It's All About the Bitcoins

Bitcoin ‘Is a Better Form of Money Than We Have Right Now,’ Pro Trader Says

Financial traders try to avoid getting Zhou Tonged.
traders Bitcoin Is a Better Form of Money Than We Have Right Now, Pro Trader Says

They can't stop Bitcoining. (Getty Images)

Betabeat noticed back in August that professional Wall Street traders were taking an interest in Bitcoin. Even though the Bitcoin market is valued lower than in the past, and volatility (read: easy opportunities to flip coins and make fast money) has also flattened out, it seems pro bankers are still trading in BTC. 

Reuters reports that workers at Morgan Stanley and Goldman Sachs in London and New York have been visiting Bitcoin exchanges up to 30 times in a day as finance professionals peer into the digital Wild West created by the Bitcoin gold rush. The article does not specify whether the traders work in foreign exchange, the closest analogue to Bitcoin speculation, or if they trade stocks. It’s also possible that some of the finance professionals looking at Bitcoin work in IT.

But one trader who said Bitcoin is his “second job” estimated 90 percent of traders have bought Bitcoin. “It is a better form of money than we have right now, or than anyone has designed so far,” he told Retuers anonymously.

Finance pros may have been attracted by the increasingly complex Bitcoin instruments, such as options and margin trading:

Perhaps the most notorious is Bitcoinica, a platform offering margin trading, short selling and stop orders run by 17-year-old Chinese high school student Zhou Tong.

Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment.

Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang.

To be “Zhou Tonged” is to be wiped out financially.

As Bitcoin draws in new demographics, its susceptibility to regulation grows. Mt. Gox, the largest Bitcoin trading exchange, sued the French bank Credit Mutuel’s Credit Industriel et Commercial after the bank shut down Mt. Gox’s account. A court ruled to have the account reopened and Mt. Gox compensated, but had to refer the question of whether Bitcoin is a virtual currency under French law “and thus subject to relevant regulation” to another court.

Meanwhile Bitcoin may have a different sort of day in front of a judge as the now-defunct exchange TradeHill is embroiled in a lawsuit with payments provider Dwolla.

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