2013-01-18 forexmagnates.com - Q4 2012 Forex Magnates Report now available

[Akka]

Q4 2012 Forex Magnates Report now available – 160 pages of crucial forex information at your fingertips

Other articles include a look the role of Co-Location in the FX industry, the current state of affairs in Japan, a guide to setting up Payment Solutions, and Marketing with Twitter. For good measure, we also threw in a little about Bitcoin.

You can view the full table of contents here: http://forexmagnates.com/q4-2012-forex-magnates-report-now-available-160-pages-of-crucial-forex-information-at-your-fingertips/


Would be nice to know, what they wrote about Bitcoin, but it isn't worth 350$ to me.

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[elux]

Would be nice to know, what they wrote about Bitcoin, but it isn't worth 350$ to me.

From the description, it's hard to tell whether their coverage of Bitcoin is serious or not.

That said, I'd very much like to know what song these whales are singing.

http://mediaserver.fxstreet.com/Reports/d37b4c9b-5db3-40ca-b274-903c69c2608a/4354d50b-ef15-4af5-b24c-292f7f7ea2ef.pdf

Preview of the report: http://forexmagnates.com/wp-content/uploads/2013/01/Forex-Magnates_Q4_2012_preview.pdf

Also, video: Forex Magnates Summit - A Quick Glance

[ronfinberg]

Hi,
My name is Ron Finberg and I am an editor at Forex Magnates and wrote that promo about our Quarterly Report that you quoted, and I wanted to answer about the bitcoin comment.
In addition to our online forexmagnates.com site, we publish a quarterly research report aimed at forex brokers, banks and technology providers.  In the report I wrote an in-depth article about setting up a payment solution system.  It basically goes through the details for brokers on how to become a merchant, choosing a payment solutions provider, dealing with acquiring banks and focused on credit card, e-wallet, and real time bank transfer payments.  In addition, I also added some information about upcoming technology and wrote a little about bitcoin and mobile payments.  The intro to this section was that 'you may not be using these things now, but your competitors will in the future, so its important to be ahead of the curve'

This is the intro to that section and about bitcoin:

The Future
For payment methods, the two biggest trends for the future are globalization and mobile.  As the world becomes smaller and more businesses are marketing internationally, demand for global payment solutions has increased.  This has occurred even as real time bank transfers which are focused on specific countries and regions has grown.  Nonetheless, while these real time transfers are effective in areas with developed banking systems, there is a large portion of the world lacking quick and low cost payment methods.  A natural choice to fill this gap has been pre-paid credit cards.  These products are especially used in regions with high figures of foreign workers. However, the disadvantage of these cards is limits on withdrawals, high fees, and the need for users to hold onto a physical non-replaceable card.  Due to these issues and others, e-currencies are gaining a foothold in the fragmented payment industry.

E-currencies are digital forms of money that are stored either in one’s computer drives or at a third party facility.  Of the many e-currencies available, bit-coin has become the most reputable due to its base code that it was formed with.  Bit-coins are a pure digital currency as it isn’t backed by any country or physical asset, but is simply a product of complex programming code that limits the amount of bit-coins created to limit inflation and cause scarcity.  Like credit cards, to become a bit-coin merchant, a broker works with a third party payment gateway to receive and send payments.  Advantages of bit-coin are that payments from the system become irreversible after an hour, thus limiting fraud risk. They can also be received from clients around the world.  The downside of bit-coins is that as a digital currency, the money doesn’t have any regulatory body supervising transactions and there are money laundering concerns.  As such, as the form of payment becomes more prevalent, financial regulators may impose a limitation on whether brokers within their jurisdictions can receive bit-coins as payments.  Although the idea of an unbacked and universal currency may sound risky to brokers, the fact is that users of the system are growing.  Therefore, as adoption of the product rises, client demand for bit-coin deposits will increase.

As to why I added the mention about bitcoin in the promo.  At Forex Magnates we thankfully have an active readership which has brought up bitcoin payments and trading on multiple occasions, both publicly and privately.  So the reference was sort of an 'inside joke' to those readers. 

Currently we are planning on devoting more coverage to bitcoin after we do a site upgrade. The wordpress payment integration specifically showed us that it's only a matter of time before brokers begin to role it out. 

Interested to hear the community's thoughts
Ron

[Akka]

Thank you very much Ron,

it's really exiting to see our humble currency getting some notion from provisionals

And also many thanks for satisfying my curiosity.

[ronfinberg]

My pleasure.  Feeling is mutual, happy to see Forex Magnates being quoted here.

[hazek]

Hey Ron,

It's great to see information about Bitcoin spread in important circles so I'm happy you included it in your report. Although you seem to have a good grasp on Bitcoin I'd still like to give you a couple of suggestions on how you could improve your report. First, call it Bitcoin for the system and bitcoins for the currency, bit-coins is a tell-tale sign that you're really new to Bitcoin and you might face a credibility problem. Second "to become a bit-coin merchant, a broker works with a third party payment gateway to receive and send payments." is confusing and I'm not sure exactly if it can even apply to Bitcoin. There are no payment gateways, just peers in a peer to peer network. All a merchant really needs is the Bitcoin software, either on their own system or hosted by a third party.

Perhaps it wouldn't be a bad idea to give a copy of the entire section on Bitcoin to someone reputable within this community for a proof reading in order to avoid such inaccuracies/confusion. But if that doesn't work for you here are two links that do a great job at correcting common misconceptions:
http://blog.bitinstant.com/blog/2012/7/5/a-business-primer-on-the-bitcoin-ecosystem-erik-voorhees.html
http://bitcoinmagazine.com/common-misconceptions-about-bitcoin-a-guide-for-journalists/

And if you have any questions or need help with anything don't hesitate to ask.

