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Bitcoin use in the real world may have started with the purchase of a pair of pizzas, but you'd be unlikely to see it used for such a minor exchange today.

That's because as bitcoin has soared in popularity it's become too expensive to use in small transactions. 

The problem came to a head in early December, when Steam, the popular downloadable video game store, announced it would stop accepting bitcoin payments for games, citing the currency's volatility and high transaction fees. Steam relied on a bitcoin payment system called BitPay. Among BitPay's other customers are Microsoft, online retailer NewEgg, and APMEX, which sells precious metals online.

Business Insider checked in with BitPay communication manager James Walpole to find out why bitcoin transactions have become so costly. Here's what he had to say:

Don't blame BitPay for high bitcoin transaction costs

You might think that services like BitPay are to blame for bitcoin's high transaction costs. After all, BitPay's service, which lets merchants accept bitcoin as payment, is similar to a credit card processing service, and retailers are often complaining that credit card fees cut into their profits.

But the fees charged by BitPay and similar companies represent only a small portion of the total cost of a typical bitcoin transaction. For its part, BitPay charges merchants a 1% processing fee per transaction. If a customer spends $10, BitPay keeps $0.10, while sending the vendor the remaining $9.90. 

That's the same fee charged by BitPay rival CoinGate, but one that is less than what's charged by Stripe or Visa on credit card transactions. Those fees can add up over many transactions, but they're not what's making individual bitcoin payments so costly.

Instead, blame the bitcoin miners

So if it's not BitPay and other bitcoin payment processors that are making transactions using the cryptocurrency so expensive, what is? Walpole points the finger at bitcoin miners.

Miners are the people or companies that record data in the bitcoin blockchain, the digital ledger that keeps track of all bitcoin transactions. Miners save those transactions in so-called blocks; they complete a block by solving ever-more-complex cryptographic puzzles.

Mining has become an expensive proposition. It requires high-powered computers that use lots of energy. Miners are typically in the business to make money. They're compensated for their services in three ways.

When they solve a particular puzzle and complete a block, they are awarded with newly created bitcoin. But they also collect fees from both individual bitcoin holders and from bitcoin payment processors such as BitPay.

Its those fees that have made using bitcoin so pricey.

Mining fees are skyrocketing

The first type of fee miners collect are mining or transaction fees. These fees in particular are surging.

At the end of September, the average bitcoin mining fee was around $2 per transaction. By December 21, average fees reached a high of around $37. 

The surge in fees was a matter of supply and demand. As bitcoin's price surged from $10,000 to $20,000, increasing numbers of people wanted to invest in the cryptocurrency. The upsurge in users and transactions increased the demand for miners' services.

At the same time, supply is constrained. The blockchain system that underlies the cryptocurrency can only process around 3 to 7 transactions per second. So at any given moment, a greater number of transactions were competing for a relatively small number of slots in the ledger.

But another, related factor was at work too. Mining fees, which are paid by individual users to miners, are actually optional; bitcoin users don't have to pay them. But they usually do, because the fees encourage miners to record their transactions sooner rather than later. The sooner you want a transaction written to the blockchain, generally the higher mining fee you'll have to pay.

The advantage of having a transaction recorded quickly is that the sooner it's recorded, the sooner you can spend or sell the coins you've received — and the sooner a merchant will mark a deal as completed. That speed can be important when using bitcoin to buy high-demand goods, like concert tickets, which can sell out fast.  

But speeding the recording of bitcoin transactions has been particularly important in a volatile market such as the one the cryptocurrency has experienced in recent months. With the price of bitcoin fluctuating by hundreds or even thousands of dollars in mere hours or minutes, there's a big benefit to being able to buy and sell coins sooner rather than later — and many bitcoin traders have been paying up for just that advantage.

There's also network costs

In addition to mining fees, bitcoin users often have to pay a second fee that ultimately goes to miners, something called a network fee. Payment processors such as Bitpay and Coinbase collect such fees from consumers making purchases to pay miners to move funds from an individual customer's bitcoin wallet address to that of a merchant. The payment processors add the fee to the transaction total.

So when a customer buys something from a merchant using BitPay via the customer's personal digital wallet, the total the customer pays includes both the price of the purchased item and the network cost. BitPay doesn't make any profit off this fee though, Walpole said.

Like mining fees, network costs fluctuate based on how busy the network is. Unlike mining fees, however, network charges aren't optional; BitPay charges them on all transactions it handles to ensure that miners record those transactions as quickly as possible.  

Volatility matters, but not why you think

Bitcoin's price has fluctuated a lot over the last year, but overall has gone way up. And bitcoin transaction costs have gone up in tandem with it.

But the rise in bitcoin's value and the jump in transaction fees aren't as closely linked as they may sound. The price of bitcoin doesn't have a direct impact on transaction fees. It's not like miners are charging more or bitcoin users are having to pay higher fees just because bitcoin is worth more.

Instead, all of the volatility in the price of bitcoin had led to more people buying and selling the cryptocurrency — which has meant a whole lot more transactions that need to be recorded. And more demand has led to higher fees. 

But volatility is affecting demand in a more important way. Because of those fluctuations, the value of bitcoin can change significantly in a short amount of time. When there are a lot of transactions taking place, it can potentially take days to record them all, during which time bitcoin's value could have changed by thousands of dollars.

Merchants risk losing money if they lock in a price with a customer and the value of bitcoin falls before the transaction is completed. That's not a risk many merchants or bitcoin traders take lightly, so many have been willing to accept higher fees to speed the recording of their transactions.

Read more about the blockchain technology that powers bitcoin here.

Subscribe to our Crypto Insider newsletter for the best of the blockchain every day

SEE ALSO: One of the world's biggest video-game services, Steam, has stopped accepting bitcoin because it's so volatile

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NOW WATCH: Why you should never throw away these bags again

• The Mega Millions and Powerball jackpots for this weekend's drawings are both over $300 million.
• If the historical relationship between prize sizes and ticket sales holds, there's a pretty good chance no one will win the jackpot this weekend, but someone could get lucky.

This is an interesting week for lottery fans, as both of the big multi-state lotteries have jackpot prizes over $300 million. The Mega Millions lottery has an estimated prize of $306 million before its Friday evening drawing, while Powerball has a prize of about $384 million for its Saturday drawing, as of the time of this writing.

Business Insider looked at why mathematically it might not be a sound financial idea to buy a ticket for one of those lotteries, despite the large headline jackpot prizes. The odds of any particular person winning the jackpot are very slim: 1 in 292,201,338 for Powerball, and 1 in 302,575,350.

But millions of tickets will still be sold for chances to win those prizes, and so we decided to look at how likely someone, somewhere in the country will actually win.

The number of jackpot winners in a lottery is a textbook example of a binomial distribution, a formula from basic probability theory. If we repeat some probabilistic process some number of times, and each repetition has some fixed probability of "success" as opposed to "failure," the binomial distribution tells us how likely we are to have a particular number of successes.

In our case, the process is filling out a lottery ticket, the number of repetitions is the number of tickets sold, and the probability of success is the 1-in-292,201,338 chance, for Powerball, of getting a jackpot-winning ticket. Using the binomial distribution, we can find the likelihoods of various numbers of winners.

It's worth noting that the binomial model for the number of winners has an extra assumption: that lottery players are choosing their numbers at random. Of course, not every player will do this, and it's possible some numbers are chosen more frequently than others. If one of these more popular numbers is drawn on Saturday night, the odds of splitting the jackpot will be slightly higher. Still, the above graph gives us at least a good idea of the chances for different numbers of winners.

Of course, our above binomial distribution is dependent on knowing how many people actually are buying tickets for this week's jackpots. We won't know that exact number until after the draws actually happen. However, we can try to make a guess based on historical trends.

LottoReport.com maintains an archive of jackpot sizes and ticket sales for Mega Millions and Powerball drawings. Looking at Powerball drawings from 2017, we can see that there is a relationship between the size of the jackpot and the number of ticket sales. This makes sense — bigger prizes bring more attention and entice more buyers to jump into the pot.

Looking at that chart, we can see that lottery drawings in the approximate range of Saturday's $384 million jackpot have tended to bring in between around 30 and 50 million tickets sold.

If 30 million tickets are sold, the binomial distribution model above suggests about a 90.2% chance no one wins and the jackpot rolls over, a 9.3% chance of exactly one winner, and roughly a 0.5% chance of a split jackpot.

