For those of you who haven’t heard about Bitcoin yet, this will probably be the future common way to proceed a payment or a money exchange in the next couple of years. You only need internet access, and a credit card, to be able to spend and invest online only by one click!
This brand new financial technology is spreading around the world, and has been present and used in the UK for the last few years. Whether you mine them, by making your computer resolve complicated math algorithmes, or buy them, bitcoins can be used in the UK for individual purchases or within organizations, provided with the bitcoin transaction option.
Recently, one of the most important English banks, Barclays, decided to start working with bitcoins. Indeed, it would be much simpler for international transactions, as money exchanges between different countries are complicated and expensive, mostly because of the change of unit. With the use of bitcoin, no modification is needed; the service is much faster and cheaper. A report co-authored by the Santander bank, also experimenting with the bitcoin strategy, showed that this blockchain technology, a program that lets people send bitcoins to each other and records those transactions, could reduce banks' infrastructure costs by up to $20 billion (£12.8 billion) a year! Unfortunately, it will still take a couple of years for the banks to adopt a totally new form of payment, mostly because of regulatory and scale issues.
Nobody knows what's next when it comes to bitcoins, that’s the joy of it. The way it works is quite weird, although fundamentally it's digital cash and everyone can understand that,” said Marc Warne, the founder of Bittylicious (one of the main sites selling bitcoins).
The bitcoin is great for sellers. Many websites sell them in a simple and rapid way. It’s not as good for buyers. They cannot spend it on clothes in a shop, or on food in a restaurant. The only way they can use them effectively in turn is by becoming bitcoin traders. This evidently has major economic consequences, but how does this affect the UK?
While the bitcoin is massively popular on the main European continent, it is slightly less so in the UK. Although the community of bitcoiners is a buzzing and enthusiastic one, the country as a whole feels ambivalent about the world’s number one cryptocurrency. It’s a question of people versus institutions. The general public is curious and wants to experiment, work out the potential of the bitcoin, basically, give it a chance.
Conversely, the institutions, banks and government don’t want to take chances. And who can blame them? Taking risks is a luxury that the government, responsible of an entire nation, cannot afford.
The government’s scepticism undesirably fuels the growth of the bitcoin, as an unrecognised and unofficial currency. But that doesn’t stop people from publicly meeting up for bitcoin events in order to trade their unofficial money for goods. London’s first Satoshi Square event took place two years ago. People met up in the City stretch from Saint Paul’s Cathedral to the Gherkin and made the financial capital look more enthusiastic than it ever had (and that’s saying something).
It looked like a live Wall Street performance, with Bitcoin enthusiasts meeting to create and cultivate networks face to face, despite the bitcoin being a digital commerce.
The government doesn’t halt the bitcoin boom so much; however, it is almost impossible to purchase bitcoins at competitive rates. I therefore doubt the bitcoin will become a global currency anytime soon, but its popularity keeps growing as I write.
by William H.