Bitcoins, a type of highly encrypted digital currency, are surging on a wave of speculation and demand for alternative currencies as central banks continue to print.
Could we soon see the launch of a Bitcoin ETF? It’s an interesting idea, but experts say don’t hold your breath.
Bitcoins, which trade hands online, have surged over 14% in the past week, reports Jeff Cox for CNBC. The digital currency has jumped to $250.
The Bitcoin is a type of decentralized digital currency based on a peer-to-peer network and can be exchanged through computers internationally without a financial intermediary. The system was first introduced by developer Satoshi Nakamoto in 2009.
Complex computers act as “miners” that would confirm transactions between two parties using Bitcoins, and they would receive Bitcoins as compensation. This helps serve to expand the supply of Bitcoins, which can not exceed 21 million, Minyanville reports.
“It got traction because it’s decentralized, it’s not subject to government meddling, it’s considered safe and there’s limited supply,” Alan Safahi, CEO of ZipZapInc, said in the CNBC article. “So that drives value in kind of a commodity-type perception.”
As the digital currency gains momentum, some have floated the idea of a ETF backed by Bitcoins. Alternatively, Bitcoins could be a candidate for the exchange traded note structure, but the sponsoring bank would have to be willing to back the appreciation or depreciation of the Bitcoin currency. What started off as a joke, may not seem like a joke at all.