By Xavier Kong
KiniBiz ponders the question, and asks for answers from the community and the authorities on whether or not Bitcoin might become reality’s Republic Credits.
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If one were to pick up a science fiction novel, there would be no surprise that it would likely contain hints to a globally or universally accepted currency that would move the economy of the world within the novel. One example here would be Star Wars (Sorry Trekkies!), where the currency in use is the Galactic Credit Standard, or “credit”.
In the past, this seemed very far away and impossible, but now, with the advent of Bitcoin and other altcoin, it looks like the “credit” might not be that far off.
One concept altcoin shares with the fictional credit is that it is capable of cross-border transactions almost instantaneously, which is something that isn’t possible at the moment with fiat money.
One example offered to KiniBiz was a transaction of US$1 million from the United States to Europe.
“Not only would it take a few days, but banks will also charge you for the transaction. However, with Bitcoin, its instantaneous, virtually free, and can be done at any time of the day, any day of the week,” said Marin Ivezic of IBM.
Of course, authorities bit back at this statement, citing the stability of cryptocurrencies in general as a point against them. Bitcoin, as an example, meets with intense fluctuation on a moment to moment basis. KiniBiz has witnessed how, in the span of ten minutes, it was possible for the price of Bitcoin to fluctuate by almost RM30.
According to Personal Finance Hub’s Andrew Moran, the Bank of Canada had released a document on Tuesday titled “Understanding Platform-Based Digital Currencies”, “the central bank believes that the peer-to-peer decentralised virtual currency could potentially disrupt the global financial stability if adoption persists in becoming widespread”.
Within the document itself, was the statement that “central banks are studying and closely monitoring decentralised digital currencies such as Bitcoin. There could be potential risks to overall financial stability if Bitcoin became a significant means of payment and the Bitcoin system remained unstable.”
This brings the topic back to the issue of trust, which Bitcoin and other altcoins answer through a decentralization of it. According to Mark Smalley of Brain Control.me, who quoted Edelman’s Trust Barometer from 2013, “In the United States and China, 61% of people trust people like themselves, 43% trust CEOs in general, and only 38% trust government officials!”
What Bitcoin and other altcoins do is they offer their ledger as part of the entire package, where everybody who mines altcoin maintains the ledger through the block chain, which notes all transactions, with each transaction receiving stronger verification from each miner that checks it out.
“The thing is, nobody really trusts anybody on the Internet. As a result, everyone keeps an eye on what everyone else is doing. That way, no one can really pull a fast one because everyone else is watching,” said Adam Giles of Brain Control.me, concurred by Anson Zeall of Coinpip.
“What makes Bitcoin unique is that there’s a record as to who possesses it, and there’s a network that records transactions. Additionally, there is no way to increase the number of Bitcoins in existence, which is not the case in other currencies, like the US currency, which the treasury can just print more if needed,” noted Daniel Burrus, founder and chief executive officer of Burrus Research, again concurring that Bitcoin is not as unregulated as some authorities think it is.
KiniBiz likens this situation to a magician on stage. It is easier to perform a trick if the audience is all on one side of the curtain. However, altcoin is like having the audience all around, in close proximity, and already watching the magician’s hands. This situation makes it almost impossible to perform a trick.
However, there are already devices out there that peddle Bitcoin to users, such as the aforementioned AVMs by Numoni in Part 2 of this series. These devices feature two designs, which are unidirectional (only allow purchase of Bitcoin, like the one in Bangsar) or bidirectional (allows both purchase and sale of Bitcoin) and, according to Atlanta Bitcoin’s Aaron Williams, “help to lift Bitcoin’s image by answering to security and building on technology that the world is already comfortable with”.
“For instance, the machine will not pressure a person to buy or sell Bitcoin, but rather is just there, allowing people to approach it of their own free will. The machine also represents a form of security and comfort, eliminating the need to buy Bitcoin from any shady characters, and work similarly to an ATM,” said Williams.
Williams also sees a future where exchanges will begin to treat altcoin ATM operators with a business-to-business view, and where altcoin vending machines will be integrated with ATMs, allowing for direct purchase and sale of altcoin at the ATM itself, which would be a powerful indicator of the strength of the KYC/AML/CTF measures applied to altcoin.
“User identity confirmation and security would be more firmly integrated with the buy and sell of Bitcoin, and this will only serve to validate the services provided by the Bitcoin ATMs,” said Williams.
Diamond Circle, a Bitcoin ATM manufacturer, has also unveiled plans to launch a Bitcoin debit card at the Bitcoin 2014 conference in Amsterdam.
“The debit cards will also be able to hold up to nine different fiat currencies and will be linked to the customers’ Bitcoin wallet,” noted Sid Zagaeski of CoinReport.net, adding that the company has guided that the exchange rate for Bitcoin will depend on live market rates at the time of the transaction, though the card will only be able to be used with the company’s cashless Bitcoin ATM.
So, will or will not an altcoin become the planet’s currency?
KiniBiz received several positive responses from the community, with one particular response stating “if not Bitcoin, another altcoin will”. One example is how Bitcoiners have formed “brick-and-mortar Bitcoin embassies” in Europe to help encourage the use of Bitcoin among their local communities. The first such embassy was actually formed in Montreal, Canada, with others in Israel and Poland as well.
However, it seems Bank Negara Malaysia has a different opinion.
“Bank Negara stands by its statement from earlier this year, and maintain our stance that Bitcoin is not recognized as legal tender in Malaysia,” said Lee Poh Fong from Bank Negara Malaysia in response to KiniBiz’s queries about the national bank’s take on cryptocurrency.
Though there are still plenty of obstacles on the way to the “credit”, there can be no denying the possibility that an altcoin will take over as the world’s currency. However, the future is not ours to see, and only time will tell.
Yesterday: Security, safety and excryption
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