If sales are on the higher end and 50 million tickets are sold, that slightly increases the odds of at least one winner. The likelihood that no one wins drops to about 84.3%, the chance of exactly one winner goes up to 14.4%, and the chance of more than one winner remains small at about 1.3%.

Of course, there are a lot of assumptions going into those numbers, so they should naturally be taken with a grain of salt. But if those historical relationships hold, this gives us some estimate for the range of likelihoods that someone will win.

So, it's more likely than not, given historical ticket sales trends, that no one will win this weekend, but there's a decent chance some lucky winner will have a very happy Saturday.

SEE ALSO: If you can solve one of these 6 major math problems, you'll win a $1 million prize

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NOW WATCH: PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was

Stocks slipped on the final trading day of 2017, but not by nearly enough to cast a shadow on the incredible rally this year. 

For the first time ever, the S&P 500 finished every month of the calendar year with a gain. 

Here's Friday's scoreboard: 

• Dow: 24,767.29 -70.22 (-0.28%)
• S&P 500: 2,677.04 -10.50 (-0.39%)
• Nasdaq: 6,907.68 -42.48 (-0.61%)

And for the final trading day of the year, here's how various assets were priced on Friday, and their annual gain:.

• S&P 500: +20% (best year since 2013)
• 10-year yield: 2.45% on Jan. 2, 2.4% on Dec. 29
• 30-year yield: 3.06% on Jan. 2, 2.74% on Dec. 29
• WTI crude oil: $60.42, +12% (highest level since mid-2015)
• Gold: $1,305.50, +13% (best year since 2010)
• US Dollar Index: 91.94, -10% (worst year since 2003)
• Bitcoin: $14,610.71, +1,401% (as of 3:35 p.m. ET)

1. Goldman Sachs expects a $5 billion hit to profits for the fourth quarter and year because of the new tax law. Two-thirds are due to changes in repatriation taxes, when funds held overseas are returned. 
2. Ripple briefly overtook ethereum as the second-largest cryptocurrency by market cap. Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com.

3. A settlement has been reached in the insider trading case against Bill Ackman's hedge fund, Pershing Square, and Valeant Pharmaceuticals. "Pershing Square and Valeant have agreed to split the $290 million total settlement such that Pershing Square will pay $193.75 million and Valeant will pay $96.25 million," Pershing said in a press release.  

Additionally: 

The best stock market trade of 2017 was one that experts hate

A kidnapped crypto executive was reportedly released after paying a $1 million bitcoin ransom

You can now practice trading CME bitcoin futures

Wall Street banks are booking big losses because of Trump's new tax rules — and they can be traced all the way back to the financial crisis

Join the conversation about this story »

NOW WATCH: How the sale of Qdoba will impact Chipotle's future

Stocks slipped on the final trading day of 2017, but not by nearly enough to cast a shadow on the incredible rally this year. 

For the first time ever, the S&P 500 finished every month of the calendar year with a gain. 

Here's Friday's scoreboard: 

• Dow: 24,767.29 -70.22 (-0.28%)
• S&P 500: 2,677.04 -10.50 (-0.39%)
• Nasdaq: 6,907.68 -42.48 (-0.61%)

And for the final trading day of the year, here's how various assets were priced on Friday, and their annual gain:.

• S&P 500: +20% (best year since 2013)
• 10-year yield: 2.45% on Jan. 2, 2.4% on Dec. 29
• 30-year yield: 3.06% on Jan. 2, 2.74% on Dec. 29
• WTI crude oil: $60.42, +12% (highest level since mid-2015)
• Gold: $1,305.50, +13% (best year since 2010)
• US Dollar Index: 91.94, -10% (worst year since 2003)
• Bitcoin: $14,610.71, +1,401% (as of 3:35 p.m. ET)

1. Goldman Sachs expects a $5 billion hit to profits for the fourth quarter and year because of the new tax law. Two-thirds are due to changes in repatriation taxes, when funds held overseas are returned. 
2. Ripple briefly overtook ethereum as the second-largest cryptocurrency by market cap. Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com.

3. A settlement has been reached in the insider trading case against Bill Ackman's hedge fund, Pershing Square, and Valeant Pharmaceuticals. "Pershing Square and Valeant have agreed to split the $290 million total settlement such that Pershing Square will pay $193.75 million and Valeant will pay $96.25 million," Pershing said in a press release.  

Additionally: 

The best stock market trade of 2017 was one that experts hate

A kidnapped crypto executive was reportedly released after paying a $1 million bitcoin ransom

You can now practice trading CME bitcoin futures

Wall Street banks are booking big losses because of Trump's new tax rules — and they can be traced all the way back to the financial crisis

Join the conversation about this story »

NOW WATCH: How the sale of Qdoba will impact Chipotle's future

The post Our Top 5 Bitcoin “Good News” Stories of 2017 appeared first on Bitcoin Magazine.

The post Our Top 5 Bitcoin “Good News” Stories of 2017 appeared first on Bitcoin Magazine.

The post Lyn Ulbricht: Ross’s Latest Appeal About “Constitutional Protections and Freedoms for Us All” appeared first on Bitcoin Magazine.

• A family is suing Alaska Airlines and a contractor after an elderly woman died following a fall down an escalator in a wheelchair at Portland International Airport.
• The family paid for a service to ensure the woman would reach her connecting flight safely, but a surveillance video shows the woman navigating the airport alone and eventually falling down an escalator.
• The woman had her right leg amputated below the knee as a result and died the day after the surgery.

A family is suing Alaska Airlines and a contractor after 75-year-old Bernice Kekona died following a fall down an escalator while in a wheelchair at Portland International Airport, according to CBS News.

Kekona's family had paid for a service to ensure Kekona would reach her connecting flight safely after landing in Portland, but the family alleges the contractor, Huntleigh, that Alaska Airlines hired to perform the service did not fulfill its duties.

A surveillance video shows that after exiting her initial flight, Kekona navigated the airport alone before falling down an escalator headfirst and suffering multiple injuries. She eventually had to have her right leg amputated below the knee and died the day following the surgery.

Though it doesn't cite any specific monetary damages, the lawsuit says that Kekona's medical bills were almost $300,000.

"We don't have all the facts, but after conducting a preliminary investigation, it appears that Ms. Kekona declined ongoing assistance in the terminal and decided to proceed on her own to her connecting flight," Alaska Airlines said in a statement to Business Insider. 

The airline said that Kekona "went off on her own" after being helped into her wheelchair.

Huntleigh did not immediately respond to a request for comment.

SEE ALSO: American Airlines apologizes for accusing pro basketball players of theft and forcing them off the plane

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NOW WATCH: This is one of the best responses to Jamie Dimon calling bitcoin a fraud that we have heard so far

• The CEO of UK-registered cryptocurrency exchange Exmo Finance has reportedly been released from the custody of his kidnappers after a $1 million bitcoin ransom payment, according to a report from the Financial Times. 
• Pavel Lerner was reportedly kidnapped while leaving the company's Kiev offices. 

Pavel Lerner, the CEO of cryptocurrency exchange Exmo Finance, has been released from the custody of kidnappers after the payment of a $1 million bitcoin ransom, according to the Financial Times. 

Lerner, 40, was reportedly dragged into a black Mercedes-Benz by men in balaclavas while leaving the Kiev offices of his company on December 26, according to local media reports.

The FT reported Friday that Lerner was "released in a state of shock," according to Anton Gerashchenko, a Ukrainian adviser. 

"We have operative information that he paid more than $1 million worth of bitcoins," Gerashchenko said. 

The exchange business Lerner runs is registered in the UK and also has a presence in Spain, Russia, India, and Thailand, according to the Telegraph.

The anonymity of bitcoin and its eye-popping gain of more than 1,300% this year have made it a darling of criminals and the so-called dark web. 

The Italian mafia has used bitcoin to launder money for its illicit activities, for instance, and the notorious WannaCry hackers extorted over $140,000 worth of the cryptocurrency from their malware victims. 

Since transactions on bitcoin's blockchain network are decentralized and anonymous, the cryptocurrency provides an attractive option for criminals looking to conduct business outside of the watchful eye of government officials. 

Read the full FT report>>

Oscar Williams-Grut contributed reporting.

