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Bitcoin Futures Rise as Trading Starts 12/11 06:10

   CHICAGO (AP) -- The first-ever bitcoin future jumped after it began trading 
Sunday as the increasingly popular virtual currency made its debut on a major 
U.S. exchange.

   The futures contract that expires in January surged more than $3,000 to 
$18,580 eight hours after trading launched on the Chicago Board Options 
Exchange. The contract opened at $15,000, according to data from the CBOE.

   The CBOE futures don't involve actual bitcoin. They're securities that will 
track the price of bitcoin on Gemini, one of the larger bitcoin exchanges.

   The start of trading at 5 p.m. CST overwhelmed the CBOE website. "Due to 
heavy traffic on our website, visitors to www.cboe.com may find that it is 
performing slower than usual and may at times be temporarily unavailable," the 
exchange said in a statement. But it said the trading in the futures had not 
been disrupted.

   Another large futures exchange, the Chicago Mercantile Exchange, will start 
trading its own futures on Dec. 18 but will use a composite of several bitcoin 
prices across a handful of exchanges.

   The price of a bitcoin has soared since beginning the year below $1,000, 
hitting a peak of more than $16,858 Dec. 7 on the bitcoin exchange Coindesk. As 
of 1:15 a.m. CST, it was at $16,733.49 on Coindesk.

   Futures are a type of contract in which a buyer and a seller agree on a 
price for a particular item to be delivered on a certain date in the future, 
hence the name. Futures are available for nearly every type of security but are 
most famously used in commodities such as wheat, soy, gold, oil, cocoa and, as 
dramatized in the Eddie Murphy and Dan Aykroyd movie "Trading Places," 
concentrated frozen orange juice.

   The futures signal greater mainstream acceptance of bitcoin but also open up 
bitcoin to additional market forces. The futures will allow investors to bet 
that bitcoin's price will go down --- a practice known as shorting --- which 
currently is very difficult to do.

   There have been other attempts to bring bitcoin investing into the 
mainstream. Tyler and Cameron Winklevoss, twin brothers who own large amounts 
of bitcoin, tried to create an exchange-traded fund based on bitcoin, but 
federal regulators denied their application.

   How much actual investor interest there will be in these bitcoin futures is 
still up in the air. Many larger Wall Street brokerages and clearinghouses, 
including Goldman Sachs and JPMorgan Chase, are either not allowing customers 
to trade bitcoin futures or only allowing select clients to do so. Other 
brokerages are putting restrictions on the amount of margin a trader can use in 
bitcoin futures, or putting limits on the amount that can be purchased.

   The digital currency has had more than its fair share of critics on Wall 
Street. JPMorgan Chase CEO Jamie Dimon has called bitcoin "a fraud." Thomas 
Peterffy, chairman of the broker-dealer Interactive Brokers Group, expressed 
deep concerns about the trading of bitcoin futures last month, saying "there is 
no fundamental basis for valuation of Bitcoin and other cryptocurrencies, and 
they may assume any price from one day to the next."

   Peterffy noted that if bitcoin futures were trading at that time, under the 
CBOE's rules those futures likely would experience repeated trading halts 
because 10 percent or 20 percent moves in bitcoin prices have not been unusual 
in recent months.

   Bitcoin is the world's most popular virtual currency. Such currencies are 
not tied to a bank or government and allow users to spend money anonymously. 
They are basically lines of computer code that are digitally signed each time 
they are traded.

   A debate is raging on the merits of such currencies. Some say they serve 
merely to facilitate money laundering and illicit, anonymous payments. Others 
say they can be helpful methods of payment, such as in crisis situations where 
national currencies have collapsed.


(KA)

 
 
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