Bitcoin’s new investors: ‘change is happening’

futurecapitalbitcoinfund19 May 2014 / Financial Review – Domenic Carosa is bullish on Bitcoin, which is unsurprising for a digital entrepreneur. Interest in his new $30 million Future Capital Bitcoin Fund “has been extraordinary”, says the one-time BRW Young Rich lister. “Investors may not know exactly where this is going, but they know that change is happening.”

Mr Carosa, however, is not investing directly in the crypto-currency. Instead, his fund is targeting companies that ­facilitate, exchange and trade Bitcoins – an approach not unlike that of Sam ­Brannan, who became California’s first gold rush millionaire by selling picks and pans to prospectors in the 19th century.

It’s an understandable strategy given Bitcoin’s infamously volatile price. The crypto-currency spiked from $US100 in late 2013 to $US1100 in December, before fading to its current range of $US400 ($427) to $US500.

Other investors are quite happy with Bitcoin’s volatility. “It’s all relative,” says fellow venture capitalist Niki Scevak from Blackbird Ventures. Swings may spook those used to Australian or American ­dollars, but not “someone dealing in Zimbabwean dollars”. That may not assure many investors but Mr Scevak shrugs: “That’s what venture capitalists do.”

He cheerfully acknowledges that Bitcoin has only a “low chance” of reaching the mainstream. “At the start of last year I would have said 1:1000. It’s maybe 1:20 now,” Scevak says.

Coinarch’s Luke Jones offers a ­derivative trading platform for part­icularly bold Bitcoin betters, starting with contracts for difference (CFDs). Combining the unpredictable crypto-currency with heavily leveraged CFDs may have Australian Securities and Investment Commission regulators choking on their cornflakes, and Mr Jones agrees ­regulatory issues are a major challenge for the Bitcoin community…… Read more

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