BitcoinBitcoin May Go Boom: A Guide to This Week’s Big SEC Decision (Update)Jeff John Roberts[Update: The SEC rejected the ETF proposal on Friday afternoon, causing the price of bitcoin to slump.]Bitcoin is at a critical juncture.Any time now, the Securities and Exchange Commission will issue a decision that could throw open the door to a flood of new capital, and change how many investors regard the digital currency.The SEC's bitcoin decision, which is over three years in the making, is due by Friday.Here's a plain English guide to what might happen, including why the decision is so important and how it could affect the price of bitcoin.The agency must decide if the BATS stock exchange can change its rules to offer a bitcoin ETF (exchange traded fund), which would let people buy bitcoin like a common stock.The ETF—called the Winklevoss Bitcoin Trust ETF—is the creation of the Winklevoss brothers, who once fought Mark Zuckerberg for control of Facebook, and now own a large stock of bitcoins.It's all about liquidity.

While there are plenty of places to buy bitcoin, many investment funds can only hold assets that meet certain regulatory standards—such as approval from the SEC.If the agency approves the ETF application, money managers who want to include bitcoin in their portfolio are likely to jump in.Meanwhile, millions of ordinary people will have an easy new way to buy the digital currency.I can't really phrase it any better than this quote from BitMex, a bitcoin analysis site:If the SEC approves the Bats rule change, all manner of American muppet retail investors can yolo into Bitcoin via a regulated ETF.The pool of eligible money that can easily obtain exposure to Bitcoin will dramatically rise.There are various predictions about the amount of money that could flow into Bitcoin.In short, it will be Yuge.The SEC is obliged to make the decision by March 11, which is this Saturday.That means the ruling is almost certain to come out on Thursday or Friday.According to Blake Estes, an alternative asset expert at the law firm Alston & Bird, the decision will appear on this SEC web page, and everyone will find out at the same time.Get Data Sheet, Fortune’s technology newsletter.RelatedFortune 500Hackers Leaked ‘Orange Is the New Black’ Despite Receiving $50,000 RansomFortune 500Hackers Leaked ‘Orange Is the New Black’ Despite Receiving $50,000 RansomPeople are calling this a coin toss.

Those who think the SEC will approve the ETF point to the skillful work carried out by the Winklevoss lawyers, and to the fact that bitcoin is far more mainstream than it was even two years ago.Today, many more people—including regulators—are familiar with digital currency and how it works.There is also a sense that a bitcoin ETF is sooner or later inevitable.Pessimists, on the other hand, can point to two sets of concerns that could lead the SEC to give the thumbs down.bitcoin external walletThe first of these relates to how the Winklevoss intend to run the operation.ecb bitcoin ponziSome people are uneasy that the proposed ETF would use Winklevoss-controlled businesses to source and store the bitcoins that would back the shares.bitcoin external wallet

The other set of concerns lie with bitcoin itself.The digital currency has been subject to wild price fluctuations, driven in part by heists and insider antics.According to Estes, the SEC may worry the agency's approval of an ETF could lead to a bubble inflated by bitcoin novices—a bubble that could then pop."Somefear it could be a g ood opportunity for legacy players to find the next sucker to take it off their hands," said Estes.Bitcoin has been on another tear of late, nudging a record of $1,300 per unit—more than an ounce of gold.bitcoin generator skynovaSome of this likely reflects investor optimism the SEC will approve the ETF, meaning a future price rise is partly baked-in.bitcoin mining goalNonetheless, there are broad expectations the short term price of bitcoin will go crazy if the SEC says yes.If the SEC says no, it will have a negative effect, though probably not a very dramatic one.gpforums bitcoin