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NOW WATCH: The 5 issues to consider before trading bitcoin futures

The post As Bitcoin Hard Forks Go, ‘SegWit2x’ Launches With Little Support appeared first on CCN

The “SegWit2x” hard fork activated on Thursday at Bitcoin block 501451, but so far it has struggled to gain support from both users and cryptocurrency services. ‘SegWit2x’ Hard Fork Activates Leading up to the fork, SegWit2x (B2X) futures surged in value, peaking above $1,200 on Dec. 27. This was likely because, due to the naming

The post As Bitcoin Hard Forks Go, ‘SegWit2x’ Launches With Little Support appeared first on CCN

• Whole Foods courted seven separate potential deal partners.
• The company read a news story about Amazon's interest and reached out after feeling the heat from activist investors.
• Amazon played hardball, demanding secrecy and nearly walking away after Whole Foods made a $45-per-share counteroffer.

The day that Amazon and Whole Foods announced their $13.7 billion merger that shook the grocery industry, a giddy John Mackey couldn't hide his enthusiasm.

The grocer's CEO regaled a crowd of his employees with a tale of "love at first sight," describing the moment the two companies met on a "blind date" six weeks earlier.

But in reality, the deal was far from inevitable, according to a Securities and Exchange Commission filing detailing how the merger went down.

In all, seven suitors were vying for Whole Foods. And though Amazon may have been the preferred deal partner, tough negotiations ensued, and the e-commerce behemoth came close to walking away from the deal.

Amazon arrived as a bidder in unusual fashion. Whole Foods read a news story from April suggesting the tech giant had been interested in acquiring Whole Foods but ultimately decided against it.

The organic-food retailer's management had since late 2016 been actively discussing strategies to improve Whole Foods' disappointing stock price, which had steadily declined along with profit in recent years.

Pressure to right the ship heightened in early April when the activist hedge fund Jana Partners announced it had acquired a nearly 9% stake in the company and was angling for a big shake-up in the top ranks.

Whole Foods' top brass had no desire to relinquish their control of the company without a fight, and a week later Mackey and his team hired a top defense banker from Evercore with more than a decade of experience battling activist and hostile investors.

Seven suitors

On April 18, inquiries started to trickle in. One industry competitor wrote a letter expressing interest in a deal, followed in subsequent days by inquiries from four private-equity firms.

That week, as interest from potential acquirers began to simmer, Whole Foods' management and an outside consultant mulled over a recent media report indicating Amazon had entertained the idea of buying up their company.

The Whole Foods consultant that Friday called Jay Carney, a former Obama administration spokesman who is now a senior vice president of corporate affairs for Amazon, to see if the tech giant might still be interested in pursuing the grocer. The next Monday, Amazon told the consultant it would be open to a meeting.

Meanwhile, pressure from Jana Partners intensified. That week, the hedge fund met with Whole Foods execs and made various demands, particularly insisting on an overhaul of the board of directors.

The Whole Foods board met that Friday, April 28, to discuss how it would respond to Jana. That's when Mackey informed members that he and other top executives were planning to jet off to Seattle to gauge Amazon's interest in acquiring the company.

They wasted little time, flying to Amazon's headquarters that Sunday for a meeting that Mackey later said lasted 2.5 hours and was "love at first sight."

"I think we coulda talked for 10 hours. And — when we huddled together, it was like we just had — we just had these big grins on our faces, like, 'These guys are amazing. They're so smart. They're so authentic,'" Mackey later told employees in a company town-hall meeting. "They say what's on their mind. They're not playin' a bunch of BS games. And it was like, 'This is gonna be so incredible.'"

But despite Mackey's optimism, a deal was far from certain, and Jana was breathing down his neck.

Whole Foods tried to placate Jana the next week by offering up two board seats in exchange for the activist investor's retracting its claws and giving the company 18 months to pursue strategic measures to revive itself.

Jana declined the offer, but Whole Foods nonetheless shook up its board, appointing five new directors on May 10.

Amazon emerges

Over the following weeks, Whole Foods' management continued to weigh its options. One competing grocery retailer suggested a "merger of equals," while another competitor proposed a commercial agreement, such as a supply-chain arrangement.

Then, on May 23, Amazon sent a written offer to buy Whole Foods for $41 per share, valuing the company at $13.1 billion — well above the $35 it was trading at. The tech giant communicated that it felt its bid was very competitive, and it demanded secrecy during the transactions. Any leak or rumor of a deal, and Amazon would be willing to terminate discussions.

Amazon was aggressive about the last point: protecting the secrecy of the "highly sensitive" negotiation. Goldman Sachs, representing Amazon in the transaction, separately called up Whole Foods' banker at Evercore two days later to reiterate: Confidentiality was crucial to a deal, and they would have no part in a multiparty bidding war.

Whole Foods' board met to discuss its options on May 30. It now had six suitors in addition to Amazon: two industry competitors and four private-equity firms.

Evercore advised the board that the buyout shops were unlikely to be able to top Amazon's price. And according to the SEC filing, the bank reminded the directors "that Amazon.com had re-emphasized in multiple communications that Amazon.com would not be willing to further engage with the Company in the event of a rumor or leak of a potential transaction."

Whole Foods decided to pursue Amazon, but it wanted to sweeten the deal. It made a counteroffer of $45 per share, or nearly $14.4 billion. Amazon wasn't pleased.

From the SEC filing:

"The Goldman Sachs representatives expressed their disappointment at the price specified in the Company's counter proposal as they had previously informed the Evercore representatives that Amazon.com believed that it had made a very strong bid."

The next day, Goldman Sachs told Whole Foods that Amazon was now looking at other opportunities — and it was considering whether to reply to the counterproposal or just walk away.

As a last-ditch effort, Amazon offered $42 per share, emphasizing that this was its best and final offer. The tech giant was clear: It wanted a swift response, and it didn't want any other bidders meddling in the process.

From the filing (emphasis added):

"Goldman Sachs also made it clear again to the representatives from Evercore that Amazon.com would disengage from its efforts to acquire the Company and pursue other alternatives and initiatives if the $42.00 per share price were not accepted and that Amazon.com expected that the Company would not approach other potential bidders while the Company was negotiating with Amazon.com (although they understood that the Company's board of directors would have a customary fiduciary out in the merger agreement), and requested that the Company promptly give a yes or no response to the $42.00 offer.

"They signaled Amazon.com's willingness to move forward on the transaction quickly if the Company responded favorably to the offer as well as Amazon.com's resolve in discontinuing discussions with the Company if the Company did not find the revised offer to be attractive."

Whole Foods adhered to Amazon's demands. The companies spent the next two weeks quietly performing due diligence on the deal before approving a merger on June 15 at Amazon's final offer price of $42 per share — $13.7 billion including debt.

With the whole process successfully kept secret in accordance with Amazon's request, the deal, announced the next day, sent tremors across multiple industries and sapped billions from the market caps of grocery stores and pharmacy companies.

Not long after, shares of Whole Foods surged above the deal price, suggesting investors thought — or hoped — that a rival bidder would emerge. But in reality, six other companies had already inquired about Whole Foods, and Amazon had made clear it would under no circumstances engage in a bidding war or exceed a price of $42 per share.

Whole Foods sealed its marriage with Amazon, and this week shares shot back down toward the deal price as investors confronted the realization that the tech giant had won and no competing bid would emerge.

Join the conversation about this story »

NOW WATCH: The 5 issues to consider before trading bitcoin futures

Welcome to Crypto Insider, Business Insider’s roundup of all the bitcoin and cryptocurrency news you need to know today. Sign up here to get this email delivered direct to your inbox.

The cryptocurrency market came storming back Friday after a holiday slump. 

The market capitalization for cryptocurrencies retested old highs, crossing back over $600 billion. The market first hit the milestone on December 18. It bottomed out four days later at $412 billion. 

The biggest gains in the market were not among the top known cryptos - such as bitcoin and Ethereum - but smaller so-called alt-coins. Here's the scoreboard for Friday: 

• Bitcoin (BTC): $4,761 (+2.7%)
• Ethereum (ETH): $744 (+3.6%)
• Bitcoin Cash (BCC): $2,693 (+8.65%)
• Ripple (XRP): $1.67 (+32%)
• Litecoin (LTC): $253 (+2.01%)

Smaller coins, such as Cardano and Stellar, were up more than 20% apiece, according to data provider CoinMarketCap.com. 

What's happening:

1. You can now practice trading CME bitcoin futures. Wannabe bitcoiners now have a way to try their hand at CME Group's bitcoin futures market without any risk. CME recently added a bitcoin futures simulation to its CME Institute suite of trading simulation tools.
2. ETHEREUM FOUNDER: 'I won't stop or slow working on crypto just because price memes and stupid jokes exist.' Vitalik Buterin, the founder of Ethereum, has clarified a tweet from Wednesday in which he threatened to leave crypto if communities in the space didn't grow up. Originally, he said he would leave crypto if all people in the space did was post memes about how much money they had.
3. Ripple briefly overtakes Ethereum as the No. 2 crypto. A red-hot close to 2017 briefly caused Ripple's XRP to overtake Ethereum as the second-largest cryptocurrency by market cap. Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com.
4. The CEO of a UK-registered bitcoin exchange has been kidnapped in Ukraine. Pavel Lerner, 40, was reportedly dragged into a black Mercedes-Benz by men in balaclavas while leaving the Kiev offices of his company, Exmo Bitcoin, on December 26, according to local media reports.
5. 'This is my future': South Korean students are going wild for bitcoin, even as regulators crack down. Young South Koreans are flocking to cryptocurrency markets, driven by high youth unemployment and promises of big returns.

SEE ALSO: Bitcoin bull Tom Lee has identified 12 stocks that are perfect if you don’t want to own it

Join the conversation about this story »

NOW WATCH: PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was

Welcome to Crypto Insider, Business Insider’s roundup of all the bitcoin and cryptocurrency news you need to know today. Sign up here to get this email delivered direct to your inbox.

The cryptocurrency market came storming back Friday after a holiday slump. 

The market capitalization for cryptocurrencies retested old highs, crossing back over $600 billion. The market first hit the milestone on December 18. It bottomed out four days later at $412 billion. 

The biggest gains in the market were not among the top known cryptos - such as bitcoin and Ethereum - but smaller so-called alt-coins. Here's the scoreboard for Friday: 

• Bitcoin (BTC): $4,761 (+2.7%)
• Ethereum (ETH): $744 (+3.6%)
• Bitcoin Cash (BCC): $2,693 (+8.65%)
• Ripple (XRP): $1.67 (+32%)
• Litecoin (LTC): $253 (+2.01%)

Smaller coins, such as Cardano and Stellar, were up more than 20% apiece, according to data provider CoinMarketCap.com. 

What's happening:

1. You can now practice trading CME bitcoin futures. Wannabe bitcoiners now have a way to try their hand at CME Group's bitcoin futures market without any risk. CME recently added a bitcoin futures simulation to its CME Institute suite of trading simulation tools.
2. ETHEREUM FOUNDER: 'I won't stop or slow working on crypto just because price memes and stupid jokes exist.' Vitalik Buterin, the founder of Ethereum, has clarified a tweet from Wednesday in which he threatened to leave crypto if communities in the space didn't grow up. Originally, he said he would leave crypto if all people in the space did was post memes about how much money they had.
3. Ripple briefly overtakes Ethereum as the No. 2 crypto. A red-hot close to 2017 briefly caused Ripple's XRP to overtake Ethereum as the second-largest cryptocurrency by market cap. Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com.
4. The CEO of a UK-registered bitcoin exchange has been kidnapped in Ukraine. Pavel Lerner, 40, was reportedly dragged into a black Mercedes-Benz by men in balaclavas while leaving the Kiev offices of his company, Exmo Bitcoin, on December 26, according to local media reports.
5. 'This is my future': South Korean students are going wild for bitcoin, even as regulators crack down. Young South Koreans are flocking to cryptocurrency markets, driven by high youth unemployment and promises of big returns.

SEE ALSO: Bitcoin bull Tom Lee has identified 12 stocks that are perfect if you don’t want to own it

Join the conversation about this story »

NOW WATCH: PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was

Welcome to Crypto Insider, Business Insider’s roundup of all the bitcoin and cryptocurrency news you need to know today. Sign up here to get this email delivered direct to your inbox.

The cryptocurrency market came storming back Friday after a holiday slump. 

The market capitalization for cryptocurrencies retested old highs, crossing back over $600 billion. The market first hit the milestone on December 18. It bottomed out four days later at $412 billion. 

The biggest gains in the market were not among the top known cryptos - such as bitcoin and Ethereum - but smaller so-called alt-coins. Here's the scoreboard for Friday: 

• Bitcoin (BTC): $4,761 (+2.7%)
• Ethereum (ETH): $744 (+3.6%)
• Bitcoin Cash (BCC): $2,693 (+8.65%)
• Ripple (XRP): $1.67 (+32%)
• Litecoin (LTC): $253 (+2.01%)

Smaller coins, such as Cardano and Stellar, were up more than 20% apiece, according to data provider CoinMarketCap.com. 

What's happening:

1. You can now practice trading CME bitcoin futures. Wannabe bitcoiners now have a way to try their hand at CME Group's bitcoin futures market without any risk. CME recently added a bitcoin futures simulation to its CME Institute suite of trading simulation tools.
2. ETHEREUM FOUNDER: 'I won't stop or slow working on crypto just because price memes and stupid jokes exist.' Vitalik Buterin, the founder of Ethereum, has clarified a tweet from Wednesday in which he threatened to leave crypto if communities in the space didn't grow up. Originally, he said he would leave crypto if all people in the space did was post memes about how much money they had.
3. Ripple briefly overtakes Ethereum as the No. 2 crypto. A red-hot close to 2017 briefly caused Ripple's XRP to overtake Ethereum as the second-largest cryptocurrency by market cap. Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com.
4. The CEO of a UK-registered bitcoin exchange has been kidnapped in Ukraine. Pavel Lerner, 40, was reportedly dragged into a black Mercedes-Benz by men in balaclavas while leaving the Kiev offices of his company, Exmo Bitcoin, on December 26, according to local media reports.
5. 'This is my future': South Korean students are going wild for bitcoin, even as regulators crack down. Young South Koreans are flocking to cryptocurrency markets, driven by high youth unemployment and promises of big returns.

SEE ALSO: Bitcoin bull Tom Lee has identified 12 stocks that are perfect if you don’t want to own it

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NOW WATCH: PAUL KRUGMAN: Bitcoin is a more obvious bubble than housing was

Exmo has confirmed that Pavel Lerner is safe after reports that he was thrown out of a car.

The post Bitcoin Price Flirts With $14,000 as Ripple Nips at Ethereum’s Heels appeared first on CCN

The bitcoin price held relatively stable on Friday, continuing to flirt with $14,000 amidst its general downtrend. The ripple price, meanwhile, leaped nearly 35 percent and has begun to nip at ethereum’s heels as the two cryptocurrencies jockey for the second place in the market cap rankings. Buoyed by ripple’s rally, the cryptocurrency market cap

The post Bitcoin Price Flirts With $14,000 as Ripple Nips at Ethereum’s Heels appeared first on CCN

The post Bitcoin Price Flirts With $14,000 as Ripple Nips at Ethereum’s Heels appeared first on CCN

The bitcoin price held relatively stable on Friday, continuing to flirt with $14,000 amidst its general downtrend. The ripple price, meanwhile, leaped nearly 35 percent and has begun to nip at ethereum’s heels as the two cryptocurrencies jockey for the second place in the market cap rankings. Buoyed by ripple’s rally, the cryptocurrency market cap

The post Bitcoin Price Flirts With $14,000 as Ripple Nips at Ethereum’s Heels appeared first on CCN

• Wannabe bitcoin futures traders can give the market a try with a new simulation tool.
• CME Group added the free tool to its CME Institute suite to help educate investors about the new product. 
• CME launched bitcoin futures earlier this month.

Wannabe bitcoiners now have a way to try their hand at CME Group's bitcoin futures market without any risk. 

CME recently added a bitcoin futures simulation to its CME Institute suite of trading simulation tools. The point of the free tool is to help educate people about how bitcoin futures work. CME tweeted about the new feature on Wednesday:

CME launched its futures market, which allows investors to bet on the future price of the red-hot coin, on December 18. Cross-town rival Cboe Global Markets launched its own bitcoin futures market earlier in December.

The new markets have further unleashed bitcoin onto mainstream financial firms. Brokerages TD Ameritrade and E-Trade now allow clients to trade the product on their platforms. A number of market-making firms such as DRW, DV Trading, and Akuna Capital are providing liquidity to the markets. 

Still, interest in the market from investors remains low. 

Volume for CME's futures contract set to expire in January is just 723 at midday on Friday while Cboe's is a bit higher at 3,144. By way of comparison, front month gold futures volume is 158,000, according to Bloomberg data. Volumes are typically muted during the holidays. 

Of course, bitcoin futures trading is still in its infancy. As investors become more comfortable with the product and it becomes more established they may decide to jump on board.  

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SEE ALSO: A partner at one of the top bitcoin trading firms told us why crypto is 'such an amazingly fun space to be in'

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NOW WATCH: The 5 issues to consider before trading bitcoin futures

• Citigroup, Goldman, and other banks are announcing multi-billion dollar writedowns because of the new tax rules that take effect next year. 
• There are two main reasons for the losses: a provision in the plan taxing overseas profits, and a revaluation of tax assets that for some banks date back to the financial crisis. 
• Despite these announced losses, which are comparatively small, banks are still thrilled about the tax changes.
• "It's a very very small price to pay for what they got out of this," said Isaac Boltansky, director of policy research at Compass Point, told Business Insider.

Like most businesses, banks should be pleased with President Donald Trump's $1.5 trillion tax reform bill that passed this month. It will cut corporate tax rates from 35% down to 21%.

Banks are expected to benefit even more than most companies — since they tend to pay full tax rate to begin with, and because potential economic and inflationary stimulus from the bill could give their lines of business a shot in the arm. They're expected to see earnings grow in the neighborhood of 15% as a result of tax reform, according to research firm Compass Point. 

So why have the big Wall Street banks been announcing giant losses in December?

Goldman Sachs reported Friday that its fourth-quarter and 2017 earnings would take a $5 billion hit on account of tax reform; Citigroup earlier in the month said it expected to take a $20 billion loss if the tax plan went through.  

Other bulge-bracket banks are also expecting billion-dollar losses resulting from tax reform, though not as large as Citi and Goldman Sachs. 

There are two primary reasons banks are reporting some big losses in the fourth quarter from the tax plan: the repatriation provision, and the necessity to revalue some assets on their balance sheet that, in some cases, connect all the way back to the financial crisis. 

Overseas profits are getting taxed, whether you bring them home or not

First, repatriation, which is fairly straightforward.

In part to help pay for some of the tax cuts to corporations and individuals and encourage companies to bring profits back to the U.S., the new rules levy taxes on earnings that corporations have sitting overseas.

Currently, companies pay taxes on overseas profits when they bring them back to U.S. soil — a process they can delay and drag out. 

Now, corporations will pay a 15.5% tax on their overseas cash earnings, whether they bring them back or not. 

"That's why you're seeing large multinational companies taking into account a new tax on their earnings overseas," Isaac Boltansky, director of policy research at Compass Point, told Business Insider.

Goldman Sachs attributed two-thirds of its $5 billion loss to this provision. 

A tool to defray tax costs is getting a haircut

Taking the corporate tax rate down to 21% from 35% is a major boon for the banks, which tend to pay closer to the full tax rate than other industries. But that also means revaluing some assets kept on their balance sheets intended to help defray tax costs. 

What we're referring to are "deferred tax assets," an accounting procedure that can get a bit wonky, but for these purposes it functions like this: When a business takes a big loss in a given year, it can use the size of that loss to lower its tax burden in future years. Since it can lower what you pay in taxes and thus increase profits in the future, it's considered an asset — but you have to estimate it fairly given the current tax code and report that asset on your balance sheet. 

This is what's primarily going on with Citigroup, which took massive losses during the financial crisis that it has been using in the ensuing years as deferred tax assets.

But if the overall corporate tax rate drops, the value of those tax assets drop as well.

"A lot of banks put up large losses during the crisis," said Jesus Bueno, a VP at Compass Point and the firm's bank expert. "If you're going from a 35% tax rate to a 21% tax rate, the value of those losses becomes less over time."

Banks now have to adjust their valuation of their tax assets, "impairing" a large chunk on their balance sheets to account for the tax rate falling by 14 percentage points. 

As Bueno put it: A $35 million tax asset would now need to be written down to $21 million. 

The law requires that companies do this during the period when the legislation is enacted, which is the quarter we're in right now — hence why you've got a rash of banks announcing losses after the tax legislation passed this December. 

It's important to keep in mind: None of this was a surprise to banks, and they're not upset about it, either. 

"This was very much expected," Bueno said. "The benefit from the ongoing corporate tax rate more than offsets the hit to deferred tax assets."

Boltansky added: "It's a very very small price to pay for what they got out of this."

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NOW WATCH: Economist Jim Rickards on gold versus bitcoin — intrinsic value is meaningless for both but the bitcoin prices aren't real

The post Ark Investment CEO: Bitcoin is Bigger Than Apple appeared first on CCN

Catherine Wood, CEO of Ark Investment Management, told CNBC that bitcoin is a “bigger idea” than Apple. “I know a lot of people say, ‘don’t compare this to Apple, which is nearing a trillion dollars, but this is so much bigger than even Apple, which is a pretty big idea.” She said her fund cannot

The post Ark Investment CEO: Bitcoin is Bigger Than Apple appeared first on CCN

It's always good to know when the markets are open and when you can take the day off.

The New York Stock Exchange has a list of the days on which the biggest stock market in the world is closed for business.

Bond and other securities markets are somewhat more decentralized, but the Securities Industry and Financial Markets Association (SIFMA) has a list of suggested holidays and half days.

Finally, the Chicago Mercantile Exchange also provides information on when US equity and other futures markets are open and closed during the holiday season.

Here's our guide to US market holidays for 2018 (all times are Eastern Time):

SEE ALSO: If you can solve one of these 6 major math problems, you'll win a $1 million prize

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NOW WATCH: Here's what bitcoin futures could mean for the price of bitcoin

The post Ivy Playground for Bitcoin: Experimenting With the Future of Bitcoin Smart Contracts appeared first on Bitcoin Magazine.

The post Vector, Nexus Join the Space Race With Plans for Satellite-Based Blockchain Network appeared first on Bitcoin Magazine.

The post Ripple Mania: How Big Can the Bankers’ Cryptocurrency Get? appeared first on CCN

For a brief period of time, Ripple overtook Ethereum to become the second largest cryptocurrency in the global market behind bitcoin, with a $72 billion market valuation, on December 29. Ripple Mania in South Korea Since then, the market cap of Ripple has fallen slightly from $72 billion to $70.3 billion, allowing Ethereum to regain

The post Ripple Mania: How Big Can the Bankers’ Cryptocurrency Get? appeared first on CCN

The post Ripple Mania: How Big Can the Bankers’ Cryptocurrency Get? appeared first on CCN

For a brief period of time, Ripple overtook Ethereum to become the second largest cryptocurrency in the global market behind bitcoin, with a $72 billion market valuation, on December 29. Ripple Mania in South Korea Since then, the market cap of Ripple has fallen slightly from $72 billion to $70.3 billion, allowing Ethereum to regain

The post Ripple Mania: How Big Can the Bankers’ Cryptocurrency Get? appeared first on CCN

Ripple's token XRP nearly doubled within one week, becoming now the third largest cryptocurrency by market capitalization.

The post Bitcoin Price Stabilizes at $14,200 After Dipping Below $13,500 Amidst Correction appeared first on CCN

The bitcoin price has stabilized at $14,500 after dipping below $13,500 yesterday. Analysts have attributed the recent dip in the price of bitcoin to now-refuted rumors that the South Korean government was planning to ban bitcoin exchanges. Bitcoin Demonstrating Signs of Recovery On December 28, CCN reported that unconfirmed rumors around a potential cryptocurrency exchange

The post Bitcoin Price Stabilizes at $14,200 After Dipping Below $13,500 Amidst Correction appeared first on CCN

• The S&P 500 is set to finish 2017 with 12 months of gains. 
• That's never happened before. 
• Earnings growth was strong, all 45 economies under the Organisation for Economic Cooperation and Development (OECD) were expanding, and investors started to price in the impact of the new tax law. 
• Some analysts expect 2018 to be more volatile. 

What a year.

For the first time ever, the S&P 500 is set to end every single month of a calendar year with a gain.

It came very close three times: in 1958, 1995, and 2006, when it had 11 up months. The worst year was 1974, when it was positive in only one month. 

There was no shortage of news this year to deter the bull market, from the threat of nuclear war to unending warnings that the stocks are too expensive.  

Yet here we are. In February, the S&P 500 was already trading at the average point that Wall Street analysts had forecast for the year-end — 2,364. It closed at 2,687 on Thursday, on track for a 20% gain this year which would be the highest since 2011. 

It wasn't only the US stock market that had an impressive. Almost every major equity index will finish positive for 2017. That's unsurprising, given that for the first time in a decade, all 45 economies under the Organisation for Economic Cooperation and Development (OECD) were growing. 

US companies, especially in the energy sector, pulled further away from an earnings recession that lasted from Q2 2015 through Q3 2016. They're now on track for the best year of earnings per share growth since 2011. 

And then there's President Donald Trump, who has repeatedly taken credit for the rally.

It's not 100% his for all the reasons listed above and the fact that the bull market was going seven years strong before he was elected. But the prospect of tax cuts did boost investor sentiment. For some time, it supported the highly-taxed companies that would benefit the most from cuts. And, many analysts forecast that it will be an earnings booster in 2018.  

Some of them also think the best of this party is over. Morgan Stanley, for example, is still bullish, but predicts that next year won't be as easy. As stocks made ever-increasing highs, the CBOE's volatility index plummeted to a historic low.

"After a very painful slide in volatility for many traders looking for a rise the past several years, we have finally reached a point where betting on higher volatility will pay off," said Mike Wilson, the chief US equity strategist at Morgan Stanley, in a note. 

SEE ALSO: Traders are betting billions that the hottest stocks of 2017 will get crushed

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• Vitalik Buterin, the founder of Ethereum, clarified a tweet about him leaving crypto if communities in the space don't grow up.
• He said he'll stay so long as "there's also real social value that the ecosystem is working towards."

Vitalik Buterin, the founder of Ethereum, clarified a tweet from Wednesday about him leaving crypto if communities in the space don't grow up. 

Originally, he said he would leave crypto if all people in the space do is post memes about how much money they have.

He said on Thursday that "all" was the "operative word" in his original tweet, adding he would continue to work in the space so long as there are communities working on something impactful. Here's Buterin in a tweet:

Buterin said coiners working on interesting projects should check to see whether they are eligible to receive funds from his advisor token donation fund. Buterin said the fund has distributed over $1 million.

"Never hurts to quietly put up an ETH address," he added.

The market for digital coins has exploded this year, with bitcoin and Ethereum leading the way, up more than 8,500%.

Also, ethereum has paved the way for hundreds of initial coin offerings, a cryptocurrency twist on the initial public offering process. Autonomous NEXT, a fintech analytics firms, estimates over $4 billion has been raised via ICOs, which help startups raise capital outside traditional financial services.

In total, the market for digital coins has exploded from just under $18 billion at the start of the year to a whopping $580 billion, according to data from CoinMarketCap.com. 

Buterin has questioned whether the crypto space deserves these eye-popping gains based on what it has given back to society. 

"So total cryptocoin market cap just hit $.05T today. But have we earned it," he said in a tweet soon after the milestone. 

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SEE ALSO: A partner at one of the top bitcoin trading firms told us why crypto is 'such an amazingly fun space to be in'

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The post Ripple Price Surges 38%, Unseats Ethereum as Second-Largest Cryptocurrency appeared first on CCN

Ripple price surged by 38 percent on Friday, enabling XRP to unseat ethereum as the second-most valuable cryptocurrency. Ripple Unseats Ethereum as Second-Largest Cryptocurrency Ripple’s late-December rally has been nothing short of breathtaking. The ripple price has managed to tread water during the market downturns, and it has surged during the calm periods in between.

The post Ripple Price Surges 38%, Unseats Ethereum as Second-Largest Cryptocurrency appeared first on CCN

Bitcoin's price started the year off by crossing $1,000, culminating with a run that brought it close to $20,000.

Good morning! Here's what people are talking about in the world of tech going into the weekend.

1. Apple issued an apology for slowing down some iPhones with older batteries: Apple is dropping the price of iPhone battery replacements from $79 to $29 in January 2018, and will release a new version of iOS that gives consumers more information on the health of their phone battery.

2. Softbank and its partners have agreed to acquire at least a 14% stake in Uber at a $48 billion valuation, a 30% discount compared to Uber's last valuation: Uber says if the deal is successful, Softbank has agreed to invest another $1.25 billion on top of that.

3. The Softbank deal with Uber also includes governance changes that limit founder Travis Kalanick's power: People close to the founder tell Business Insider that Kalanick is okay with that, and has good reason to be on board with the changes.

4. Three movies that are getting Oscar buzz and are still in theaters were leaked to piracy networks this week: The films "Lady Bird," "I, Tonya," and "Call Me By Your Name" leaked online, reportedly from award-season screeners.

5. An editorial in The Wall Street Journal argues that Google is giving preferential advertising treatment to certain hotel chains: The WSJ's editorial board writes that Google is putting online travel agencies at a disadvantage and preventing consumers from seeing all available options. Google disputes the charges.

6. The founder of failed social media app Fling reportedly pleaded guilty to assaulting his girlfriend: Tech entrepreneur Marco Nardone reportedly pleaded guilty to assaulting his girlfriend at a domestic violence court in London on Thursday.

7. Ripple briefly overtook Ethereum as the No.2 cryptocurrency: XRP's market cap reached $73.65 billion before the digital coin pared its gains.

8. The CEO of bitcoin exchange Exmo Bitcoin has reportedly been kidnapped in Ukraine: CEO Pavel Lerner was reportedly dragged into a black Mercedes-Benz while leaving the Kiev offices of his company on December 26, according to local media reports.

9. New York state has indicated it will create its own net neutrality legislation in 2018: Other states have indicated the same, and will test a provision in the FCC's new order that says states can't do this.

10. Two Romanians were arrested for allegedly hacking police surveillance cameras in Washington DC days before President Donald Trump's inauguration: The BBC reports that the hacking was potentially part of a larger ransomware scheme.

Join the conversation about this story »

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Good morning! Here's what people are talking about in the world of tech going into the weekend.

1. Apple issued an apology for slowing down some iPhones with older batteries: Apple is dropping the price of iPhone battery replacements from $79 to $29 in January 2018, and will release a new version of iOS that gives consumers more information on the health of their phone battery.

2. Softbank and its partners have agreed to acquire at least a 14% stake in Uber at a $48 billion valuation, a 30% discount compared to Uber's last valuation: Uber says if the deal is successful, Softbank has agreed to invest another $1.25 billion on top of that.

3. The Softbank deal with Uber also includes governance changes that limit founder Travis Kalanick's power: People close to the founder tell Business Insider that Kalanick is okay with that, and has good reason to be on board with the changes.

4. Three movies that are getting Oscar buzz and are still in theaters were leaked to piracy networks this week: The films "Lady Bird," "I, Tonya," and "Call Me By Your Name" leaked online, reportedly from award-season screeners.

5. An editorial in The Wall Street Journal argues that Google is giving preferential advertising treatment to certain hotel chains: The WSJ's editorial board writes that Google is putting online travel agencies at a disadvantage and preventing consumers from seeing all available options. Google disputes the charges.

6. The founder of failed social media app Fling reportedly pleaded guilty to assaulting his girlfriend: Tech entrepreneur Marco Nardone reportedly pleaded guilty to assaulting his girlfriend at a domestic violence court in London on Thursday.

7. Ripple briefly overtook Ethereum as the No.2 cryptocurrency: XRP's market cap reached $73.65 billion before the digital coin pared its gains.

8. The CEO of bitcoin exchange Exmo Bitcoin has reportedly been kidnapped in Ukraine: CEO Pavel Lerner was reportedly dragged into a black Mercedes-Benz while leaving the Kiev offices of his company on December 26, according to local media reports.

9. New York state has indicated it will create its own net neutrality legislation in 2018: Other states have indicated the same, and will test a provision in the FCC's new order that says states can't do this.

10. Two Romanians were arrested for allegedly hacking police surveillance cameras in Washington DC days before President Donald Trump's inauguration: The BBC reports that the hacking was potentially part of a larger ransomware scheme.

Join the conversation about this story »

NOW WATCH: The real reason Snapchat photos taken on Android phones look terrible

• FTSE 100 closes up 0.9% at 7,696.05, according to Markets Insider.
• FTSE 250 also at a record high, but other European indices lag on the day.
• European stocks on track for best year since 2013, $9 trillion added to stock markets globally in 2017.

LONDON — The FTSE 100 closed at a record high on Friday, the final trading session of 2017.

London's leading shares index closed up 0.9% at 7,696.05 at 12.30 p.m. GMT (7.30 a.m. ET), following a half day's trade. The close represents a record high for the FTSE 100 and means the index has risen 26% since January 1, 2016.

The FTSE 250, the index below the FTSE 100 that is often seen as a truer reflection of the domestic UK economy, also closed at a record high. The index finished Friday up 0.45% at 20,734.21.

Mike van Dulken, head of research at Accendo Markets, said in an emailed statement: "Equities are trying to eke out the most of an already generous Santa Rally. The FTSE trades fresh highs, along with US equity futures.

"The only blot is European bourses struggling under the weight of a weaker USD (lower US yields, seasonality) and thus penalised by a stronger EUR. The FTSE would normally find hindrance in similarly derived GBP gains, however higher oil prices, a strong commodity sector (oil, copper) and interest in select defensives are providing a welcome offset."

The biggest gainers on the FTSE 100 are Just Eat, up 2.7%, AstraZeneca, up 1.9%, and Old Mutual, up 1.7%.

While European bourses are not doing as well as the FTSE on the day, global markets have had a strong year. European equities are set for their best year since 2013, thanks to strong performances from tech and mining stocks, and globally $9 trillion of value has been added to stock markets since January.

Here's how the rest of Europe looks at 12.35 p.m. GMT (7.35 a.m. ET):

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• Ripple's XRP briefly passed Ethereum on Friday as the No. 2 cryptocurrency by market cap.
• XRP's market cap reached $73.65 billion before the digital coin pared its gains.
• XRP has gained more than 5,000% in 2017.

A red-hot close to 2017 briefly caused Ripple's XRP to overtake Ethereum as the second-largest cryptocurrency by market cap.

Ripple, which focuses on bank transfers, sported gains of more than 40% at one point Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com. The dethroning was also captured in a tweet from @WillyKracket:

XRP has since pared its gains and slipped back into the third spot in terms of size.

The cryptocurrency, which is up about 61% over the past week and more than 5,000% this year, has been on a tear since Ripple's Asian subsidiary and a group of Japanese credit-card companies announced a new consortium Wednesday. The consortium aims to identify how blockchain and distributed-ledger technology can be deployed in credit-card payments.

The news of the consortium follows a bullish month for the coin, which has been propelled to new heights by interest from Asia, according to reporting by Forbes.

"Asians are going mad for Ripple," Alexey Ivanov, the CEO and cofounder of Polynom Crypto Capital, a Moscow-based cryptocurrency and blockchain investment fund manager, told Forbes.

Frank Chaparro contributed to this story.

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NOW WATCH: This is why you should be buying gold

• Ripple's XRP briefly passed Ethereum as the No. 2 cryptocurrency by market cap on Friday.
• XRP's market cap reached $73.65 billion before the digital coin pared its gains.
• XRP has gained more than 5,000% in 2017.

A red-hot close to 2017 briefly caused Ripple's XRP to overtake Ethereum as the second largest cryptocurrency by market cap.

Ripple, which focuses on bank transfers, sported gains of more than 40% at one point on Friday, propelling it to a record high and a market cap of $73.65 billion, according to data from CoinMarketCap.com. The dethroning was also captured in a tweet from @WillyKracket:

XRP has since pared its gains and slipped back into the third spot in terms of size.

The cryptocurrency, which is up about 61% over the past week and more than 5,000% this year has been on a tear since Ripple's Asian subsidiary and a group of Japanese credit card companies announced a new consortium Wednesday. The consortium aims to identify how blockchain and distributed ledger technology can be deployed in credit card payments. 

The news of the consortium follows a bullish month for the coin, which has been propelled to new heights by interest from Asia, according to reporting by Forbes.

"Asians are going mad for Ripple," Alexey Ivanov, CEO and cofounder of Polynom Crypto Capital, a Moscow-based cryptocurrency and blockchain investment fund manager, told Forbes.

Frank Chaparro contributed to this story. 

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NOW WATCH: The chief global strategist at Charles Schwab says stocks will keep soaring in 2018

Here is what you need to know.

The S&P 500 looks to close out 2017 with a bang. The benchmark index is on track to open up 0.27% near 2,695. It's gained about 20% this year.

Short volatility was the stock market's "trade of the year." Two exchange-traded products used to short volatility have surged almost 200% in 2017, dwarfing returns for even the best-performing stocks in major indexes.

Traders are betting billions the hottest stocks of 2017 will get crushed next year. Facebook, Apple, Netflix, and Google are among the most heavily shorted right now, according to data from financial analytics firm S3 Partners.

Ethereum's founder warns on crypto. "*All* crypto communities, ethereum included, should heed these words of warning," Ethereum founder Vitalik Buterin said on Twitter Thursday. "Need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society." 

Ripple hits a record high. Ripple's XRP trades up 26% at $1.5926 a coin, according to Markets Insider data. It's gained nearly 5,200% in 2017.

Apple apologizes for slowing down iPhones with older batteries. "We’ve been hearing feedback from our customers about the way we handle performance for iPhones with older batteries and how we have communicated that process," Apple said in a public letter. "We know that some of you feel Apple has let you down. We apologize."

Softbank is buying a big chunk of Uber. The Japanese investment firm agreed to buy a 15% stake in Uber for $48 billion, or a 30% discount to its recent $69 billion valuation. Softbank will also invest $1.25 billion in Uber directly. 

Las Vegas tourism keeps sliding. Visitation fell 3.7% year-over-year in November, running the streak of consecutive monthly declines to six — the longest in eight years, the Las Vegas Review Journal says.

The People's Bank of China frees up cash for the Lunar New Year. China's central bank said in a statement out Friday that some banks will be allowed to lower their reserve requirement ratios by up to 200 basis points, for 30 days, Reuters reports. 

Overseas markets end close out 2017. China's Shanghai Composite gained 13.71% in 2017 and Germany's DAX is on track to finish the year up 28.26%, Bloomberg data shows.

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• Two exchange-traded products used to short volatility have surged almost 200% in 2017, dwarfing returns for even the best-performing stocks in major indexes.
• Shorting volatility is an activity that's been met with great consternation from many market experts.

The best stock market trade of 2017 doesn't involve a specific stock or sector. It instead relates to price fluctuations in equities — or in this case, the lack thereof.

Two exchange-traded products betting against US stock volatility skyrocketed almost 200% in 2017 through Christmas, dwarfing returns for the absolute hottest mega-cap tech stocks. Sure, companies like Amazon and Apple have smashed index benchmarks, but the short-volatility trade has put everything else to shame.

Its success has been a direct byproduct of a market that's been seemingly paralyzed by its own success. For evidence of that stasis, look no further than the CBOE Volatility Index — or VIX, which functions as the stock market's fear gauge, and has been locked near record lows for much of 2017.

While the rationale for the lack of anxiety felt by stock traders has varied, popular reasons include: continued monetary stimulus, strong global economic growth, robust earnings growth, and the expected windfall from tax reform.

This is all occurring at a time when there are very few identifiable risks capable of derailing the market, allowing it to repeatedly hit new highs. And since the VIX trades inversely to the S&P 500 roughly 80% of the time, the fear gauge's prolonged stretch near all-time lows makes sense.

Their 2017 paths outlined in the chart below, the two wildly successful vehicles in question are the VelocityShares Daily Inverse VIX Short-Term ETN and the ProShares Short VIX Short-Term Futures ETF. As indicated by their names, both products are intended to be used only for very short-term exposure, and are designed to deliver a daily return that's the exact inverse of the VIX.

A raging debate

Success stories around the trading of these inverse VIX products swirled in 2017, with none catching the public eye quite like a former Target manager growing his net worth from $500,000 to $12 million using them. Seth M. Golden, who lives in a suburb of Ocala, Florida, has employed a strategy that's the inverse of the "buy the dip" trade, which involves adding to long positions on weakness. In Golden's case, he waits for inverse VIX products to surge, then shorts them further.

Hedge funds have also gotten in on the action, holding a net short position on VIX futures for all of 2017 — although it must be noted that they've been short the fear gauge for most of the 8 1/2-year bull market. Still, the measure of net short exposure hit four new records over a span of 11 weeks earlier this year, indicating just how keen large speculators have been to short the VIX.

But as large investors have continued to pile into the short-volatility trade, there's been a growing chorus of experts calling for discretion. Perhaps the most outspoken critic of the trade has been Marko Kolanovic, the global head of quantitative and derivatives strategy at JPMorgan — a man so respected that his assertions can move the entire market.

He said in late July that strategies suppressing price swings reminded him of the conditions leading up to the 1987 stock market crash, and has since doubled down on the warning on multiple occasions.

More recently, Societe Generale's head of global asset allocation, Alain Bokobza, compared the continued VIX shorting by hedge funds to "dancing on the rim of a volcano." He warned that a "sudden eruption" of volatility could leave traders "badly burned." The comments echoed those made by Bokobza a couple of weeks prior, when he maligned the "dangerous volatility regimes" in the global marketplace.

Even one of the foremost pioneers of modern volatility has gotten in on the criticism — in an interview with Business Insider, the Hebrew University of Jerusalem professor emeritus Dan Galai compared the capital being used to short the VIX as "stupid hot money," and he likened the trade to "a substitute for going to Vegas and betting on the roulette."

The other side of the trade

Perhaps heeding the warnings of the aforementioned market experts, there have been investors who have piled into the other side of the short-volatility trade, buying options to gain exposure to VIX upside.

The most high-profile example is probably the mysterious investor known as "50 Cent," who lost almost $200 million betting on a VIX spike in 2017. The trader has consistently purchased bite-sized chunks — usually costing around 50 cents — of options contracts betting on a higher VIX.

Meanwhile, there's another volatility vigilante who stands to make a whopping $260 million if things fall perfectly into place. After buying a massive call option spread, the investor has rolled the trade over multiple times. Most recently, they extended the expiration of the wager to January.

It's entirely possible that both of these traders are simply using the VIX wagers as a hedge for a bullish stock market play. But in a market where everyone is looking for a quick buck on the other side of the trade, their fortitude is admirable. One day further down the line, stock market volatility will rise again, and they'll be set to profit from it — assuming they don't run out of money or throw in the towel.

With all of that in mind, perhaps now you'll recall 2017 as the year of the wildly profitable inverse-VIX trade. Yes, politics dominated public consciousness while tech stocks got the bulk of the attention in the markets realm, but at the end of the day, there's was nowhere better to be than short volatility.

SEE ALSO: GOLDMAN SACHS: Here's how to make a killing in early 2018

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• Exmo Bitcoin CEO Pavel Lerner kidnapped in Kiev.
• Exchange hit by a DDoS attack at the same time.
• A spokesperson said users' funds are "absolutely safe" and "we are doing everything possible to speed up the search for Pavel Lerner."

LONDON — The CEO of a UK-registered bitcoin exchange has reportedly been kidnapped in Ukraine.

Pavel Lerner, 40, was reportedly dragged into a black Mercedes-Benz by men in balaclavas while leaving the Kiev offices of his company, Exmo Bitcoin, on December 26, according to local media reports.

The exchange business is registered in the UK and also has a presence in Spain, Russia, India, and Thailand, according to the Telegraph.

Russian-born Lerner lists a Kiev address for correspondence, according to filings with Britain's Companies House. He is listed as a person with "significant control" of Exmo Finance, which runs Exmo Bitcoin.

The BBC confirmed with Kiev police that a man was kidnapped but said police would not name the person who had been abducted.

Shortly after the incident, Exmo tweeted that it was facing a distributed denial of service (DDoS) attack intended to disrupt its exchange.

Exmo spokesman Anatoliy Larin told the BBC:

"We are doing everything possible to speed up the search for Pavel Lerner.

"Despite the situation the exchange is working as usual. We also want to stress that nature of Pavel's job at Exmo doesn't assume access either to storages or any personal data of users. All users' funds are absolutely safe."

The details of Lerner's kidnapping are unclear. But the cryptocurrency world has become a magnet for hackers and criminals looking to make easy money.

Bitcoin has rocketed over 1,500% against the dollar during 2017 and currently stands at close to $14,400 (£10,665). Its rapid rise has been mirrored by other cryptocurrencies.

As a result, cryptocurrency exchanges and others who deal with high volumes of cryptocurrencies have become targets of hackers trying to rob them. Cryptocurrency Tether was hit by a $31 million hack earlier this year and cybersecurity researchers have found evidence of growing interest from North Korean hackers in bitcoin.

Exmo was first registered in the UK in 2014 and claims to have close to 1 million customers globally, according to its website. It is the 22nd largest exchange globally by volume, according to industry data source CoinMarketCap.com.

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• Barry and Honey Sherman's family hire private detectives to investigate the couple's mysterious death earlier this month.
• The detectives will "ensure that no stone is left unturned."
• Police have not published an update since December 17.

The family of Barry and Honey Sherman, the Canadian pharmaceutical billionaires found strangled in the basement of their Toronto mansion, have reportedly hired private detectives to solve the mystery of their deaths.

It is now two weeks since the bodies of the couple were discovered by a real estate agent, and Toronto police are yet to publish a meaningful update since December 17.

Now, Brian Greenspan, the renowned Canadian lawyer acting for the Shermans' family, has retained the services of two private detectives to carry out an independent investigation.

He told Canadian newspaper The Globe and Mail that the investigators, named as former Toronto Police Service detectives Michael Davis and Tom Klatt, will "provide a second lens and to ensure that no stone is left unturned."

The Globe and Mail reported that a second autopsy was conducted on the Shermans before they were buried. A memorial service was held for the pair on December 21.

Police are still in control of the couple's $5.4 million (£4 million) mansion, the newspaper added, and have quizzed neighbours to assess whether they saw anything suspicious.

The police theory that the family has rebuked

There has been some disagreement between the family and police over the reason for the Shermans' death earlier this month.

Initial post-mortem examinations showed the couple died from "ligature neck compression," or strangulation from tying or binding, the Toronto Police Service said on Sunday.

Officially, police have marked the deaths as "suspicious" and a homicide — but not murder. Canadian newspapers have reported a police theory that deaths were part of a murder-suicide.

Citing a "Toronto police source," The Globe and Mail said investigators were working on an early theory that Barry killed Honey before killing himself.

The pair's children have rejected this theory. They said: "Our parents shared an enthusiasm for life and commitment to their family and community totally inconsistent with the rumors regrettably circulated in the media as to the circumstances surrounding their deaths."

Sherman, 75, founded Apotex in 1974, and it is now one of the world's biggest pharmaceutical companies. The couple were known for their philanthropy, giving tens of millions of dollars to hospitals, universities, and Jewish organisations.

SEE ALSO: Mystery still shrouds the death of Barry Sherman, the Canadian billionaire found strangled in the basement of his $5.4 million mansion

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In a public warning on Friday, India’s finance ministry cautioned citizens against investing in virtual currencies like bitcoin, likening them to ponzi schemes. India’s Ministry of Finance issued a statement today cautioning people ‘against risks investing in virtual currencies including Bitcoin’, claiming they lack intrinsic value and aren’t backed by any assets. ‘Mere speculation’ is

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• Britain's economy has slowed rapidly since the Brexit vote.
• But where does the UK economy stand heading into 2018?
• Economists James Knightley and James Smith at Dutch lender ING have compiled a handy "dashboard" showing the health of six key indicators in the economy.

LONDON – Eighteen months on from Britain's vote to leave the European Union, and the British economy has confounded the predictions redictions that the country would collapse into a recession after the Brexit vote.

The economy however, has slowed markedly, facing uncertainty from all corners.

Uncertainty around Brexit pushed businesses to delay spending, and inflation caused by the weak pound made spending more expensive for consumers.

Most economists now think inflation has peaked, and the IMF said on Wednesday that it expects the UK's to grow at around 1.5% in 2018 — not bad, but not fantastic either.

But where does the UK economy stand heading into 2018? Thankfully, economists James Knightley and James Smith at Dutch lender ING have compiled a handy "dashboard" showing the health of six key indicators in the economy.

The indicators — inflation, consumer spending, hiring, wage growth, investment, and manufacturing — provide a reasonable snapshot of where things stand right now.

Perhaps the most interesting of ING's indicators is consumer spending. Consumers have been in recent years, the main drivers of Britain's economic growth, but Brexit has started to slow that story, and according to data released earlier this week, consumers are now more pessimistic about their personal finances than at any point in the last four years.

"After a remarkable run in 2016, spending has slowed significantly as real wages fall. Shoppers remain cautious on non-essentials, which will keep a lid on growth as we head into the new year," Knightley and Smith write.

Check out the full dashboard below:

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NOW WATCH: Economist Jim Rickards on gold versus bitcoin — intrinsic value is meaningless for both but the bitcoin prices aren't real

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For the second time this week, the Ripple price has achieved a new all-time high at $1.52, surging by more than 15 percent overnight and obtaining a market cap of $59 billion. According to The Wall Street Journal, the $70 billion market valuation of Uber dropped by $20 billion over a period of 24 hours

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Competing technologies? Not so much argues Symbiont executive Caitlin Long who believes the best of both bitcoin and blockchain will prevail in 2018.

South Korea announces new cryptocurrency regulations coinciding with the drop in bitcoin prices, YouTube gets pulled from Fire TV and SoftBank will now own about 15 percent of Uber. All this on Crunch Report. Read More