Feb 27, 2014

Bitcoin’s rollercoaster ride: Aussie brokers see the positives

Bitcoin has endured a tumultuous week, sending jitters through digital economic markets. Rose Powell of StartUp Smart talks to the Australian brokers.


After months of rising value and hype, the world’s first digital only currency, bitcoin, has weathered a tumultuous week, with a virus stealing thousands of coins and major exchange Mt Gox disappearing this week. The Tokyo-based bitcoin exchange halted trading on Tuesday. Shortly afterwards the homepage was wiped. In a statement emailed to Reuters, chief executive Mark Karpeles said:
"We should have an official announcement ready soon-ish. We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties."
Market strategist Evan Lucas from IG Markets told Crikey sister publication StartUp Smart an estimated US$350 million to $400 million had been stolen from the platform. He says the emerging digital currency sector is living through a bit of an "I told you so moment". "What’s happened is very sad for those involved, but given how the system works, it was always open to getting hacked. It’s disappointing, but it’s not unexpected because of the situation," Lucas said. George Samman is the co-founder of Sydney-based bitcoin derivatives trading platform, which has managed over $42 million in broker transactions since launching in May 2013. He says while no one knows what’s going on with Mt Gox, his team has been weaning themselves off the exchange for months. "Getting rid of a big player that has been a detriment to the bitcoin industry is good. It’ll strengthen the exchanges and liquidity of the marketplace," he said. halted trading yesterday and expects to be out of action for about a week while it integrates with other exchanges. "It'll hit our bottom line," Samman said. "But we’re in a strong cash position, and integrating with other exchanges was always the plan. We’ve just had to speed up the timeline dramatically." Despite this, Samman is bullish about the future of bitcoin. "It’s not over," he said. "I think this is going to make it even stronger, as this hasn’t taken us out. Prices are still pretty stable at around 500 [US dollars per bitcoin]. As an entrepreneur in a field like this, you’ve got to think the best and be prepared for the worst.” There are over 140 bitcoin start-ups listed on leading investment aggregator AngelList. Local crowdsourced design marketplace 99designs hosted over 30 logo design competitions for new bitcoin companies in February alone. Early stage investment fund Blackbird Ventures backed Melbourne-based bitcoin exchange and payment system Coinjar with $500,000 (its investment maximum) in December. At the time, investment round leader Niki Scevak told StartUp Smart he expected the industry would evolve to manage the ongoing threat: "This is very, very early on in the life of bitcoin. The majority chances are that bitcoin start-up investments will amount to nothing. A lot of bitcoin companies that have achieved success have been hacked, so that’s a big risk because once you’re hacked you’re dead because the trust is eroded." Both Scevak and CoinJar founder Asher Tan say they would welcome regulation of the digital currency, a position with which Lucas agrees. "In the future there will be a digital currency. I have little doubt about that. But the issue now is where it comes from, and who runs it," Lucas said. "All of the crackdowns from governments such as Russia will certainly hurt it, and now the question is really urgent about addressing how capable peer to peer digital currencies are of self-policing." He adds it’s likely to be a digital currency regulated by an organisation like the World Bank, with some fraud protection, that will be the one that takes off and reaches the mainstream. *This article was originally published at StartUp Smart

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2 thoughts on “Bitcoin’s rollercoaster ride: Aussie brokers see the positives

  1. MJPC

    What did the world learn from the causes of the GFC…nothing.
    “how capable peer to peer digital currencies are of self-policing”, not if greed comes into play. Cut government regulation (or have none at all) and welcome to anarchy.

  2. Kevin_T

    Are and the same company? They appear to both be represented by George Samman in the above article (in adjoining paragraphs).

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