Category Archives: Bitcoin

Prosecutors in Norway are demanding three darknet drug dealers to pay the penalty in Bitcoin. Read more...

Bitcoin has been portrayed as the most favored currency among the criminal kind. Thanks to increased usage of the likes of Bitcoin among the darknet marketplaces. However, the pseudonymous nature of Bitcoin leads to criminals getting caught on a regular basis. But usually, those who face the trial usually end up having their cryptocurrencies, devices confiscated, sentenced to jail time with or without a monetary penalty slapped on them.

The penalties paid by the dark net drug or weapons dealer caught in the act is usually in the form of fiat currency, but not in Norway. Recently, reports have emerged that the Norwegian prosecutors are demanding three convicts, charged with dealing drugs on dark web marketplaces, including the Silk Road to repay the profits in Bitcoin. If the court does allow the prosecutors to have it their way, then the dealers will be forced to pay about 120 bitcoins, which is worth around $140,000. But it doesnt end here. They are also demanding 3.1 million in the countrys native fiat currency, Norwegian Kroner as well.

The case dates back to the Silk Road days, and the three men were arrested way back in June 2015 for running an online drug distribution ring. The arrests were the result of a 2-year long investigation by Norways law enforcement authorities along with other international investigators. The arrests which took place in Oslo, Norway, also resulted in the seizure of a considerable amount of narcotics, computers and even an indoor marijuana farm.

News articles on media outlets state the prosecution saying that they have enough evidence for the sale in Bitcoins to convict the drug-dealing trio. However, the demand for profit repayment in Bitcoin is heard for the first time in the Norwegian judicial system. The demand made by prosecutors could soon set a precedent for other courts within and beyond the region to adopt a similar practice.

The governments interest in seeking Bitcoin payment, which is not even a recognized currency in Norway also sets a milestone in Bitcoins timeline, pushing it one step closer to recognition as a mainstream currency.

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Norway Asks Online Drug Dealers to Pay up, in Bitcoin - newsBTC

Government officials have always been keen on linking bitcoin to money laundering and terrorist financing. Even though none of those claims have ever been proven or verified, very few people seemed to make a fuss about it. A new UK report into this matter goes to show there is no reason to think bitcoin is involved in these malicious schemes by any means.

Ever since bitcoin started gaining popularity, claims have been made as to how this anonymous currency facilitates terrorist financing. That has always been a very disturbing claim, even though there was never any solid evidence to back up these claims by any means. In fact, this particular UK report goes to show how cryptocurrency is not used by terrorists, and most likely never will.

It is evident government officials overreact when they are greeted with new and innovative technologies. Particularly when these innovations take place in the financial sector. Terrorist financing has been a thorn in the side of government officials for quite some time now, yet they are no step closer to finding out where the money is coming from. Blaming bitcoin and other cryptocurrencies for this issue is a logical conclusion, even though officials are incapable of providing this is happening.

These claims started to become more apparent earlier in 2017. Indonesias AML and CTF agency claimed they uncovered a bitcoin transaction between various members of Daesh. While it is not unthinkable some of these users indeed own bitcoin, they are as likely to own Euros, US Dollars, and other national currencies. For some reason, no one seems to make a problem of those facts, yet the government is focusing a lot of resources to making bitcoin look bad.

Additionally, the EU Parliament is looking to pass a new legislation that will bring exchanges under stricter AML and CTF regulation. All bitcoin exchanges already conduct user identity verification procedures, thus it is a bit strange to think about what could happen in the future. Do keep in mind this new regulation will not prevent people from using cryptocurrencies, yet it will allow centralized companies to increase their due diligence measures.

While these concerns can somewhat be justified, the truth of the matter is how terrorist financing via cryptocurrencies is not a big threat right now. Creating a measured response should be the first priority, rather than making decisions that would hinder growth for bitcoin and other cryptocurrencies. Most of the reports regarding bitcoin and terrorist financing are speculative and unspecific at best. In parallel, terrorists are embracing digitization at an accelerated pace, and cryptocurrencies could become a favorable tool for terrorist organizations in the future.

