In a potentially game-changing move for Bitcoin, eToro – the online social investment network with over 3 million traders – has announced that it will allow members to trade the digital-only currency.
Steps like this increase the liquidity of Bitcoin
Last year, pundits raised concerns about the survival of Bitcoin after the cryptocurrency nosedived after the closure of the notorious Silk Road, an online narcotics market where Bitcoin circulation kicked off.
eToro’s decision to allow its users to trade Bitcoin makes it more accessible to amateur traders. However, the decision to list Bitcoin as a stock rather than a currency exposes the risks involved with trading Bitcoin.
Last month, eToro was revealed to be on Tech City UK’s Future50 list of high-growth businesses.
Yonia Assia, CEO and founder of eToro pointed to the fact that both Bitcoin and eToro are upshots of the internet revolution.
eToro users can share, follow and copy other users’ trading habits and make investments with little knowledge of the stock market starting with as little as $10.
Both eToro and Bitcoin were born out of the social revolution.
It’s therefore very apt for us to take the lead in making Bitcoin – essentially the world’s first crowdsourced currency – available to the masses.
eToro will list Bitcoin as a stock rather than a currency which shows that the commercial validity of Bitcoin as a currency is still limited.
Last month, PayPal president David Marcus said he thought people were mistaken to see Bitcoin as a currency.
Though Bitcoin has received a lot of media attention, it is hardly used commercially.
The currency’s value is in the hand of speculators purely, resulting in extremely erratic prices.
eToro will execute Bitcoin orders four times each day, and will encourage users to consider Bitcoin as a long-term investment.
Tech analyst, Chris Woodcock commented:
One of the major hurdles that Bitcoin must overcome to be accepted as a legitimate currency is it’s high volatility, which makes it useful as a gambling instrument but not so much as a medium of exchange.
It is a similar reason why, for example, some emerging markets choose to peg their currencies to the USD, to reduce volatility.
eToro’s decision to trade Bitcoin could help even out price volatility but wont bring the stability for Bitcoin traders until the currency becomes established. According to Woodcock:
Steps like this increase the liquidity of Bitcoin in general which will help.
But what is really needed is for the value of commercial transactions to far outweigh the value of speculative or financial transactions.
The other side of the coin
Though Bitcoin is now widely known, its associations with the narcotics trade and the lack of regulation limit its commercial usage as a currency.
Apple has rejected various Bitcoin apps include Coinbase and Gliph, because there is no acknowledgement of the currency’s legality from any government.
Last year, 96,000 Bitcoins (worth around £60m) went missing from user wallets on a darkweb narcotics site, Sheep Marketplace. With no one but internet vigilantes to find the thief, it is unlikely that users will recover money stolen from their online wallets.
With little legitimacy as a currency, and no official body to prevent Bitcoin heists, its chances as a commercial currency at present are vanishingly small.
What lies ahead
Bitcoin’s future is down entirely to how widely it becomes accepted as a currency by the masses.
Its viability relies on proliferating Bitcoin usage, not just in niche online marketplaces, but on every high street and by major retailers.
Investing in Bitcoin is still a gamble, but eToro’s decision to list Bitcoin could be a step in the right direction to validating it as a legitimate currency.