Bitcoin is a manifestation of an innovative new technology called crypto-currency. At its heart, it is a cloud-based peer-to-peer ledger system that allows you to put a timestamp on transactions. This can be used for the transmission of value, allowing for the instant transfer of money to anyone, anywhere in the world.
It can also be used for entering into contracts or even proving copyright ownership of content, all without a central authority. Think of the innovations that have occurred on top of the basic internet protocol over the past 20 years, and you start to imagine the same thing happening with the crypto-currency protocol.
Bitcoin is currently the most widely known function of the protocol because of its recent price rises and press coverage. The Monetary Authority of Singapore is correct in saying that it is a risky investment, and I agree that you should only invest what you are comfortable in possibly losing.
The price is volatile and fluctuates widely depending on the manic depressive nature of free markets, press hype feeding the price cycles, and government agencies issuing cautionary warnings. It’s important though to look beyond the price action and look at the deeper benefits that crypto-currencies hold for society at large.
I understand that new technology may be frightening to some. As with all disruptive technologies there will be winners and losers. Snail mail is on its way out. Music record stores are being replaced by iTunes. Finance is next in line for innovation and while Bitcoin’s success is far from guaranteed, it’s better to be ahead of the curve than risk being left out.
There are already several Bitcoin and crypto-currency startups in Singapore. Some have attracted large amounts of venture capital from abroad. Global Foundries, which employs 6,000 people in Singapore, manufactures some of the chips which go into the hardware used to power the Bitcoin network. This isn’t just about speculation on an asset. It’s about jobs and innovation.
Here’s three examples of newly-spawned companies changing the game:
ItBit is a Singapore-based, global Bitcoin exchange. They have institutional clients from all over the world looking for a secure platform from which to purchase Bitcoin. Because of Singapore’s standing as a financial hub, it makes sense for a major exchange to be launched here. They’ve raised over US$3.25 million in funding and have 12 employees worldwide, with five in the Singapore headquarters, three of whom are Singaporean. Most of the local employees formerly worked for high profile banks and MNCs but are seeing the future in Bitcoin.
CoinPip is a Singapore founded Bitcoin payment processor which allows restaurants and shops to accept Bitcoin. Merchant on Coinpip can accept payments in Bitcoin with no volatility risk as they instantly get Singapore dollars credited and deposited. With a 0.55 percent processing fee and new technology, they can outcompete the 50-year-old credit card industry. The merchant is also able to attract Bitcoin holding locals and tourists (many look specifically for Bitcoin accepting merchants when traveling). CoinPip has raised angel funding and is already expanding to Hong Kong.
Here’s one for you gold bugs. Ripple Singapore, a Singapore four person start-up, has partnered with the very well respected Singapore-based Silver Bullion to provide a virtual way to purchase and trade in physical Silver and Gold Bullion using the crypto-currency Ripple. Ripple is a protocol which allows its users to exchange or send rights to redeem any item of value conveniently. It allows fast and efficient trades using the explicit trust network of Ripple and the hard assets held by Silver Bullion. This is a first in the world.
Despite all this, the mainstream media will continue to focus on the price action – on bubbles and crashes. Will there be wild swings in the price of the Bitcoin currency? Absolutely. Is there any way to put the crypto-currency genie back in the bottle? Absolutely not. It’s open source and there’s no way to prevent its use by individuals who have clearly embraced it.
The media will continue to condemn it, governments will try to regulate it, but in the end the only real way to control it is to use it. The best thing Singapore can do is allow it to flourish and benefit from the jobs and economic growth it could create as we take a leadership position in its adoption and build the businesses of the future.
(Editing by Terence Lee and Paul Bischoff, photo credit: Antana Coins)
Want to learn more? Be sure to check out our Bitcoin debate at Startup Asia Singapore 2014 on May 8.
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