Interestingly enough, the government is most concerned about mixers and tumblers. These platforms exist to provide more anonymity to bitcoin users, as they clean funds in the process. That said, the most popular funding methods for terrorist activities remain accessible financial services. Student loans, public benefits, cash, and even bank transfers through corrupt institutions are among the most commonly used methods. Traditional finance poses a far bigger threat to funding terrorist activity than bitcoin ever will, that much is certain.

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Bitcoin Does Not Facilitate Terrorist Financing, Report Says - The Merkle

Moreover, people need to keep in mind not every altcoin is a bitcoin competitor.

No one can deny the cryptocurrency is thriving right now. Some people want to see more money flow to bitcoin and other currencies at a quicker pace, though. One interesting trend is how bitcoins percentage of the total cryptocurrency market cap is going downhill. Right now, that percentage sits close to 81%, whereas it used to be over 95% in January of 2014.

For the longest time, bitcoin has been the dominant cryptocurrency. That is only normal, as it is the only one to gain some market traction. However, several altcoins have proven to be a favorite among speculators and traders as well. Albeit very few of these currencies have use cases, they are perfect vehicles for value speculation. As a result, some money is flowing from bitcoin into the altcoin sector on a regular basis.

This trend is not alarmed by any means. In fact, diversification of a cryptocurrency portfolio is a good thing. While bitcoin still represents the vast majority of total market capitalization of all cryptocurrencies, its share is dropped. In fact, it has been dropping for quite some time now. Back in January of 2014, bitcoin represented 96% of the total cryptocurrency market cap. Fast forward that day, and that number has shrunk to just 84%. Not a big change according to some people, yet it goes to show something is changing behind the scenes.

Looking at the charts, bitcoin has gone through this cycle before. Its market cap percentage dropped below 80% in January of 2015, June of 2016 and Late 2016 as well. Bitcoin rebounds successfully every time, though, and it is expected this pattern will repeat itself once again. After all, there is no reason to ditch bitcoin holdings In favor of any altcoin right now, even though some investments may look appealing.

One contributing factor to the demise of bitcoin is the high transaction fee problem. With fees increasing rapidly, altcoins are becoming more popular due to lower costs. Then again, none of these networks have been tested to handle the transaction volume bitcoin processes every day. Until that happens, it is impossible to tell which currency can keep the costs down in the end. Reducing bitcoins fees would be a good start, though, that much is certain.

Moreover, people need to keep in mind not every altcoin is a bitcoin competitor. Ethereum, for example, is not positioned to be a currency like bitcoin. Neither is Ripple, as it is a competing technology that appeals to banks. Dash and Monero can compete with bitcoin, although the anonymity features may put off some people. Only time will tell how these percentages evolve over the next few months, though.

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Bitcoin's Market Cap Percentage Continues To Shrink Due To Mounting Transaction Fees - newsBTC

Buying and selling bitcoin and cryptocurrency in a decentralized manner becomes more important and popular. Peer-to-peer exchange platforms have a big role to play in this regard. Moreover, the number of p2p cryptocurrency exchanges continues to increase every year. Below are some of the top P2P bitcoin trading platforms people may want to take a closer look at.

Although the OpenBitcoinsplatform is not available for actual peer-to-peer trading just yet, it is good to see more of these services being developed as we speak. Users will be given access to a P2P trading environment where escrow protection is offered for every single transaction. Doing so minimizes the risks for buyers and sellers. Moreover, the platform will not charge a commission or fee for trading activity. It is unclear when OpenBitcoins will launch, but the platform offers a lot of promise.

Creating a decentralized bitcoin exchange is not an easy feat by any means. The Coinffeine team set out to create an open source peer-to-peer bitcoin exchange quite some time ago, and launched their platform a while ago. As one would come to expect, users will always be in control of their funds at any point during the trade. Additionally, the peer-to-peer aspect of Coinffeine ensures personal information disclosure is kept to a bare minimum.

What matters even more to most people is how there will be far less operational costs involved with running a peer-to-peer platform. Right now, Coinffeine charges no fees whatsoever, although that situation may change over time. The only downside to platforms like these is how they may struggle for liquidity. If no one uses Coinffeine to execute trades, finding a buyer or seller can be a painstaking process. Moreover, users need to download the software to access the platform, which may be a technical hurdle few people are willing to tackle.

