Bitcoin Denominated MT4 Trading at Bit4X

Update UK’s FCA Issues Warning Against Bitcoin Brokers Bit4X and VenetFX Prices of bitcoin are skyrocketing in the past month as the Cyprus bank haircut has highlighted the worries involved with trusted established banking systems. The foundation for bitcoin appreciation has actually been building much before the current events in Cyprus. While its use is […]

Responding to Cyprus Funding Fears, Markets.com Publicly Discloses Capital Allocation

If there is a bright side to the events in Cyprus, it has been the increase of transparency emanating from the Island’s many forex brokers. We have already seen numerous posting of firms explaining that they are holding minimal funds in Cyprus and the overall effects of a deposit haircut won’t affect client accounts or […]

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Update UK’s FCA Issues Warning Against Bitcoin Brokers Bit4X and VenetFX

Prices of bitcoin are skyrocketing in the past month as the Cyprus bank haircut has highlighted the worries involved with trusted established banking systems. The foundation for bitcoin appreciation has actually been building much before the current events in Cyprus. While its use is still a small drop in the bucket of overall commerce, demand for bitcoins has been boosted with the expansion of firms beginning to accept the currency for internet transactions. While firms accepting bitcoins aren’t household names, products available for sale cover pretty much every item a person could purchase from name brand clothing, electronics, and food. With demand rising steadily, the Cyprus financial crisis has simply led to a perfect storm of increased need and awareness of bitcoins which has allowed the currency to take off.

With the rising prices, one of the big questions being asked by FX traders is how to trade the currency? While bitcoins as a tradable instrument doesn’t yet exist among the major platforms, one firm has been providing clients the ability of holding bitcoin denominated MT4 accounts. Bit4X, a Slovenian IB of VenetFX, has launched bitcoin based accounts for clients, with both funding and withdrawals using the digital currency. In a twist from traditional brokers, Bit4x requires no client documentation with customers allowed to provide any alias and email address. All that is needed is a digital location to receive withdrawals to. This feature could provide appeal to traders desiring an anonymous location to trade with. However, the anonymity also leads to the inability of clients to make claims against the broker in the case of fraud or trading errors, but this seems to be the accepted trade off of migrating away from fiat currencies.

According to Matic ‘kakobrekla’ Kočevar, Director of Bit4x, the company currently has a small but growing base of clients. He explained that “clients are interested in holding a bitcoin denominated account to take advantage of appreciation in the currency while they trade.” In regards to BTC/USD trading, Kočevar said that this is the biggest request they have and the feature they are working on integrating. If accomplished, it will be expected to provide a substantial boost to Bit4x’s customer base.

With the NFA on the verge of banning credit card deposits in the US, alternative funding options are expected to be in demand. While it remains to be seen whether more brokers decide to begin accepting bitcoins, it will be interesting to see how their emergence is greeted by financial regulators. As regulators are most concerned with client safety, how will they regulate bitcoin customers who are interested in less government control and anonymity? Also, knowing that bitcoins have become synonymous with money-laundering, will regulators work to create a solution that solves this worry or is a full ban on the currency eventual?

In any event, regardless of how the digital currency will be taken up by the established players, the arrival of Bit4x shows that there is little question that funding options for FX bitcoin users is becoming readily available. Also, while not out yet, it’s only a matter of time before BTC/USD on MT4 and other major platforms will arrive.

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27 Comments

  1. david

    would be huge for bitcoin and there users. however if most of the places are bucket shops with little compliance then it won't last. its had security issues and will have more teething. bottom line is traders basically won't get a get service most if the time.

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  2. Ron FinbergRon Finberg

    We’ll see. Bitcoin accounts appeal to a small but growing audience. Regulation will be the key. In my opinion, the money laundering issue is the biggest hump, and a broker would need to be proactive with the regulators on how they will monitor it in order to get approved for deposits in the long run.

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  3. Andy

    How can this be compliant with KYC and AML rules? It can only be a matter of time until this gets shut down.

