Coindesk recently launched its proprietary Bitcoin Price Index (BPI) “to establish the standard retail price reference for industry participants and accounting professionals”, according to the cryptocurrency news website.
This new index displays an average value calculated through information from leading global Bitcoin exchanges. However, as stated by Coindesk, “the formula is flexible enough to maintain only those exchange rates that conform to certain minimum criteria for price discovery and validity”.
Initially, those specific criteria are defined as:
(a) exchange must serve an international customer base;
(b) minimum trade size must be less than 1,500 USD or equivalent;
(c) banking transfers in or out of the exchange must be completed within seven days without special fees.
The developers that created Coindesk’s BPI explain that the criteria are “subject to modification based on changing market and regulatory conditions”. That’s why they plan to revise the formula on a predictable monthly schedule. This will increase the credibility of the index because users will have some advance notice with respect to the formula updates and associated rationale for those updates.
For now, the index will be based on USD/XBT price data from Bitstamp, BTC-e and CampBX “using each exchange’s bid/ask midpoint and without volume-weighting”. In addition to a real-time API that gets updated every 60 seconds, Coindesk will also provide a GMT end-of-day closing index price “including a high price and a low price for the daily trading period”.