One of the peer-to-peer bitcoin trading platforms getting a lot of attention as of late goes by the name of BitSquare. This open-source desktop application allows users to buy and sell bitcoin and other cryptocurrencies as they see fit. Although installing the proprietary software may be a stretch too far for most novice users, it is well worth looking into P2P exchange opportunities. Moreover, BitSquare has quite a novice-friendly user interface without too many bells and whistles.

One thing that makes BitSquare so appealing is how there is no registration process involved, and there is no central point of failure. Moreover, the BitSquare software never holds onto users funds and does not collect any personal information in the process. It is also one of the most convenient pieces of peer-to-peer bitcoin trading software to be created so far.

LocalBitcoins is the go-to trading platform for peer-to-peer bitcoin trades. Although this platform is not decentralized, it goes to show centralized platforms can benefit P2P trading activity as well. In fact, it appears LocalBitcoins is seeing more volume every week, as new records are set on a very regular basis. With markets available all over the world, LocalBitcoins is the most popular peer-to-peer bitcoin trading platform without question.

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Top 4 Peer-to-peer Bitcoin Trading Platforms - The Merkle

Bitcoin Unlimited, the new grassroots client, reached 39.6% over a 24 hour period earlier this week, its highest ever. Now standing at more than 30% over the longer one week period.

Bitcoin Unlimited reaches almost 40% network share over the past 24 hours image from nodecounter

The new client aims to increase bitcoins transaction capacity to meet growing demand and reduce fees as they now average $1 per transaction. It further aims to return more predictable transaction times which currently can be delayed from hours to days.

It has found much support from miners with Antpool, bitcoins biggest mining pool, switching to Bitcoin Unlimited on Tuesday. The decision was somewhat surprising, but discussions of a flag day soft fork to force segwit appears to have incentivized the miner to move.

There are now in total ten mining pools on Bitcoin Unlimited, with just one further pool sufficient to allow for near 50% temporary share due to variance. One such pool is to be expected as Chandler Guo, a digital currencies miner, is to open a new pool that will mine on Bitcoin Unlimited.

It is not known if any business is running the new client, but Blockchain.info, Coinbase, Bitpay, Bitgo and many other bitcoin businesses, have advocated for bigger blocks in general and have complained regarding delays.

Critics say Bitcoin Unlimited gives power to miners regarding blocksize decisions and its emergent consensus system is untested. Supporters argue that all nodes decide on the blocksize and the emergent consensus system has been live tested during the increase of the soft limit from 250kb to 500kb to 750kb and then 1MB.

There are arguments on whether the system allows for re-organization with Charlie Lee, Litecoins Founder and Coinbase employee, stating that if at any point, the [Bitcoin Core] chain grows longer (in PoW) than the [Bitcoin Unlimited] chain, the BU client will reorg to the [Bitcoin Core] chain.

ViaBTCs founder, Haipo Yang, has suggested that miners wait for Bitcoin Unlimited to reach 75% of the networks hardware share to avoid a chain split on the same proof of work chain.

There is, however, a community split. Thus, blockstream employees might PoW fork the chain, but BTC.TOPs founder, Jiang Zhuoer, has stated that $100 million has been set aside to attack any minority chain and make it inoperational.

Any upgrade to bigger blocks is likely to be gradual to give businesses and node operators considerable time. As the client is now nearing 30% share over 1,000 blocks with variance giving it 40%, such upgrade process might begin.

If it nears 40% in the longer 1,000 blocks time-frame, then there might be a shift in attitude as temporary variance would give it 50%. Thus, the client gains serious consideration with activation likelihood considerably increasing.

It is at 50% when, conceptually, it is a done deal. At that point, all businesses will want to be running the BU client. Miners, too, might find it safer, while the general opinion would probably move to ask when, rather than if.

The time frame is probably months, if this year at all. The likelihood of its activation is difficult to predict, but segregated witnesses has stagnated, leaving BU as the only standing option at this point in time.

Once it activates, there is no difference whatever as far as end-users are concerned except that fees would be lower and transaction times would be more predictable. Due to bitcoins current politics whereby Michael Marquardt, r/bitcoins top moderator, applies biased censorship, miners are incentivized to attack the minority chain to avoid any arguments over the bitcoin name. A chain split therefore appears unlikely, but if there is one, there is no difference for end users except that now they hold their coins on both chains.