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  4. Michael Greenberg

    it doesn’t that’s the whole idea
    shut down by whom? there’s no central bank behind it or overseeing it, it’s like i decide that i want to barter with you and that’s the common currency

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  5. Ron FinbergRon Finberg

    It’s not that it can get shut down, but merchants accepting it can theoretically can get shut down.

    A bigger issue are security hacks where bitcoin owners have had their coins stolen. So you have this quandary, it’s a digital currency, but it becomes unsafe to store it on connected devices and users are often storing on removable storage devices. But then their is the concern of damage or losing of removable devices.

    For what its worth, Bit4X holds client bitcoins on what they call ‘cold’ storage (unconnected)

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  6. Andy

    But you could shut down a financial service provider like Bit4x. The biggest Bitcoin exchange (MTGox) in Japan does follow aml/kyc rules – you cant send bitcoins or dollars to/from them anonymously. They have like $10 million ADV now(and there is no leverage too), i doubt the govt would watch that for long otherwise.

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  7. Timur Latypoff

    That’s neat =)
    I’ll be watching them

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  8. Andy

    Ron: yes i agree, its too risky. Even if you keep it a larger provider like mtgox, they and many others have been hacked too.

    In my opinion its only interesting for speculation or investing for the believers. Personally i wouldnt buy at these levels anyways, but then again i thought $85 for GOOG was too much.

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  9. Michael Greenberg

    it took them 10 years to regulate forex, and only in few countries… we’ll see, it’s not going to be fast – maybe only when banks really feel threatened?

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  10. Matic Kocevar

    Hi,

    fyi, Bitcoins are kept in an offline cold storage. They can shut down the entire Forex market and clients Bitcoins will stay intact.

    Best,
    Matic ‘kakobrekla’ Kocevar

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  11. Timur Latypoff

    Matic, that might be true, but as soon as any hacker or one of employees gets their hands on a single tiny private key file, all clients’ funds will get stolen completely anonymously, cryptographically securely, and with no chance of getting them back.

    That’s why big bitcoin exchanges constantly go out of business.

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  12. Jon

    Fantastic news. I forsee BTC/USD becoming a “major pair” very quickly after it is launched on major platforms. There will always be a need for fiat currency, as long as credit exists. There will also be a need for digital currency like BTC for more direct buying of goods and services.

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  13. John Hudson

    bitcoins are shit. they are a scam

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  14. Andy

    I dont forsee that. Even if it would be widely adopted as a ccy, due to the nature of bitcoin they couldn’t really offer margin trading, since lending/credit is tricky, so every spot trade would have to be fully financed, no? It would never be as liquid as major ccy paris. There could be a very liquid futures market tho, if it really has a future.

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  15. Matic Kocevar

    Timur, I understand your concerns completely. The key point here is that most of the exchanges or wallets that get hacked, tend to do so via their web services which is the most common vector of attack. There is no such thing with Bit4X. Further more, the wonderful Bitcoin technology allows us to have publicly audible balance on an address which is strictly under my control. A dead mans switch is in place and it would take a strategic nuclear weapon that levels out a 500km radius to render those coins useless. If you use a GPG key when you open an account, there aren’t many safer places to store your coins, except for keeping such installation for yourself.

    Best,
    Matic Kocevar

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  16. Michael Greenberg

    well construed argument John..

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  17. Matic Kocevar

    Dead Anonymous, I don’t see where the so called fraud is?

    Best,
    Matic Kocevar

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  18. Timur Latypoff

    Matic, would you please kindly explain the issues noted in the forum above?
    Thanks

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  19. Andrew Saks McLeod

    Whilst I agree that the banks have lost credibility in recent times, I do think the move to a cashless society is a very long way off. BTC/USD is a pair which may have a decent trading life, however it will be interesting as to how to measure its pricing and how liquidity providers/banks will value it against standard currencies. It is one thing trading like with like (for example GBP/USD, JPY/USD etc) as they are physical currencies, but trading “like with different” as in BTC/USD (virtual money against physical currency) could be difficult to monitor as bitcoin’s increase and decrease in value depend on different parameters to those of a physical currency, therefore making it a high-risk transaction. The question is: Is this a move toward cashless society? And although banks in certain regions have lost credibility recently, would a cashless society be a better or worse means of doing business?

