Bitcoin has attracted a lot of attention in the last year due to it’s growing popularity as a currency and it’s global reach but what’s it all about and why are big businesses now jumping onboard the Bitcoin train? Let’s dive in and find out what all the fuss is about.
Bitcoin is a decentralised, peer to peer, digital currency. What this means is that nobody issues or controls it, payments between two parties are direct with no middlemen and you can pay anyone, anywhere in the world instantly with no fees without relying on the legacy banking system. All transactions in the network are maintained in a shared ledger called the ‘blockchain’ where transactions are stored forever and cannot be reversed and this data is open and auditable at the click of a button. Bitcoin is traded 24/7 around the world where It’s value lies in it’s utility as an open currency, the network of users, limited supply and unique products and services the blockchain can provide. One Bitcoin is currently trading around $400 USD.
Bitcoin as a payment mechanism has many distinct advantages over the competitors like credit cards, Paypal, Alipay, Octopus card etc. Firstly, transactions anywhere in the world are free and instant. This enables businesses to easily open their doors to customers from all over the world without the overhead of bank accounts, different currencies, specific payment methods in each country- it’s easy to transact. Setup time and costs are also drastically reduced whereby you can get setup to start accepting bitcoin in your business in minutes. Most bitcoin payment processors also provide the business the ability to convert the bitcoin immediately into the local fiat currency to ensure there is no volatility risk on behalf of the business if the bitcoin price should fluctuate.
In Hong Kong today there are about 20 businesses accepting Bitcoin ranging from floristry to fashion and that number continues to grow. There are estimated to be approximately 80 000 merchants worldwide accepting Bitcoin today including many big players like Dell and Expedia with key growth markets in the US, South America (particularly Argentina) and Europe leading the way with Asia rapidly catching up in places like Singapore and Indonesia.
In many countries around the region, a significant number of the population is not served by a bank or any financial entity and instead relies upon cash payments. These people (which the World Bank estimates at 2.4billion globally) cannot currently participate in global commerce. The rise of affordable smartphones and internet adoption in many developing nations provides each of these people the ability to use Bitcoin to bridge the financial gap and given the option between an entity that charges fees, is not available 24/7, requires copious amounts of paperwork like a bank and Bitcoin which is free and you can now send, receive, invest globally the choice is clear.
Silicon Valley has already put their stamp of approval on Bitcoin with investment surging past VC investment in the original 1995 .com companies like Yahoo and Netscape. I see Bitcoin in a similar situation now with many innovative new products and services focusing not just on Bitcoin as a currency but the blockchain as a historical record suitable for exchanging contracts and as a communication layer for Internet of Things devices.
Hong Kong as a financial hub has the opportunity to play a lead role in this wave of new ideas and innovation which have a proven ability to save time and money. Bitcoin can provide a quick and cost effective means for businesses to start selling their products locally and abroad and can enable companies to reach a global customer base, it will be exciting to watch what new projects entrepreneurs come up with in this space next.
About George Harrap
George is the founder and CEO of Hong Kong based bitcoin startup Bitspark. George has a background in Electronics Engineering and he is now focused on bringing finance to ‘the next billion’ through bitcoin- the world’s first decentralised, peer to peer digital currency.