The reason is there are two other ETF application before the agency.One is called the Bitcoin Investment Trust, and was developed by Barry Silbert, a well known figure in the digital currency world.The other, called SolidX, is distinct in that proposes to insure its bitcoin assets.As noted above, there is a general feeling that approval for a bitcoin ETF of one type or another is inevitable, and so a rebuff by the SEC to the Winkelvoss proposal would only be a temporary setback.That's something only you can decide—preferably after a lot of research.Today, many people see bitcoin as another alternative asset class to add to a diversified portfolio.But bitcoin has an extremely volatile history, and has been prone to spectacular crashes, so if you're averse to risk, it's probably not for you.Adam Davies, consultant at Altus Consulting believes the value of a single bitcoin will reach £3000 by the end of the year.In January, people reacted strongly when Bitcoin passed the $1000 mark.Then in March Bitcoin surpassed the price of gold.

So it was hardly a surprise when in May, it reached a new all-time high, trading above $1,400, mostly attributed to strong demand in Japan where it is now deemed a legal means of payment.The price of Bitcoin has tripled in the past year, and I believe it may top £3K in 2017.The success of the digital currency lies in its universality and convenience, allowing people to do things in an easier way, much like the transport and telecommunications industries.However, just because something is easy does not necessarily guarantee adoption.So what is driving it’s popularity?This year, the adoption of Bitcoin will be driven by those who operate in the grey economy and thus experience the strongest barriers to value transfer.To use Bitcoins you don't need any proof of ID.Acquiring and transferring them from one location to another is extremely easy.Bitcoin rose to infamy due to its use on the dark web as the unit of currency for sites such as Silk Road, best known as an online market for selling drugs.

However, Bitcoin is now being adopted by many people who want to move money across borders and hedge against hyper-inflation and currency restrictions, or as in India, banknote demonetisation.This is happening across the globe.Whereas dark web sites such as Silk Road occupy the dark market, this upswing in Bitcoin usage is known as the ‘grey’ market.These activities are likely become more and more mainstream in light of the changing political and economic climate, and this will drive a further increase in popularity.Thus Bitcoin is rapidly becoming a safe haven investment, being free from government interference, and with limited supply.Before the Brexit vote, when the world seemed a safe and consistent place, I put forward the theory that Bitcoin would pass gold as the safe haven currency.At the time I realised that given the right conditions digital currencies would only trend up in value.Since then we’ve seen the right conditions develop; China has a fragile economy, new political direction in the US, the political tsunami of Brexit, and upcoming European elections means we are likely to see more economic volatility.

Almost all currencies are valued by either securing the currency against a commodity or by comparing its value against another currency.Bitcoin is unique; it not created by a sovereign state and without an owning authority.The value of Bitcoin is solely determined by the price someone is willing to pay for it.This is an important distinction from traditional currencies and the key strength of Bitcoin.With traditional currencies, when making international trades electronically you are relying on the availability of supply.If there are not enough dollars, yuan, euros or pounds the value of the currency will increase, or more is issued to cover the shortfall (supply and demand).This means one of two things, either the value of good in transit increases or the currency in question is devalued.The value of bitcoin is, instead, determined by the value of products within trades taking place.When bitcoin was starting out, there wasn't much trade and therefore there wasn't much value; the value of a Bitcoin was low.

Today, as we watch bitcoin becoming increasingly popular, the amount of in-flight trade in goods using Bitcoin mans that the value must increase in order to cover the value of the goods.As there is a limited supply of Bitcoin and the supply will only increase slowly over time to a maximum of 21 million, the increase in trade volumes will result in an increase in Bitcoin value.So the reason I believe that bitcoin will reach £3k in 2017 is really down to how much the value of trade will increase in 2017.The largest ever bitcoin transaction was on 12th March 2017 at $860K, the largest number of transactions in a single day is a number that increase week on week.This shows a upwards trend of Bitcoin usage, and as Bitcoin is not seen as an tradable commodity by the investment houses, this trend is driven by trade.Which means Bitcoins has to increase in value to meet the demands of higher trade and value volumes and thus higher value transactions.The value of Bitcoin transactions, with more increasing adoption and acceptance, underpinned by easy access, growth could actually outstrip the original $3000 prediction.