By Jon Matonis
Tuesday, September 17, 2013
ürich. But inside the nondescript building of SIX Interbank Clearing, a small unit of professionals maintains the list of the world’s currency codes.
week in that very same building, I had the honor of presenting the
bitcoin cryptocurrency to a gathered audience of various bank officials
at an e-commerce conference. And I mentioned that the individual, or
committee, that endorses and finalizes XBT as the ISO currency code for
bitcoin will earn their spot in history next to Satoshi Nakamoto.
course, a new code for a brand new asset class is not comparable to an
achievement in financial cryptography and distributed consensus, but it
is significant nonetheless because of its impact on the evolution of
The ISO 4217
standard for currency codes is published by a voluntary,
non-governmental organization independent of any national agenda. It
operates more or less as a body that approves the three-character
currency codes of new countries or regions. In some cases, the code
reflects a non-governmental unit such as gold (XAU) and silver (XAG).
the regulations and government approval that so frequently underpin
discussions about the legitimacy of bitcoin, a different type of
legitimacy is emerging and it has the ability to out-survive the elected
administrations of legal jurisdictions.
legitimacy holds the key to bitcoin’s success – not the sanctions and
official blessings for what’s an appropriate monetary unit. Governments
and regulators may come and go, but customs and convention persevere.
Currency code XBT
is a sign of this growing market-based influence, at least among the
organizations currently depending on such codes. Governments generally
follow rather than lead market adoption because it is too difficult to
alter the course of momentum.
Uniquely, bitcoin operates as both a
value transfer network and a separate unit of account. Therefore, it
doesn’t require the services of a third-party intermediary to approve
and route transactions. However, as a monetary unit, bitcoin offers
great opportunities for those who desire to trade or price in bitcoin
and perhaps layering services on top of the protocol.
At the top
of the pyramid is SWIFT, a member-owned cooperative that provides the
communication platform to connect more than 10,000 banking organizations
in 210 countries (16 more countries than the United Nations).
influence is so pervasive that its ecosystem is a daily barometer of
global economic performance such as GDP growth rates, capital flows, and
foreign exchange trade volatility.
Once again, bitcoin is a major topic of conversation at Sibos, the annual SWIFT conference being held in Dubai this year.
In prepared remarks yesterday, SWIFT CEO Gottfried Leibbrandt said,
“I would not see why we at Swift could not send transactions in bitcoin
as a currency.” If they do, they will undoubtedly look to the ISO for
the currency code. The Bitcoin Foundation had two scheduled appearances
at the SWIFT conference.
Also, the payment networks like VISA,
MasterCard, and American Express all rely on the ISO 4217 codes for
international transactions and currency conversion. Once the member
banks start requesting settlement in bitcoin for certain transactions,
the payment networks will look to the ISO for the corresponding currency
one of the world’s leading providers of Internet foreign exchange tools
and services, recently began displaying bitcoin prices in XBT across
their data feed. Founded in 1993, the company licenses over 35,000 XE
Currency Converters, provides commercial currency data to over 1,000
clients, and serves 18 million unique users per month.
Service provider OANDA
also displays bitcoin prices using the currency code XBT. OANDA is a
market maker and a trusted source for currency data, serving both
individuals and financial institutions. Founded in 1995, it provides
access to one of the world’s largest historical, high frequency,
filtered currency databases serving over 30 million requests per month.
Not to be outdone, Bloomberg in August announced that they were testing XBT price quotes internally lending more ammunition to the push for formal code adoption.
In the bitcoin trading world, exchange operator Kraken became the first to make the formal switch to XBT this week and other bitcoin exchanges are expected to follow suit.
In the retail foreign exchange trading world, platform market leaders like MetaTrader 4
are witnessing client firms undertaking the bitcoin modifications on
their own. Although not expressing trades in XBT yet, the gradual
adoption of bitcoin into existing forex platforms signals a huge shift
in market trading. So far, only three companies are known to have
incorporated bitcoin into the MT4 environment, including AvaTrade, BTC-E, and Bit4X.
may represent the beginning for bitcoin standards and market-based
legitimacy, but it is certainly not the end. Next up on the standards
agenda is the Unicode symbol for bitcoin with B⃦ or ฿ as the two leading contenders.