April 8, 2016- In This Issue:

 

  
Rise of Internet Enables Bitcoin to Compete With Fiat, Researchers Find
A new research paper co-authored by an economics advisor at the Federal Reserve Bank of Philadelphia explores whether private currencies, such as digital currencies like bitcoin, can compete with government-issued alternatives.

"Can competition among privately issued fiat currencies such as Bitcoin or Ethereum work?" the paper, published on 3rd April, asks. "Only sometimes. To show this, we build a model of competition among privately issued fiat currencies."

The paper, co-authored by Jesús Fernández-Villaverde of the University of Pennsylvania and Philadelphia Fed researcher Daniel Sanches, seeks to unpack how private forms of money, including digital currencies, interact with one another in terms of price stability.

Among the notable arguments is that the rise of the Internet has resulted in an environment in which private monies like bitcoin can competitively emerge.

XML Gold Exchange Is Excited About The Future of Bitcoin
Any exchange platform that merges Bitcoin with more traditional online payment option would benefit from price volatility associated with digital currencies. However, the Bitcoin price has been relatively flat for the past few months, which begs the question whether or not there is a continued demand to exchange the digital currency against other payment solutions.

But XML Gold remains confident the demand for Bitcoin will continue to grow over the coming years, although sellers - in general - are not too keen on Bitcoin itself. Granted, they will accept the currency to attract more customers, but they will also look to convert it to a different form of money as soon as possible.

However, there are also those who will keep a portion of incoming transfers in Bitcoin as they want to benefit from future price increases if those will ever happen. Plus, some companies are quite happy about Bitcoin, such as Overstock.com for example. XML Gold feels more companies will take a page out of their book, and at last keep a fraction of every payment in Bitcoin.

"It is not always convenient to pay with bitcoins: you need to take your smartphone, look for an app, scan a QR code... This can push off even those clients who have bitcoins. There are various approaches to the try to make bitcoin payments faster, like sending a payment request to the client's smartphone and he only needs to press OK. But this isn't safe. Another way of payment is an NFC-chip placed in a smartphone or a plastic card."

Third Bitcoin ATM Comes to SF's Mission
Bitcoin, a digital "cryptocurrency," is now being dispensed at a local grocery on 17th and Mission streets that installed a bitcoin ATM - the third of its kind in the Mission District, and the first to appear at a market. 

"At first I thought, what the hell is this?" said the nephew of the market's owner, who gave his name as Raj. "I thought it was just going to be sitting there, but I've actually seen a couple of transactions happen since we first got it in a few weeks ago."

Two bitcoin ATMs are installed and open to the public at 20Mission Hive, the artist and merchant collective on 20th and Mission streets that was bought by bitcoin investor Jered Kenna last month.

Harry Patel, the owner of Mission Groceries, said he was approached by a representative of Coinsource, a company that is working to establish a national network of bitcoin ATMs and owns the Mission machine, about hosting the ATM at his store. "It's good for me, because it adds foot traffic," said Patel, who said he's seen "about 15 to 20" people use the ATM since it was installed earlier this month. The company makes private compensation arrangements for merchants hosting its machines.

Investment Firm Pegs Bitcoin Value at $655
Needham & Co. LLC, a New York City-based investment firm, has begun covering the Bitcoin Investment Trust (BIT), giving it a "buy" rating and a $62.00 price target (PT). Needham estimates the present per-bitcoin value at $655.

BIT is sponsored by Grayscale Investments, which is owned by Digital Currency Group, which invests in the blockchain and digital currency ecosystem. BIT is a private, open-ended trust that invests only in bitcoin. Hence, the value is based primarily on the bitcoin price.

Needham, according to a 39-page report explaining its "buy" at $62 PT, believes the price of bitcoin stands to benefit substantially from rising demand for its two main use cases as an alternative payments channel and as a "digital gold." The growing demand is driven by market trends such as expanding ecommerce, globalization, and by the pervasiveness of enabling technology like mobile phones.

Venture Capitalists Inject Nearly Half a Billion in Bitcoin throughout 2015
After the significant growth of venture capitalist funding of Bitcoin and blockchain companies in 2014, a lot of industry experts were wondering if this trend was sustainable in the years to come. Keeping in mind how numbers increased from US$80m in 2013, all the way to US$299m in 2014, such a spectacular growth would be hard to match for any industry.

But Bitcoin and blockchain technology startups managed to turn 2015 into an even more spectacular year, as the total amount of funds raised to US$474m. This goes to show venture capitalists have a keen interest in Bitcoin and its underpinning technology, despite fierce competition from Fintech entrepreneurs and startups all over the world.