If Bitcoin Unlimited does activate, it would be the first time ever in the entire blockchain space that a decision in such a decentralized manner without any guidance or leadership has been made.

Image from Shutterstock.

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Bitcoin Unlimited Reaches Almost 40% - CryptoCoinsNews

By Mariana Zuiga By Mariana Zuiga March 10

CARACAS, Venezuela Venezuela has become widely known as an economic basket case in recent years. But with its cheap electricity and volatile national currency, the country has at least one competitive advantage: Its a good place to make the digital cash known as bitcoin.

Bitcoins are increasingly accepted online for buying real-world goods and services. And, unlike the Venezuelan bolivar, the virtual currency has been going up in value.

Making bitcoins is known as mining, but it requires a powerful computer instead of a pick and shovel. Those computers produce bitcoins by creating elaborate algorithms, but they also suck up a lot of electricity. In many countries, the cost of running a mining terminal can run higher than the value of the actual bitcoins.

Thats not the case in cash-poor, oil-rich Venezuela, where state-subsidized electricity is so cheap its virtually free. But Venezuelas government isnt pleased. Its cracking down on bitcoin mining, even though the country has no laws on the books outlawing the currency or its manufacture.

In November, Venezuelas secret police raided the house of two brothers in Caracas and found more than 90 mining terminals. The agents demanded $1,000 in bribes for each machine, according to the brothers, who spoke on the condition of anonymity because they fear arrest. The brothers said they paid the bribes to stay in business.

This isnt an isolated case and such operations appear to be expanding. In January, Venezuelan federal police arrested four bitcoin miners in the town of Charallave. They were accused of Internet fraud and electricity theft. According to an Instagram post published by Douglas Rico, the director of the federal police agency CICPC, the miners were endangering the stability of the towns electrical service. During that same week, Edward and Erick Tapia Salas were also arrested in Caracas for selling bitcoin-mining machines through a Venezuelan e-commerce site.

Miners have taken to websites such as Reddit to share their fears of being caught. Miners are getting jailed and accused of terrorism, money laundering, computer crimes and many other crimes,read one commentfrom a user who claimed to be Venezuelan. It's getting crazy here and I really don't want to waste my life for money.

Those who keep mining in Venezuela said they have started taking extreme precautions to hide their activities. Luis Len, 25, a business student and bitcoin miner, said miners have learned not to keep all of their computers in one place. If they do, the state power corporation can detect the abnormal amount of electricity the mining terminals use.

That was [the brothers] big mistake, Len said. They were consuming 20 times the normal level of electricity for that house.

Venezuelas crackdown on the bitcoin industry started in March 2016 with the arrest of two miners in the city of Valencia. According to news accounts of their arrest, Joel Padrn, 31, and Jos Perales, 46, were charged with electricity theft and possessing contraband computers.

But miners and bitcoin users are not the only ones at risk. When Padrn and Perales were detained, Daniel Arraez, a 30-year-old economist who was working as a consultant for a Venezuelan bitcoin market called Surbitcoin, was called by the secret police to testify in their case. Padrn had told the agents that he and Perales had exchanged money through Surbitcoin.

Arraez was asked to come to the secret police offices in Valencia. To my surprise, I never returned home, he said. He was placed in the same cell with Padrn and Perales and charged with making illegal transactions and criminal association.

Arraez said his arrest was a way for the government to blame someone else for its ruinous policies, including chronic mismanagement of public utilities. We were only the scapegoats of the disastrous situation in the countrys electricity sector, he said.

After eight months in jail, Arraez was released in October. Hes awaiting a pretrial hearing. Despite having to share a small cell with eight other men and seeing the sunlight only twice a week, he said Venezuelan miners should keep making bitcoins to advance technologically like other countries.

The crackdown has not stopped Venezuelans from using the currency, either. The continued decline of the Venezuelan bolivar has fueled a growing internal demand for bitcoins. According to Surbitcoin, the number of bitcoin users in the country rose from 450 in 2014 to 85,000 last year.

