Denmark’s virtual-currency bourse says it will become the world’s first to allow clients to swap dollars and euros for NXT, the fourth-largest crypto-payment form which until now has only been traded via bitcoin.
The CCEDK Crypto Coins Exchange Denmark ApS, which opened in May, will start offering the service today, Chief Executive Officer Ronny Boesing said in an interview. Clients can also exchange NXT, which was created in November, into Nordic currencies, he said.
“NXT is a strong currency and a potential challenger to Bitcoin as a leading virtual currency,” Boesing said. “In terms of safety, it’s perceived as being as safe as bitcoin, if not safer.”
Bitcoin, in which CCEDK also offers trading, has lost 45 percent of its value after surging to more than $1,100 last year. The software is now poised to decline further, according to a Bloomberg Global Poll of financial professionals. Bitcoins, which could be purchased for about $13 each at the beginning of last year, were valued at about $625 this week.
Since being introduced eight months ago, NXT has grown to a market capitalization of about $44 million compared with ripple’s $50 million, litecoin’s $265 million and bitcoin’s $8.11 billion, according to website coinmarketcap.com. There are 1 billion NXT in existence and, unlike bitcoin, no new ones can be created via mining.
“At the moment, people use bitcoin to buy NXT on other exchanges and we will make it easier to invest directly in this second-generation virtual currency,” Boesing said. “We’re happy to add NXT to our platform because it’s a currency that’s growing very fast, backed by a very strong community.”
Investors are buying the currency to store it as an investment or to use it for online purchases, he said. It also has so-called second-generation crypto currency features that bitcoin lacks. These include the NXT asset exchange, a platform where the currency can be used for crowd-funding and commodity investments.
Virtual currencies have come under increased scrutiny from regulators and prosecutors around the globe. Mt. Gox, once the world’s biggest Bitcoin exchange, filed for bankruptcy in Japan earlier this year amid claims it lost 850,000 bitcoins. China’s central bank barred financial firms from handling virtual currency transactions last year.
The European Commission this month signaled it will try to impose rules on virtual currencies after the European Banking Authority said banks shouldn’t buy, hold or sell such products until regulators develop safeguards to protect their integrity.
The CCEDK exchange also offers trading in litecoin and peercoin and supports trading from seven physical currencies: dollars, euros, pounds, Swiss francs, Danish kroner, Swedish kronor and Norwegian kroner.
“In time, we hope to be able to offer trading in all the top 10 virtual currencies,” Boesing said.
There are more than 200 crypto currencies being traded, according to coinmarketcap.com. The number of currencies and their joint market capitalization is bound to decline “to a level that is consistent with their value as a transfer mechanism, and not reflecting their value as a medium of exchange,” said Paul Donovan, global economist at UBS AG in London.
“Society has always had local currencies, barter systems, and other substitutes for official currency transactions,” Donovan said in an e-mailed reply to questions. “Technology has allowed these local currencies etc. to assume a larger scale in terms of both transactions and geographic scope, and the distinction between virtual and real world economy has blurred. The increase in the number of crypto currencies is a manifestation of that.”