Bitcoin

With a shiny red ballon dog selling for $58 million, perhaps it was time to take a little profit in the equity exuberance. S&P futures are down 9 points from last night's close - which in the new normal is considerable (sadly) - with no macro data headlines this morning to spark a move, we will be watching JPY (which for now is rallying awkwardly) for signs of ignition. Meanwhile, as the USD flatlines (despite dispersion in FX), Bitcoin just toppped $400 for the first time ever - doubling in the last two weeks. Precious metals are up modestly; treasury yields are limping lower; and European equities (and sovereign bonds) are having another tough day.

• China Pledges Greater Role for Market in Economy (WSJ), China vows 'decisive' role for markets, results by 2020 (Reuters)
• China expected to cut growth target to 7% (FT)
• World Trade Center Tower Debuts in Manhattan Leasing Test (BBG)
• Job Gap Widens in Uneven Recovery (WSJ)
• Khamenei’s conglomerate thrived as sanctions squeezed Iran (Reuters)
• Swiss referendum on wages of high earners stirs debate (FT)
• Obama to Nominate Massad to Head CFTC (WSJ)
• Japan readies additional $30 billion for Fukushima clean-up (Reuters)
• Target Fills Its Cart With Amazon Ideas (WSJ)
• Shadow banks reap Fed rate reward (FT)

With Bitcoin ranging from $395 to $295 and back up to $370 in the last 24 hours, keeping an eye on where exactly the "selling" and "buying" is coming from may prove useful to some. As Liberty Blitzkrieg's Mike Krieger highlights, there is a site for that "FiatLeak.com," which uses data from the three major Bitcoin exchanges for which data is published, Mt. Gox, Bitstamp and BTC China to show you which countries and which currencies are moving in and out of bitcoin in real time.

Let’s use a broad guesstimate. One Bitcoin should theoretically be worth 700 ounces of gold or pretty close to $1,000,000, if we adjust existing supply of both to equal eachother. One BTC is currently worth 0.14 ounces of gold. That gives BTC an upside of 5000 times to equal the current price of gold, supply adjusted. Clearly, I and everyone else believes that Gold may well be much higher than here in the next 5 to 10 years, thus versus the US Dollar the upside for BTC could be multiples of that. Now, before you shake your head, simply go back to the chart of Gold versus the US Dollar and just recognise that it has risen 8750% since the 1920s. And just remember that Microsoft rose 61,000% from its IPO to it’s peak. Considering what we know about the world, I personally believe that Bitcoin may well explode in value as more and more people begin to use it. If you stuck $5,000 into Bitcoins and each Bitcoin did go up to a gold equivalent of let’s say, only 100 ounces of gold (not the potential fair value of 700), then at current prices your Bitcoin stash would be worth $3.3m.

Moments ago BitCoin hit $395, and will likely cross $400 in the immediate future.  So as more and more pile into the electronic currency, some due to ideological reasons, some simply to chase momentum, some out of disappointment with the manipulated gold price looking to park their savings in an alternative, non-fiat based currency, which a year ago traded 40 times lower, the attention of the government is finally starting to shift to what has been the best performing asset class in the past year, outperforming even the infamous Caracas stock market.

Which means one thing: Congressional hearings.

A little over a week ago, the world’s first Bitcoin ATM was launched to much fanfare in a Vancouver coffee shop called Waves Coffee, is off to a fast start, conducting $100,000 (Canadian) worth of transactions in its first eight days of operation. The rollout of Bitcoin ATMs is a huge positive for the network going forward. The difficulty of buying bitcoins has been a huge obstacle that has prevented more people from getting involved. These ATMs will change that paradigm entirely for the communities in which they are installed...

Having now tripled since August, Bitcoin's break above $300 ($324 highs) raises an important thought experiment - can a digital currency act as a global reserve currency?

The “authorities” can shut down website after website, but the tide of new technology and the human spirit itself cannot and will not be overcome. This is the hard lesson that statists and collectivists will be learning the hard way in the years to come, as decentralization and freedom stage a gigantic, peaceful revolution. A revolution that is already in full swing and gaining tremendous momentum with each passing day.

