Excerpt from Financial Times
Bitcoin, a decentralised, virtual currency, is garnering increasing interest from investors and entrepreneurs. The FT’s Maija Palmer reports from a Bitcoin conference on where the currency is heading and goes to buy her first (fraction) of a Bitcoin.
Maija Palmer: In the centre of London’s financial district, a crowd of some three hundred entrepreneurs and investors gathered this week to discuss what many believe could be a game-changer for the way we use money. Bitcoin, a decentralized virtual currency began life as something of an experiment. Could an electronic currency which is not issued by any government and which exists only as a string of numbers on a network of computers really work?
Erik Voorhees (Chief Executive, Coinapult): A lot of bitcoin use is simply person-to-person payments. So if you owe your buddy some money for beers, you can pay him on your cell phone at the bar. Or if you have programmers that are working for you over in India, you can pay them bitcoin without having a huge fee or a two week payment delay. And those people then buy services with the bitcoin, so it’s a very organic process that sort of just grows, and it will continue to grow as long as people find bitcoin useful.
Maija Palmer: Bitcoin made headlines at the start of the year, when its value shot up from thirteen dollars per bitcoin to over two hundred. Although the price is now down to just under ninety dollars, the cryptocurrency, worth an estimated nine hundred and ninety million dollars in total, has peaked investor’s interest and a small but growing number of companies are accepting bitcoin payments. It is also becoming easier for even the not so tech savvy to use bitcoins.
Maija Palmer: So I’m about to become a bitcoin investor on a very small scale. I have a five-pound note and I’m going to buy my first ever fraction of a bitcoin. What I did earlier was I downloaded an app onto my phone, which gives me my wallet, which is basically represented by this QR code here, which is what I’m going to need to interact with this ATM machine. So – press start. Scan the phone. And now it is asking me to insert the bill. And send bitcoins. And it says “Your bitcoins are on their way” to this very long string of numbers. And hopefully that will have updated on my phone. There we go. I can see the transaction has come in. This payment should become spendable in a few minutes.
Maija Palmer: Spending my bitcoin wealth is still a little challenging. But, according to the purveyor of the Bitcoin ATM, Josh Harvey, this could all change.
Josh Harvey (Co-Founder, Lamassu Bitcoin Ventures): There’s a company called BitPay in the United States, and they are signing up thousands of merchants every month. I think there are over ten thousand now. It started with big names like WordPress and NameCheap, which is a very large domain name registrar, and now you are seeing a lot of smaller retail locations. There is a supermarket in San Francisco, cupcakes in San Francisco, restaurants in New York, restaurants in Massachusetts. These big techie cities are going to be the first places where you are going to see the adoption, and it will just kind of take off slowly and gradually from there.
Maija Palmer: Investors with a healthy appetite for risk are starting to make their first forays into the bitcoin market.
Shakil Khan (Spotify Angel Investor, Founder of CoinDesk): It’s pretty obvious digital currency is going to happen whether it’s bitcoin, an evolution of bitcoin, or some other currency. The jury is still out on that, we won’t know until it happens. But for me, looking at it from a technology point of view, an investment point of view, and really the excitement, it’s similar to the internet in 1995-1996. I semi-missed that boat, and often think back and wonder what it would have been like to be involved in companies then, so I guess this is my second chance.
Maija Palmer: But the biggest problem for bitcoin enthusiasts is confusion over regulation. The US Federal Government has seized bank accounts of bitcoin exchanges, citing rules designed to prevent money laundering and the financing of terrorism. While elsewhere regulators remain non-committal.
Stefan Greiner (Xenion Legal): I’m afraid they have to be worried about the regulatory aspect, because the regulatory bodies in the US and all over Europe have not really formed an opinion about what bitcoin is, what bitcoin’s transactions are. You should think about how you can pay for the regulation, because this is… On a practical level, this is the crucial point – when the regulation comes, it will cause a lot of costs.
Maija Palmer: Many remain sceptical as to whether bitcoin can survive these regulatory hurdles. But, with its anonymity and the ease and speed with which payments can be made, there does seem to be an appetite for something like Bitcoin to exist. The financial services sector should take note. If it isn’t bitcoin, it is likely something similar will soon emerge from the shadows.
Maija Palmer, Financial Times, London.
Image credit: Flickr