Nasdaq to launch futures contracts for Bitcoin by 2018

The second-biggest stock exchange in the world, Nasdaq plans to launch futures contracts for Bitcoin by 2018, The Verge reports.

With the move, investors would be able to bet on the rise and fall of the cryptocurrency in real time.

Bitcoin has been dismissed as a bubble by a number of bankers and investors.

While Bitcoin's rise has created new millionaires virtually overnight, the use of the crypto-currency in the real-world has so far remained a rarity.

According to Jeff Currie, global head of commodities research for Goldman Sachs Group, Bitcoin is a commodity with several similarities to gold and volatility comes mainly from the lack of liquidity.

In an interview to Bloomberg Television, Currie said, ''I don't see why there is all this hostility to it,'' adding that Bitcoin is ''not much different than gold'' as it doesn't have liability attached to it by definition, like a security.

Meanwhile, Bitcoin, yesterday breached the $11,000-mark before taking a 18-per cent plunge, but later recovered significantly.

Commentators point out that Nasdaq is not the first player from the traditional finance world to have plans for Bitcoin. Chicago's CME Group said it would start providing futures contracts on bitcoin as well.

Even as Bitcoin continues to make millionaires, real-world applications for the currency and the underlying technology have been limited so far. Many startups have attempted to use bitcoin, blockchains, and other cryptocurrencies and a lot of this exuberance has been due to initial coin offerings, where investors can buy virtual tokens in lieu of more traditional equity.

ICOs have raised hundreds of millions of dollars, this year alone passing traditional venture capital as a source of funds.

Bloomberg reports that earlier this month, Thomas Peterffy, the billionaire chairman of Interactive Brokers Group Inc, wrote an open letter to Commodity Futures Trading Commission (CFTC) chairman J Christopher Giancarlo, arguing that bitcoin's large price swings mean its futures contracts should not be allowed on platforms that clear other derivatives.

''A large cryptocurrency price move that destabilizes members that clear cryptocurrencies will destabilize the clearing organisation itself,'' wrote Peterffy, whose firm is a CME clearing member.

That could impair ''its ability to satisfy its fundamental obligation to pay the winners and collect from the losers on the other products in the same clearing pool,'' he said.