In a country with the worlds highest inflation rate and strict controls on currency exchange, users see bitcoins as a safe alternative to protect their savings. People have also used bitcoins to buy basic products online that have disappeared from Venezuelan shelves.

But the widespread adoption of the currency seems unlikely any time soon: nearly one-third of the population doesnt even have a bank account.

Read more:

Thousands march against Maduro government in Venezuela as crisis deepens

Venezuelas currency is so devalued it no longer fits in ordinary wallets

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Bitcoin 'mining' is big business in Venezuela, but the government wants to shut it down - Washington Post

Wall Street Journal (subscription) (blog)

Let's Be Real: Bitcoin is a Useless Investment Wall Street Journal (subscription) (blog) The Winklevoss twins are an unlikely source of philosophical musings about the nature of money. But the rejection by U.S. regulators of their plan for an exchange-traded product holding bitcoin is a good time to ask why bitcoin might have any value ...

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Let's Be Real: Bitcoin is a Useless Investment - Wall Street Journal (subscription) (blog)

TumbleBit, one of the most promising privacy advancements built on top of Bitcoin, will be implemented in the upcoming Breeze Wallet.

The Breeze Wallet is a bitcoin wallet in development by blockchain startup Stratis, scheduled for release in one or two months. It will serve as a typical bitcoin wallet for desktop computers, but with an added tumbling option. Connected through a TumbleBit tumbler, Breeze Wallet users can mix their coins without needing to trust each other or the tumbler with their coins or their privacy.

We are integrating TumbleBit because its a trustless and secure solution that works with Bitcoin without any forks, Stratis Founder and CEO Chris Trew told Bitcoin Magazine.

Stratis

Stratis is a U.K.-based startup that offers end-to-end solutions for development, testing and deployment of blockchain applications. The company will maintain its own blockchain (the Stratis blockchain), which includes a native token (the Stratis token). Additionally, the company builds tools for existing blockchains, including Bitcoin, Ethereum and BitShares. Stratis projects include a Bitcoin full node in the programming language C#, a Bitcoin software development kit and, indeed, the Breeze wallet, which will hold both bitcoins and the Stratis tokens.

TumbleBit was first proposed by academic researchers Ethan Heilman, Leen AlShenibr, Foteini Baldimtsi, Alessandra Scafuro and Sharon Goldberg. Inspired by its potential, Programming The Blockchain in C# author and Stratis team member Nicolas Dorier started working on an implementation of TumbleBit in C#. He was joined by the co-author of his book, Ficsr dm, who focused on Tor integration.

Now, with the help of dm, Stratis is making the solution available in a convenient and easy-to-use wallet. It is a natural match not only because Stratiss and Doriers implementations of TumbleBit share the same programming language, but also because Stratis has a strong focus on privacy on their own platform, Trew explained.

Regulation is one of the main hurdles for blockchain [technology] and Bitcoin adoption among the financial services industry, he said. The first step of regulatory compliance is privacy of their sensitive financial data. This is one of the reasons for the rise of the private chain and distributed ledger technologies. Our goal is to provide open and public blockchain solutions for the enterprise; to deliver this we must provide transaction privacy on a public blockchain.

Challenges

To realize the privacy features it promises, Breeze Wallet will also introduce a relatively new type of light client. Based on work by Bitcoin Core developer Jonas Schnelli, the wallet will utilize Full Block Simplified Payment Verification, or Full Block SPV.

Full nodes download and verify each block on the blockchain, which can be quite resource intensive. Most light clients therefore only download the specific data thats relevant to them: mostly relating to their Bitcoin addresses. But to do this, they need to share all their addresses with a server or a node on the Bitcoin network.

This server or node and anyone spying on the communication with this server or node learns all addresses that are in the wallet. This makes tumbling coins from one address in a wallet to another address in the same wallet rather pointless.

Instead, dm is currently implementing a type of light client that will download full blocks but immediately discard any data it doesnt need. This requires the wallet to download more data than typical light clients, which is why Breeze Wallet wont be very suitable for mobile wallets anytime soon. But it will be less resource intensive than running a full node and, therefore, easier to use for regular users.