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  20. Jon

    @Anonymous. i read the BTC forum; there was nothing proven that there was fraud. Only allegations that the potential for scam/fraud may be large. I’ve seen worse from regulated brokers, but I do think the BTC thing will take off more if at least one of the major brokers considers accepting it.

    @ Andrew. You are correct that there will never be a cashless (or rather ‘fiatless’) society. The main reason is that credit will always be needed to provide for those who WANT to live beyond their means. Western countries, particularly the USA, will be the main promoters of credit and the fiat currency that exists because of it. But there is a need for peer-to-peer transactions across borders that do not involve public servants. BTC does satisfy this need quite elegantly.

    Fiat currency valuation is extremely complex. Look at how easily a news annoucement or global event shakes up the currency. BTC is based solely on its usefulness vs using fiat currency. It’s similar to LibertyReserve, but no pegging.

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  21. Pilyjade

    My thoughts:

    I feel that bitcoin denominated forex will be the wave of the future, and I am very excited about this and will be downloading a MT4 and playing with a demo account.

    I understand that there is a concern for regulation and security of any forex broker. However, the concept behind bitcoin is that it does not fall under the control of any country or jurisdiction. The concept of a regulated bitcoin account become a bit of an oxymoron. Bitcoin has gained acceptance as a “real” currency only through more widespread popular acceptance (not official governmental acceptance). This popular acceptance was achieved through a perceived decreased risk of utilizing BTC as a currency means. Likewise, bit4x is going to have to earn the trust of bitcoin investors in the forex community.

    I see one major issue which is keeping me from rushing to open an account. I am concerned about what appears to be fixed buying power in a bitcoin denominated account in an environment of varying volatile BTC value (up 25 % just over the last 4 days). Don’t get me wrong I wish I had had all my forex accounts in BTC over the last three months, I would be happy for the increase. I am concerned about low margin as presented on the bitfx site. Other brokers will always take the value of the denominated currency into account in determining the margin/buying power of the account whether the account is dominated in GBP, CHF, JPY etc. According to the bitfx website “With the minimum deposit for opening a Live account, 10 BTC (100 dBTC) and 1:100 leverage you can trade up to 0.12 lot” With the current bitcoin value at the time of of this posting at 162.4 (Mt. Gox) a 10 BTC account would only be allowed to trade .12 lots however if denominated in USD if would be worth $1624. Assuming 1:100 margin the max buying power would be then the max buying power would be $162,400. The current EUR/USD of 1.2994( the inverse is .7696; meaning that 1 USD could buy 0.7696 EUR) then this would mean that I could buy 1.24 lots (Not that I would ever use my maximum margin). This is a scale of 10 times more margin in a USD account. Forgive me if I did my math wrong, I did it rather quickly; the concept is the same, however. Any account denominated in BTC will have to address the current BTC/USD rate to adjust margin buying power or it just won’t work.

    Open to corrections or thoughts

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  22. fxgai

    Bitcoin is an interesting idea and it’s growth is also interesting. However I imagine that a good number of people who use it do not understand it that well. The underlying cryptographic ideas involved are not so simple, and if the horses get scared about having some of their assets stored in something which they do not really fully understand, I can imagine the volatility in value could be quite tremendous…

    Still, it is an interesting idea, and being able to make “international transfers” without getting ripped off by intermediary banks, as is currently the case, has it’s attraction.

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  23. Matic Kocevar

    Pilyjade, yes you are correct in some poits but, there is a catch, or two. First things is, you can leverage up to 1:1000, second thing is, you profits and loses are in BTC. So if the BTC price goes up, your profits (denominated in USD or whatever) goes up too so it all evens out.

    Best,
    Matic Kocevar

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  24. Matic Kocevar

    Ops, sorry for all the typos in the upper post – coffee hasn’t kicked in yet. :)

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