The value of Bitcoin swings wildly, but there has always been a problem for the enterprising speculator who wants to profit from declines: there’s no way to bet on the currency falling. A financial start-up is trying to change that by creating an exchange where people can bet on the future direction of the currency’s value, up or down.
Tera Group, a start-up based in New Jersey, said Monday that it has already facilitated an trade between a company that was nervously holding Bitcoins and one that was willing to take the risk of the currency’s value changing over the next 25 days. Leonard Nuara, Tera’s co-founder, wouldn’t identiy the parties. Assuming that Bitcoin sticks around, this is a service many companies are going to be considering. Merchants interested in taking Bitcoin payments have expressed concern about holding an asset prone to sudden fluctuations in price.
The first transaction was just a one-time deal, but Tera is also building a market to allow for standardized versions of such exchanges to take place. The exchange isn’t open for business yet–Tera is waiting to get permission from the Commodity Futures Trading Commission. But it says that it is already fielding calls from companies that would like to participate.
Nuara says that he has also been hearing from potential traders who would like to get in on the action. Some are Bitcoin optimists who don’t mind taking the risks, while others think the value of Bitcoin at the end of all this is zero.
“There is usually some person who thinks it’s going up, and some person who thinks it’s going down,” he says.
