Up to $400 million could be lost in the biggest Bitcoin scam so far, and Google might accept Bitcoin in its new payment system. Here are the cryptocurrency highlights of week 7:
- CoinJar has introduced so-called Hedged Accounts that allows users to peg Bitcoin to fiat currencies such as the US dollar. What this means is that a Bitcoin will keep the USD value it had when it was bought, eliminating the effect of price swings. The service is unique in the sense that users do not have to put any effort into securing the value of their coins, which previously had to be done by entering in Bitcoin derivative contracts.
- Bitcoin exchange MyCoin may have run off with up to $387 million in customer funds. At least 43 out of possibly 3,000 victims have reported their losses to the Hong Kong police. The reported losses amount to roughly $8 million. MyCoin lured investors in “by promises of a HK$1 million four-month return for buying a HK$400,000 contract”. HK$1 million equals about US$130,000. It would be expected that anyone able to invest US$50,000 thinks twice when offered a guaranteed return of 150 percent in just four months (as it clearly points to a Pyramid or Ponzi scheme), but instead this scheme reveals the shocking inability of investors blinded by potential returns to make proper risk assessments. Clearly, more regulation and supervision is required.
- Rather than coming up with a decent Bitcoin regulatory framework, Honk Kong lawmakers are now urging authorities to ban the digital currency in the wake of the MyCoin scandal. It is a typical knee-jerk reaction that also followed on the collapse of Bitcoin exchange Mt.Gox. But except for some political votes, a ban is unlikely to benefit anyone.
- Apple Pay is already heating things up in the payments market, and now Google is bringing in the competition with its payment System called Plaso. Google is working together with payments processor Square to develop this system that would also accept Bitcoin.
- The previous could be the main reason for Bitcoin’s upward price movement this week. The digital currency is trading at about $245 per coin, which equals an eight percent increase compared to last week.