[marcus_of_augustus]

Ron,

thnx for popping in here to follow up the press ...

At Forex Magnates we thankfully have an active readership which has brought up bitcoin payments and trading on multiple occasions, both publicly and privately.  So the reference was sort of an 'inside joke' to those readers.

... Interested to hear the community's thoughts

Not to speak for any others but I think the bitcoin community would also be interested and curious to know more what the "forex magnates" community think of bitcoin? Like really brutally truthfully think would be interesting.

Cheers.

[Spekulatius]

Ron,

thnx for popping in here to follow up the press ...

At Forex Magnates we thankfully have an active readership which has brought up bitcoin payments and trading on multiple occasions, both publicly and privately.  So the reference was sort of an 'inside joke' to those readers.

... Interested to hear the community's thoughts

Not to speak for any others but I think the bitcoin community would also be interested and curious to know more what the "forex magnates" community think of bitcoin? Like really brutally truthfully think would be interesting.

Cheers.

+1

+ Who are they?

[ronfinberg]

@Hazek - yeah, that bitcoin/bit-coin makes sense.  On my notes I had bitcoin, not sure where along the process it got changed to bit-coin.  You made a good point about the payment solutions provider thing.  As the article was about setting up to accept payments, my thinking was that a broker applying bitcoin payment would try to integrate it with their existing payment practices.  But, you are right, is a little confusing.  Will definitely reach out over here for further articles.

@Marcus_of_augustus & Spekulatius - the predominate interest is from readers that want to see a bitcoin/usd CFD to trade.  Personally, I don't think the feed sources and liquidity are in place just yet to create a synthetic instrument that trades based on the bitcoin/usd rate, but it may be one of those 'wag the tail' things that if one broker launches such a product it would boost bitcoin trading as it would attract arbitragers etc.

The other group are the 'free currency' anti-regulation people that would like to see greater adoption of bitcoin.  As you guys know, the demand is driven by governments that restrict cross border cash transfers (SA & India are the big ones that come up) and bitcoin provides an opportunity to fund trading accounts without restrictions. 

My take on this is that the regulators are going to give brokers a hard time about bitcoin because of money laundering issues.  The stress that financial firms relieve from regulators about AML is hard to appreciate if you haven't worked on the inside.  I admit my ignorance on AML & bitcoin, but is there a way to monitor this?

[hazek]

I admit my ignorance on AML & bitcoin, but is there a way to monitor this?

The same way as one would attempt to monitor a cash only business: accounting books + voluntary ID gathering + honesty . Other than this there's no way to realistically monitor who sends what to whom in bitcoins.

[sunnankar]

My take on this is that the regulators are going to give brokers a hard time about bitcoin because of money laundering issues.  The stress that financial firms relieve from regulators about AML is hard to appreciate if you haven't worked on the inside.  I admit my ignorance on AML & bitcoin, but is there a way to monitor this?

I think the main AML issues are with source of funds. If you allow only trading and withdrawing via bitcoins then it would trigger less issues than if you also allow accounts to be funded via bitcoins, exchanged into fiat currencies and then withdrawn into bank accounts.

[ronfinberg]

I think the main AML issues are with source of funds. If you allow only trading and withdrawing via bitcoins then it would trigger less issues than if you also allow accounts to be funded via bitcoins, exchanged into fiat currencies and then withdrawn into bank accounts.

Hmm.. good point, I'll keep that in mind and try to get an opinion from some compliance sources

[evoorhees]

Your readers should also know that Bitcoin was the best performing currency in 2010, 2011, and 2012. Even if it does nothing else this year, it will take the title again in 2013.

Appreciation
2010: some ridiculous percentage (sub $0.01 to just under $1.00)
2011: About 1500%
2012: About 100%
2013 thus far: About 25%

[Piper67]

Your readers should also know that Bitcoin was the best performing currency in 2010, 2011, and 2012. Even if it does nothing else this year, it will take the title again in 2013.

Appreciation
2010: some ridiculous percentage (sub $0.01 to just under $1.00)
2011: About 1500%
2012: About 100%
2013 thus far: About 25%

And I have a bone to pick with the 100% figure for 2012. Technically it might be correct (though even then it was quite a bit higher), but if you measure it from December 22, 2011 to December 22, 2012 the figure is much closer to 400%.

[wachtwoord]

If you have a bone to pick it's quite easy. Calculate the TTM (trailing twelve months) of the annualized increase in Bitcoin and plot this in a graph. Splitting the increase in value on January 1st of every year is completely arbitrary.

Oh yeah, before Bitcoin existed for a year just use the annualized rate on the data that is available (so for the first day an exchange rate is known use the increase in value on that day annualized).

[thefiniteidea]

This is cool 

[dree12]

If you have a bone to pick it's quite easy. Calculate the TTM (trailing twelve months) of the annualized increase in Bitcoin and plot this in a graph. Splitting the increase in value on January 1st of every year is completely arbitrary.

Oh yeah, before Bitcoin existed for a year just use the annualized rate on the data that is available (so for the first day an exchange rate is known use the increase in value on that day annualized).

This is negative for a significant portion of 2012. I posted a few charts on this back then:

[wachtwoord]

Very cool, thanks for sharing, very insightful. Could you link to these graphs? (or a page were they are dynamically generated?).

If I can access the price data via an API in JSON format and I have some time (unlikely in the near future) I might play around with d3.js (and/or nvd3.js) to get this done. (This is also a hint/request to others that have time sooner, d3.js is really cool to play around withhttp://d3js.org/ )