When Bitcoin started in 2009, it was practically worth nothing.
Now, more than a decade later, the cryptocurrency industry has seen multiple ups and downs, peaking at more than $ 61,000 in mid-March. Acceptance from mainstream investors and businesses has also increased.
Most recently, a Singapore investor made waves in the art world when he spent a record breaking cryptocurrency valued at $ 69 million (S $ 93 million) on a digital work of art.
The buyer of the digital collage, Vignesh Sundaresan, is one of the oldest investors in Non-Fungible Tokens (NFTs). NFTs act as a novel digital asset and have grown rapidly in popularity in recent years.
Anyone can "symbolize" their work for sale as an NFT, and interest in it was fueled by million dollar sales that made headlines recently. For example, a Nyan Cat animated gif – a 2011 pop-tart flying cat meme – sold for more than $ 500,000.
The electric car giant Tesla has also started accepting Bitcoin as a payment method in the United States. Although the feature is not yet available worldwide, founder Elon Musk announced that it will be available in new markets in the future.
In the immediate vicinity, established local players are also keeping an eye on the area of digital assets. