Bitcoin futures jump in major exchange debut

The first-ever bitcoin future jumped after it began trading yesterday as the increasingly popular virtual currency made its debut on a major US exchange.

The futures contract that expires in January surged more than $3000 to $18,010 four hours after trading launched on the Chicago Board Options Exchange. The contract opened at $15,000.

The CBOE futures don’t involve actual bitcoin. They’re securities that will track the price of bitcoin on Gemini, one of the larger bitcoin exchanges.

The start of trading at 5pm CST overwhelmed the CBOE website. Another large futures exchange, the Chicago Mercantile Exchange, will start trading its own futures on December 18 but will use a composite of several bitcoin prices across a handful of exchanges.

The price of a bitcoin has soared since beginning the year below $1000, hitting a peak of more than $16,858 on December 7 on the bitcoin exchange Coindesk.

Futures are a type of contract in which a buyer and a seller agree on a price for a particular item to be delivered on a certain date in the future, hence the name. Futures are available for nearly every type of security but are most famously used in commodities such as wheat, soy, gold, oil and cocoa.

The futures signal greater mainstream acceptance of bitcoin but also open up bitcoin to additional market forces. The futures will allow investors to bet that bitcoin’s price will go down — a practice known as shorting — which currently is very difficult to do.

The digital currency has had more than its fair share of critics on Wall Street. JPMorgan Chase CEO Jamie Dimon has called bitcoin “a fraud.”

Bitcoin is the world’s most popular virtual currency. Such currencies are not tied to a bank or government and allow users to spend money anonymously.

A debate is raging on the merits of such currencies. Some say they serve merely to facilitate money laundering and illicit, anonymous payments.