It has been another record week for Bitcoin and crypto-currencies alike. We have seen the dominant crypto-currency jump another 14% to US$7,240 according to Bitstamp.com.
Are we on the frontier of mass adoption?
Bitcoin has been making headlines for a multitude of reasons during the week.
As we have talked about previously mass-adoption may be still on the horizon as one of the major hurdles faced by crypto-currencies is how taxes are accepted, paid or recognised by local governments.
As stated earlier in the week by the Royal Bank of Australia "The use of bitcoin and other digital currencies as an actual method of payment remains relatively limited in Australia, as elsewhere,". In the same statement Tony Richards from the RBA said "From the Bank's payments policy mandate, digital currencies do not currently appear to raise any pressing regulatory issues.".
In other headlines the Chicago Mercantile Exchange announced it intends to offer bitcoin Futures derivative product subject to regulatory approval by the end of the year. CME Group CEO Terry Duffy highlighted the bitcoin futures contract option "will provide investors with transparency, price discovery and risk transfer capabilities.".
However not unlike margin lending products these derivatives can often exacerbate the risk and volatility of the asset in question. When talking about an already volatile asset such as bitcoin, investors would want to be confident with their position before entering such an agreement.
On top of these catalysts there appears to be an insatiable demand for crypto-currencies from South Korea as the Korean Yuan is taking the top spot on many exchanges globally. Bitcoin and the recently created offspring currency Bitcoin Cash (BCH) are being favoured and often at inflated prices in comparison to the global market. There is speculation that this demand is being partly driven by the bitcoin 'fork' scheduled for mid November where the underlying codebase may be edited once more.
The proposed 'fork' has again split the bitcoin community as some believe the changes could be unnecessarily jeopardising the integrity of the currency. Depending how the fork is implemented by the mining community there is potential that another crypto-currency may be born again from the process. Until the anticipated date of November 15 we can expect to see further volatility across the crypto-currency markets.
Is it to late to invest?
Whilst there is a general consensus that the outlook for bitcoin is increasingly positive as we move towards the end of the year and into 2018 events like the recent Bitcoin Gold fork and the codenamed 'Segwit2x' fork in mid November continue to introduce more volatility.
As with any market volatility there is also opportunity. If you remain unconvinced that crypto-currency has yet to earn a position in a diversified portfolio perhaps consider stocks such as Dicker Data Ltd (ASX: DDR) or Carsales.com Ltd (ASX: CAR).
