In this week’s bitcoin review, we take a look at a recent ruling by the Federal Election Commission (FEC) on political donations and a laundry list of concerns recently published by the U.S. Securities and Exchanges Commission.
Bitcoin may be risky, but it’s coming to an election near you
It’s well known that the SEC isn’t the world’s biggest fan of bitcoin, after it first labeled it a Ponzi scheme in July 2013. On Wednesday, the commission followed up on that investor alert with a new one on the high investment risk associated with bitcoin and other alternative currencies. Their warning targeted both people getting into the space and those who have been in it for awhile:
The exchange rate of U.S. dollars to bitcoins has fluctuated dramatically since the first bitcoins were created. As the exchange rate of Bitcoin is significantly higher today, many early adopters of Bitcoin may have experienced an unexpected increase in wealth, making them attractive targets for fraudsters as well as promoters of high-risk investment opportunities.
The investor alert also strongly cautioned investment in bitcoin because of future government regulation and the ability of governments to freeze or restrict the use of bitcoin (as we’re seeing right now in China).
Despite the investor alert, the FEC issued an advisory opinion yesterday that Political Action Committees, or PACs, could start accepting bitcoin donations, but with several caveats. No anonymous bitcoin donations are allowed and campaign treasurers must examine the “illegality” of the contribution. The upper limit of acceptance was also up for debate. The FEC was reviewing a case from Make Your Laws PAC, which proposed accepting bitcoin as in kind donations of up to $100. While some commissioners liked the smaller limit of $100, as it would limit risk, Chairman Lee E. Goodman said in his statement on the opinion that the commission didn’t have the authority to place the $100 limit on the donations since bitcoin is not a U.S. currency. However, since the commission approved bitcoin acceptance in the terms that the Make Your Laws PAC stated, it looks like the $100 limit might be around for a bit.
The market this week
The price of bitcoin fell to around $419 in the middle of the week, but has since made it back into the $430 range. The market closed at $435.34 on Thursday, $20 lower than the week before. At 10 a.m. PST, the price had rebounded to $448.
For background on why we’re using Coindesk’s Bitcoin Price Index, see note at bottom of the post.
In other news we covered this week:
- Dogecoin may be worth a fraction of a penny, but its real value is its ability to introduce new audiences to cryptocurrency.
Here are some of the best reads from around the web this week:
- Western Union was granted a patent in April for an alternative currency system that generally sounds a lot like exchanges. Filed in 2009, it doesn’t mention bitcoin or any bitcoin exchanges specifically, but it could serve as a legal basis for the company to pursue legal action if it decides it wants to.
- DVRs may be the new target of bitcoin malware. Ars Technica explains how easy — and quick — it was for hackers to install mining malware on the machines.
- Venture capitalist Brock Pierce and BTC China CEO Bobby Lee were elected to the Bitcoin Foundation board — filling the two seats vacated by the MtGox CEO Mark Karpeles and BitInstant CEO Charlie Shrem. Pierce is part of the group trying to revive MtGox.
- PCWorld published a beginner’s guide to mining Dogecoin, Litecoin and other alternative currencies.
Bitcoin in 2014
Bitcoin price is worth about half of what its value was in January.
The history of bitcoin’s price
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A note on our data: We use CoinDesk’s Bitcoin Price Index to obtain both a historical and current reflection of the Bitcoin market. The BPI is an average of the three Bitcoin exchanges which meet their criteria: Bitstamp, BTC-e and Bitfinex. To see the criteria for inclusion or for price updates by the minute, visit CoinDesk. Since the market never closes, the “closing price” as noted in the graphics is based on end of day Greenwich Mean Time (GMT) or British Summer Time (BST).
Photo from Zach Copley/Flickr. This post was updated at 11:15 a.m. PST to reflect that Western Union’s patent most closely resembles bitcoin exchanges, not bitcoin as a payment protocol.