading desk, but in
early August 2018, concurrent with the dramatic decline of Bitcoin prices, it
also announced that they weren't “sold” on the virtual currency.
Whether the
ETF from Fidelity takes off remains to be seen. This type of back-and-forth
with established players isn’t unusual for new technologies. After all, Goldman
Sachs was founded in 1869 and Fidelity in 1946—Bitcoin has only been around for
a little more than a decade. It’s normal for the big Wall Street players to be
skeptical until the value of the investment is proven.
Even with
the back and forth, there are major Wall Street players continuing to sniff
around the edges of Bitcoin, so it’s important to understand how that might
affect you as an investor. Wall Street's interest has the potential to affect
investors, Bitcoin regulations, and ICOs (Initial Coin Offerings).
Bitcoin
remains a high-risk investment. It’s very volatile and nearly completely
unregulated. Before you invest in anything—and especially things like
cryptocurrency—it’s important to understand the risk.
You’ll still need a cryptocurrency wallet like Bitstamp, Bitfinex, or Coinbase. Then you’ll need to attach a bank account to that wallet—they all used double authentication because that helps protect your security.
How Could
Wall Street Involvement Affect Bitcoin Regulation?
Bitcoin is a
strange beast in some ways. Because of blockchain technology, there have been
no fraudulent transactions in the entire history of Bitcoin. That’s quite
remarkable. Blockchain technology is entirely secure, and it’s one of the most
promising new developments in cryptocurrency.
But that
security doesn’t mean that cryptocurrencies won’t be facing regulations.
Regulators could very well bring securities laws that are already on the books
to cryptocurrency. Bitcoin may end up escaping regulations (they’re better at
following the rules), but Ether and Ripple (the second and third most traded
cryptocurrencies) look like prime targets for regulation.
With
cryptocurrency getting more attention all the time, it’s starting to move from
a rogue market into a more mature one. And that’s going to bring changes—so
it’s important to stay up to date and be prepared.
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