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Singapore BitcoinBitcoin, altcoin, litecoin, what are they and why are they in the news all the time? If you're keen to find out a little more about these "coins", then read on.
Bitcoin and its ilk Litecoin, Monero, Dash and Ethereum, along with many, many others, are so-called digital or virtual currencies. They're also known by their slightly more mysterious-sounding name: cryptocurrencies. Bitcoin is the grand daddie of all cryptocurencies. The others are called Alt-coins. All cryptocurrencies differ from regular money in a number of profound ways. Let's have a look at these differences.
In spite of the images of shiny gold coins that seem to always accompany news articles about Bitcoin nowadays, Bitcoin is actually not a physical kind of money. It doesn't exist in our world as a tangible asset the way our paper bills and metal change does, sitting in our wallet the way they do. On the contrary, Bitcoin is intangible and solely resides on computers and the network that makes up the Bitcoin payment system.
Bitcoin can be regarded as the next step in our ever-advancing payment methods. Whereas at one time we bartered goods with others to get the things we need, progressing to gold and silver coins, followed by cheques and credit cards, we recently did away with most of our physical money altogether by embracing simply swiping our card or mobile phone to transact.
And now we're moving to Bitcoin.
Of course Bitcoin isn't just an other incremental step. After all, Bitcoin is decentralized. To wit, Bitcoin isn't made, issued or governed by a third party, such as a government or a central bank. Bitcoin has no such middleman, it doesn't need it. But then how can Bitcoin be safe and trustworthy? That's a great question, one that we'll answer below.
Bitcoin's core is its Blockchain protocol, cryptographic computer code that, in conjunction with the thousands of computers that run Bitcoin's network, is as good as hack-proof, because there isn't just one point of failure, the very construct that renders everyday valuable depositories so vulnerable to hacking. Not only that, Bitcoin is also fully transparent and uncensorable. This is how Bitcoin remains safe, secure and hack-free.
In fact, since its inception, Bitcoin's network has never been hacked or in any way been compromised. As it happens, even Bitcoin's detractors have opined that the Blockchain is Next Level security.
Money money everywhere
But why is Bitcoin here at all? Bitcoin was conceived and released by a somewhat cloak and dagger individual, Mr Satoshi Nakamoto. We're still not sure who he is, because shortly after relinquishing Bitcoin to the world, Nakamoto vanished. But we do know that Nakamoto was none too pleased about the most recent global crisis, particularly since it was caused in no small part by misuse of the powers of some of the larger banks. It was time, Nakamoto believed, to give the ability to leverage money back to the people.
Nakamoto's sense of injustice was heightened by the fact that money was (and is) constantly being printed by governments the world over, in an attempt to lower the huge debt burden now overhanging the countries concerned. By simply inflating each respective currency and keeping interest rates as low as they can get away with, central banks aimed (and aim) to reduce their respective massive debt loads. Of course, this quantatative easing, as it's euphemistically called, is at the expense of the man in the street, as the relentless hollowing out of his savings, pensions, cash reserves, etc results in reduced purchasing power at the end of the year. Every year.
Bitcoin To The Rescue
Now, Bitcoin is capped at 21 million, so printing more Bitcoin is simply impossible. This scarcity will ensure that inflation is a non-issue. In fact, Bitcoin is actually finite and, as such, deflationary. In other words, just holding Bitcoin will result in gains in value as compared to dollars, yen, euro etc. All of these are subject to inflation, but not Bitcoin. This is why Bitcoin has been garnering so much popularity amongst not only retail investors, but institutional investors too.
In fact, Bitcoin has even been gaining traction as a kind of "digital gold", a safe haven long-term store of value, the way gold traditionally has been. Except of course, Bitcoin is extremely portable and, given that it's still in its very early infancy as an asset, it's likely to appreciate in value by a huge margin in the years to come. Something that cannot be said for gold, which was languishing even before Bitcoin arrived on the scene.
Transections, Remittances, Transfers
But what can Bitcoin do that fiat cannot do? Why should we use Bitcoin instead of fiat? Because Bitcoin is decentralized, meaning it doesn't have a middleman involved, the transfer of money is faster and cheaper.
Take a 1000 Pound remittance from Britain to Singapore, for instance. Typically, a telegraphic transfer takes up to a week and may cost 20-50 Pounds or more to complete. Western Union charges a potentially even higher sum, as their fee structure includes a percentage of the total amount to be sent.
The funds in question also need to be converted from Pounds to Singapore Dollars upon arrival, an additional way for banks to earn revenue and for the original amount to shrink before finally arriving in the recipient account. And once arrived, the receiving bank may well charge yet another (handling or administration) fee. Talk about running the gauntlet.
Bitcoin To The Rescue Part II
With Bitcoin, the transfer fee should be in the order of one Dollar. Better still, it should take seconds to perhaps a few minutes at most to arrive at the other end. And obviously, no conversion need take place.
Bitcoin = savings of time and money.
No wonder then that Bank CEOs, established Finance players and other member of the "old boys" money network are up in arms over Bitcoin. Given that they're of a generation that was never comfortable with digital technology in the first place, and have a hard time even fathoming Bitcoin's general workings, it's no surprise at all to see and hear their anti-Bitcoin scare-tactics quotes in the media parroted over and over.
It's the same hackneyed fear-mongering and wholesale dissing we heard from the movie and publishing industries when the internet was becoming mainstream. This the sound industries make when confronted with the end of their reign.
But just like the internet, Bitcoin's time has come. And there's no stopping a movement once it's time has come. Sure, Bitcoin has a few teething problems, its scaling issues being one of them. The internet was lambasted back then for its limited bandwidth left and right. Obviously, these issues have now well and truly been resolved. Fibreoptics anyone? Bitcoin's throughput shortage will similarly be resolved. Just like the internet, Bitcoin is simply too good for the world not to have.
If you're based in Singapore, Asia's FinTech hub, then you'll likely be aware that Singapore has set out a roadmap to Singapore Smart Nation. Clearly, Bitcoin and the technology Bitcoin rides on, Blockchain, will be right in the vanguard during Singapore's journey to fully fledged Smart Nation status.
Want to read more about Bitcoin in Singapore? Click here for details.