Update on Bitcoin developments
Updated on 21 February 2023
Since the last DiploFoundation/GIP conference on this topic, a lot of changes have occurred with Bitcoin, a software-based online payment system. More than 60,000 online retailers now accept virtual currencies worldwide. This growing popularity has seen backers of the currencies push for greater mainstream adoption. According to the Bitcoin ATM Map, a service that keeps track of bitcoin/cryptocurrency ATMs, there are now over 200 ATMs in operation globally.
Uptake in industry
Industry adoption of Bitcoin is growing. Just recently, Expedia decided to accept bitcoins as payment for hotel bookings in the USA but, taking into consideration the volatility of this coin, won’t hold the currency, instead converting it into US dollars every 24 hours.
Online computer hardware retailer Newegg is accepting bitcoins from the USA and Canada; it is also encouraging these payments by offering special discounts. Dell.com is running a pilot programme for accepting bitcoins, as are Overstock.com and the DISH Network.
Bitcoin customers can also use the currency to buy natural and organic food from the WholeFoodsMarket.com via eGifter. This system allows customers to buy electronic gift vouchers valued from $5 to $500.
Air Lituanica and AirBaltic have adopted bitcoin payments in an effort to save on processing fees.
The high-cost medical equipment company Medical Support Products, which specialises in selling respiratory products in the USA, is now accepting bitcoin payments for its products.
In an interesting development, Amagi Metal, a company that has accepted the cryptocurrency as payment since 2012, said that from 2017, it will no longer accept FIAT currencies in payment. While it will not reject these currencies, its customers will have to convert FIAT money to bitcoins on its website. Presently, 40% of total transactions on the AmagiMetal website are made using bitcoins.
Global Payments Inc. and PayPal, two of the largest worldwide payment providers, recently signed agreements to include Bitcoin in their payment methods, and allow their network of merchants to accept bitcoins. Both companies have signed partnerships with three major Bitcoin payment processors: GoCoin, BitPay, and Coinbase.
Uptake in education
Interest in Bitcoin is also increasing in educational institutions around the world. The University of Zurich in Switzerland is testing out a new NFC-based bitcoin payment solution in one of the school’s cafeterias. NFC, a near-field communication, will allow the buyer to make payments by placing their mobile device near a receiving point to complete the transaction. This can be done offline, too. The Massachusetts Institute of Technology (MIT) was the first education institution to accept Bitcoin as a method of payment on campus.
Uptake by government
In Jersey, NJ, USA, a campaign has been launched to make the city a world leader in digital currencies. Treasury Minister Senator Philip Ozouf said he wants Jersey to be an early leader in the field. If the United States will allow banks to accept and trade in digital currencies, Jersey will be an important city for developing new business. But still, this would require new legislation to fight the potential for money laundering and other illegal activity. From August 2014, the Jersey Financial Services Commission agreed and certified the Global Advisors Bitcoin Investment Fund (GABI). Global Advisors is a Jersey-based hedge fund company which usually specialises in commodities such as metals and oil. The fund will not be open to investment from the general public.
In Australia, use of Bitcoin is growing and the government is closely monitoring developments. The Australian government has published a guide – Bitcoin for businesses – which aims to educate businesses on the benefits and pitfalls of accepting digital currency like bitcoins in exchange for goods and services.
Bitcoin Suisse AG recently announced the launch of its Swiss network of bitcoin ATMs. One section of its business includes the deployment of bitcoin ATMs, approved specifically by FINMA, the Swiss Financial Market Supervisory Authority. Future plans include bringing more bitcoin ATMs to eastern Switzerland and Liechtenstein. The company says it is working to bring aboard partners who can help make these plans a reality.
The UK is also exploring Bitcoin’s role. Chancellor of the Exchequer George Osborne announced a government investigation into the potential for virtual and digital currencies such as bitcoins to encourage innovation in the UK’s financial sector. It is also examining the potential risks of these cryptocurrencies.
Bitcoin is continuing to expand in the Middle East with BitQuick. The company launched support for six currencies (including the US$), making the buying and selling of the digital currency available in Jordan, Palestine, Egypt, Lebanon, Kuwait, United Arab Emirates, Qatar, and more.
The fear of money laundering, financial crime, and terrorism is one of the main reasons many financial authorities are seeking to regulate Bitcoin. The European Commission will be trying to implement stricter Bitcoin regulatory policies in the near feature.
Russia has said ‘no’ not only to Bitcoin, but to other digital currency payment systems as well. It is planning to modify legislation to restrict user access to web services that allow trade in cryptocurrencies.
Since the bankruptcy of MtGox, the world’s leading exchange for trading in digital currency, and after some hacker attacks, Coinbase, one of the most popular bitcoin wallets, signed an insurance agreement with AON to cover losses due to breaches in physical security or cybersecurity, accidental loss, and employee theft. It doesn’t cover bitcoins lost or stolen as a result of an individual user’s negligence in maintaining secure control of their log-in credentials.
Bitcoin has a lot of potential, yet its currency’s volatility, alongside lack of legislation and security risks are strong reasons for people not to trust it at the moment. On the other hand, an increase in the number of searches related to Bitcoin on the Internet and also the rise in software downloads and the growing membership of the mining pools that generate the coins, has resulted in an increase in its nominal value.
Stay tuned for regular updates on what’s happening in the cryptocurrency world.