Lastly, one hurdle remains: someone, somewhere, needs to host the tumbler. While this can be done as a hidden service, the TumbleBit developers have been hesitant to do this themselves so far. Such a service may not exactly please regulators and anti-money laundering agencies.

Stratis is now working through the legal and regulatory issues involved with deploying a solution of this type. The ultimate goal is to have a decentralized network of TumbleBit servers. We are working on delivering end-to-end solutions; then we will further develop some of the core components, Trew said.

For more on TumbleBit, read With TumbleBit, Bitcoin Mixing May Have Found Its Winning Answer and Better Bitcoin Privacy, Scalability: Developers Making TumbleBit a Reality.

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Bitcoin Privacy for All: Breeze Wallet Is About to Bring TumbleBit to ... - Bitcoin Magazine

On day one of the 2017 MIT Bitcoin Expo, Sia Co-Founder David Vorick, who has contributed to Bitcoin Core, gave a presentation on the important role played by full nodes in digital currency networks. In his view, economically relevant full nodes are the ones that have voting power (for lack of a better term) in attempted hard-forking changes to the rules of Bitcoin.

What Is the Role of the Full Node?

Early in his talk, Vorick focused on the general role played by full nodes on the network. Full nodes validate transactions on the Bitcoin network, he stated. Bitcoin has this longest-chain rule where the chain with the most work in it is the one that everybody follows, except this chain also has to follow all of the rules that the network has. The full nodes are the ones [that] check that the chain follows the rules, and if a chain doesnt follow the rules, it doesnt matter how much hashrate is behind it, that chain is ignored.

According to Vorick, of all the different types of Bitcoin users, full nodes are the only ones that check that the rules are followed. Those who run an SPV node or use some sort of web wallet are putting their trust in others to verify that certain rules are being followed correctly on the most-work chain.

Theyre faster, Vorick said in terms of SPV nodes. They download all the headers. They make sure that they are on the chain with the most work, but they dont actually check that the chain with the most work is legal or is valid.

Vorick went on to state that SPV nodes are essentially betting that the rest of the network will sufficiently handle the validation process for them.

SPV nodes just blindly have faith in the broader network to do this process that makes sure that the longest chain is always valid, Vorick continued. They dont actually know. Theyre just assuming that the broader network is going to keep them safe.

Without full nodes, Vorick says, miners are given the ability to do whatever they want. If people can spend each others money [or] if miners can [produce] money out of nowhere, you have a useless system, he added.

Upgrades in Bitcoin

Vorick also talked about how upgrades are made to the Bitcoin network. When talking about upgrades, he was referring to hard forks specifically. He also referred to soft forks as patches.

Soft forks dont actually change the rules; they just are more creative about how they use the rules, Vorick explained.

In terms of attempted hard forks, Vorick claimed there are three potential outcomes. In one, the hard fork could fail and everyone may decide to ignore the failed chain. Vorick pointed to the recent block larger than 1 million bytes accidentally mined by Bitcoin.com as an example of a failed upgrade.

Another possible outcome from an attempted hard fork is that economic activity continues to take place on both chains. Vorick referred to this as a partially successful upgrade, and he used the split between Ethereum and Ethereum Classic as an example of this outcome.

The third possible outcome mentioned by Vorick is a successful hard fork with new rules where the new chain becomes the only chain people use and everyone ignores the old chain. Besides the hard fork that resulted in the split between Ethereum and Ethereum Classic, the Ethereum chain has also had multiple successful hard forks.

Economically Relevant Full Nodes Have the Power

When determining the level of success achieved by an attempted upgrade, Vorick claimed that it ultimately comes down to the desires of the full nodes. If youre not running a full node, sort of your opinion on whether or not you like a hard fork is less relevant because, ultimately, if youre not validating the rules and someone gives you a transaction following a different rule set, you dont have a way to detect that, he explained. So you cant actually weigh in on an attempted hard fork, an attempted upgrade.

Vorick then compared full nodes to representatives in a democracy; however, he also pointed out that some full nodes are much more economically relevant than others. BitPay, for example, has a bigger say in what happens than a full node sending and receiving one small payment per month.

According to Vorick, users can be dragged along with miners and large businesses if the cost of running a full node is too high. If full nodes are expensive to run, only people who are capable of running nodes really have any say in what happens in a contentious upgrade, he added.

