Abstract
Significance The launch last month on two major US futures exchanges of derivative contracts on bitcoin, the largest cryptocurrency by market capitalisation, will broaden bitcoin’s ownership base, drawing in institutional investors and facilitating the launch of bitcoin-focused exchange traded funds (ETFs) and other more liquid financial instruments. Concerns will linger but demand for the cryptocurrency has strong momentum. Impacts Passively managed ETFs attracted ten times more 2017 inflows than traditional mutual funds and plans to track bitcoin may intensify this. Online spread-betters are cashing in on cryptocurrency trading, but coming European regulation will prevent investors leveraging their bets. The mining of each bitcoin is energy intensive; at current growth, by 2020 bitcoin will use more electricity than the whole world today. Initial coin offerings raised more than 5 billion dollars in 2017 and will continue outperforming venture capital fundraising. The underlying technology provides many innovative solutions and tokenisation will be used in many new and surprising economic functions.
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