Since launching in 2009, Bitcoin has experienced a brief but turbulent history. Designed as a thoroughly regulated system of fund transfers, it essentially became the world’s first major attempt at a universal digital currency. The idea was that people around the world would acquire Bitcoin through currency transactions and a payment processing practice termed “mining,” and then use the Bitcoin to conduct transactions online, and eventually in person. For many, though, this very idea was worth little more than a laugh.
Some Bitcoin advocates scoff at those who don’t take the currency seriously because they assume that critics simply don’t understand it. However, while the software behind Bitcoin and the core concept of a universal digital currency are undoubtedly impressive, the idea of it becoming a legitimate and investable resource, or a functional everyday resource has always sounded somewhat far-fetched.
Despite this ongoing debate, there was a time when the value of Bitcoin was astronomically high for an idea that essentially came out of nowhere. In looking at the currency’s recent activity, it’s clear that the value is now trading at approximately $235 for a unit, which is a relatively low number. However, the same chart shows that the price was closer to $1000 back in 2013. Naturally, the drop-off is less than ideal for a resource attempting to find its way and form a lasting influence in world financial markets. At the same time, though, its former peak is an indication of just how much activity and interest Bitcoin has the potential to generate among investors.
Meanwhile, Bitcoin has also gained a more prominent place in everyday life, entertainment, and pop culture in the last few years. There is an entire website devoted to helping users spend their Bitcoin stashes on various attractions and promotions while vacationing in Las Vegas. And perhaps even more interestingly, the NBA’s Sacramento Kings have even made strides toward accepting in-person Bitcoin payments at stadium concession stands. The Kings were the first pro sports team to adopt this sort of practice. It was part of an effort to “use the sports franchise as a social network to push the technology envelope,” according to team owner Vivek Ranadive. That’s a bit of a strange ambition, but it nevertheless helped to lead Bitcoin into previously uncharted waters.
Well, it now appears as if the same potential realized in early Bitcoin markets and by independent companies and innovators has been formally recognized by the New York Stock Exchange. The NYSE launched a Bitcoin index last week (NYXBT) as a means of introducing a monitoring system for interested customers. The article notes that this decision follows an earlier investment by the NYSE in Coinbase, a leading Bitcoin exchange start-up. It appears that the NYSE will use the values and data from Coinbase to provide an accurate daily value of one Bitcoin in U.S. Dollars.
To some extent, this development is nothing new in that it doesn’t represent a shift in how Bitcoin is acquired and traded, or how broad its reach is. On those fronts, little has changed of late; various exchange platforms already exist for the buying and selling of Bitcoin, and the NYSE’s decision to create the NYXBT has no bearing on these platforms or the activity they will generate among consumers. Rather, the introduction of a formal Bitcoin tracking index is simply an indication of a shifting public mindset toward the digital currency, and perhaps a sign that we ought to be taking it more seriously than many of us do.
NYSE president Thomas Farley said that “Bitcoin values are quickly becoming a data point that our customers want to follow as they consider transacting, trading or investing with this emerging asset class.” That’s a fairly powerful endorsement from a very influential source, and it’s arguably the biggest indication in years that Bitcoin could soon be ready for the mainstream.
Whether or not it can approach anything close to its 2013 peak in value any time soon remains to be seen. However, the NYSE’s gamble on Bitcoin probably means that the digital currency is here to stay, and that those of us who have thought of it as a fleeting joke may have to reconsider our positions!