As an example, Vorick pointed out that Ethereum Classic may not have ever existed if it cost too much for the original Ethereum chains early supporters to run full nodes.

I would advocate that, right now, full [Bitcoin] nodes are too expensive, Vorick concluded.

Read more:
You Really Should Run a Bitcoin Full Node: Here's Why | Bitcoin ... - Bitcoin Magazine

Bitcoin is at a critical juncture. Any time now, the Securities and Exchange Commission will issue a decision that could throw open the door to a flood of new capital, and change how many investors regard the digital currency.

The SEC's bitcoin decision, which is over three years in the making, is due by Friday. Here's a plain English guide to what might happen, including why the decision is so important and how it could affect the price of bitcoin.

The agency must decide if the BATS stock exchange can change its rules to offer a bitcoin ETF (exchange traded fund), which would let people buy bitcoin like a common stock. The ETFcalled the Winklevoss Bitcoin Trust ETFis the creation of the Winklevoss brothers, who once fought Mark Zuckerberg for control of Facebook, and now own a large stock of bitcoins.

It's all about liquidity. While there are plenty of places to buy bitcoin, many investment funds can only hold assets that meet certain regulatory standardssuch as approval from the SEC. If the agency approves the ETF application, money managers who want to include bitcoin in their portfolio are likely to jump in. Meanwhile, millions of ordinary people will have an easy new way to buy the digital currency. I can't really phrase it any better than this quote from BitMex , a bitcoin analysis site:

If the SEC approves the Bats rule change, all manner of American muppet retail investors can yolo into Bitcoin via a regulated ETF. The pool of eligible money that can easily obtain exposure to Bitcoin will dramatically rise. There are various predictions about the amount of money that could flow into Bitcoin. In short, it will be Yuge.

The SEC is obliged to make the decision by March 11, which is this Saturday. That means the ruling is almost certain to come out on Thursday or Friday.

According to Blake Estes , an alternative asset expert at the law firm Alston & Bird, the decision will appear on this SEC web page , and everyone will find out at the same time.

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People are calling this a coin toss. Those who think the SEC will approve the ETF point to the skillful work carried out by the Winklevoss lawyers, and to the fact that bitcoin is far more mainstream than it was even two years ago. Today, many more peopleincluding regulatorsare familiar with digital currency and how it works. There is also a sense that a bitcoin ETF is sooner or later inevitable.

Pessimists, on the other hand, can point to two sets of concerns that could lead the SEC to give the thumbs down. The first of these relates to how the Winklevoss intend to run the operation. Some people are uneasy that the proposed ETF would use Winklevoss-controlled businesses to source and store the bitcoins that would back the shares. The other set of concerns lie with bitcoin itself. The digital currency has been subject to wild price fluctuations, driven in part by heists and insider antics. According to Estes, the SEC may worry the agency's approval of an ETF could lead to a bubble inflated by bitcoin novicesa bubble that could then pop.

"Some fear it could be a g ood opportunity for legacy players to find the next sucker to take it off their hands," said Estes.

Bitcoin has been on another tear of late, nudging a record of $1,300 per unitmore than an ounce of gold. Some of this likely reflects investor optimism the SEC will approve the ETF, meaning a future price rise is partly baked-in. Nonetheless, there are broad expectations the short term price of bitcoin will go crazy if the SEC says yes.

If the SEC says no, it will have a negative effect, though probably not a very dramatic one. The reason is there are two other ETF application before the agency. One is called the Bitcoin Investment Trust, and was developed by Barry Silbert, a well known figure in the digital currency world. The other, called SolidX, is distinct in that proposes to insure its bitcoin assets.

As noted above, there is a general feeling that approval for a bitcoin ETF of one type or another is inevitable, and so a rebuff by the SEC to the Winkelvoss proposal would only be a temporary setback.

That's something only you can decidepreferably after a lot of research. Today, many people see bitcoin as another alternative asset class to add to a diversified portfolio. But bitcoin has an extremely volatile history , and has been prone to spectacular crashes, so if you're averse to risk, it's probably not for you.

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Bitcoin May Go Boom: A Guide to This Week's Big SEC Decision - Fortune