The Chicago Board Options Exchange began trading futures in the digital currency bitcoin on Sunday. The move will subject part of the market for the currency to federal regulation, and it will open up bitcoin trading to a larger group of investors.

Bitcoin’s price has soared on private exchanges recently, surpassing $18,000 on some exchanges last week. At the start of 2017, the price of bitcoin was less than $1,000. The rise in value has been fueled by several factors, including growing interest from Wall Street firms and private investors, particularly in Japan and South Korea. Yet some experts warn that the currency is too unstable, and that its price will eventually crash.

With the start of futures trading, investors will be able to bet on future bitcoin price swings. On its first day of trading, bitcoin futures rose from $15,000 to over $18,000. A second major exchange, the Chicago Mercantile Exchange, will launch bitcoin futures trading next Monday, while the New York-based Nasdaq is expected to start early next year.

Chris: This would have been impossible to predict a few years ago, Jessica. Wow! Things are developing rapidly! This could be the beginning of a huge change.

Jessica: Do you really think so, Chris? Bitcoins aren’t even real money -- they’re just electronic transactions! It’s pretty strange...

Chris: It only seems strange because it’s an entirely new way of paying for things. But it’s built on pretty impressive technology, and there are some big advantages....

Jessica: Like what?

Chris: Well, there’s no bank or government that intermediates transactions. That means transaction fees are lower than if you were to buy something by, say, credit card. It also means that transactions happen fast, even if you’re buying something from the other side of the world.

Jessica: Don’t people use bitcoin to buy things illegally, because the transactions are anonymous?

Chris: Yes -- but that doesn’t mean that only criminals use it! If you think about it, there’s no need to have your name linked to your online transactions. But all the transactions are kept in a public log, so you know the transactions are legitimate.

Jessica: Hmm. It still sounds like a fad to me... and like a financial bubble!

Chris: It may be -- it’s impossible to predict what will happen. But one thing is for certain: this is the start of something completely new.