It took only a little over a month for Silk Road 2.0 to launch on the “dark web,” and there are already close to 500 illegal drug listings.

Bitcoin, an online-only currency scarcely four years old, is breaking out to new highs this week and now sports a total value of $2.8 billion.  Just a few months ago, it looked like this economic experiment as the world’s first decentralized technology-based form of money would crash and burn.  Since then, ConvergEx's Nick Colas points out that the U.S. government has shut down a large drug website which accepted bitcoins and promised further scrutiny of its uses; and omputer science experts have warned that bitcoin is neither especially private – one of its notional values – or especially well constructed.  The market doesn't seem to care, with incremental demand from U.S. citizens (through Second Market) and Chinese nationals leading the path higher. Could bitcoin still fail? Sure.  But, as Colas notes, its success to date speaks to how much the world is changing...

The last month has seen the USD price of Bitcoins double from $130 to $270 as a combination of wider acceptance (in China and even ebay/Paypal 'watching') and concerns over ongoing global money printing (delayed taper) have sent the cryptocurrency to new record highs. With most 'markets' now manipulated or repressed by government mandate, one wonders whether Bitcoin represents the last bastion of free market expression for concern at the fiat status quo? Or is it already 'broken'?

First it was China hinting that where Silk Road failed in monetizing, pardon the pun, BitCoin, the world's most populous nation could soon take the lead. Then, none other than private equity titan Fortress said it had great expectations for the digital currency. Now, it is eBay's turn to announce that it is preparing to expand the range of digital currencies it accepts, adding that "its payment unit PayPal may one day incorporate BitCoin." But not just yet. FT reports that according to eBay CEO John Donahoe, "digital currency is going to be a very powerful thing."

• US Blasts Germany's Economic Policies (WSJ)
• Citigroup, JPMorgan Said to Put Currency Dealers on Leave (BBG)
• Watchdog: Syria Destroys Chemical-Arms Equipment (WSJ)
• Kynikos Alumni Start Hedge Fund Betting on Declining Stocks (BBG)
• China state media calls for stern action after Tiananmen attack (RTRS)
• IMF warns of financial shock risk to Africa (FT)
• Insurers Oppose Obamacare Extension as Danger to Profits (BBG)
• BoJ content to ignore Fed tapering and go its own way (FT)
• U.S. attorney wants DOJ to take civil action against BofA (RTRS)
• NSA Fallout Hits AT&T's Ambitions In Europe (WSJ)

Not Tesla, Not Apple, Not Netflix...

• U.S. spy chiefs face Congress amid spying rift with Europe (Reuters)
• Deutsche Bank income hit by €1.2bn of legal provisions (FT)
• China's second tapering attempt fails: China central bank seeks to reassure money markets after rate spike (Reuters)
• UBS Takes Action Against Staff in Foreign-Exchange Probe (WSJ)
• Saudi Arabia frees man jailed for Mohammad tweets (Reuters)
• Tax Revolts Hit Hollande as Farmers, Soccer Clubs Protest (BBG)
• German parliament to meet over U.S. spying scandal (Reuters)
• Google Nears Smartwatch Launch (WSJ)
• How to end gridlock in DC? Pork projects (Reuters)
• UBS ordered to increase capital reserves (FT)

The world's first Bitcoin ATM will be ready for use this week at a coffee shop in Vancouver, Canada. Created by Las Vegas based Robocoin, the new ATM in Vancouver will allow users to turn bitcoins directly into Canadian dollars, or turn Canadian dollars into bitcoins. As The Telegraph reports, the ATM first scans the user's palm to ensure security and transfers are limited to CAD$3,000 per day. Until now, the currency existed only on the web but the introduction of these ATMs brings bitcoin-as-cash usage closer. The RoboCoin kiosks are expected to make the process of buying and selling Bitcoins much easier says Jordan Kelley, the company's chief executive. "Our goal is to make Bitcoin truly grandma-friendly," says Kelley. This is especially notable in light of President Obama asking Eric Schmidt if "Bitcoin is anything he has to worry about?"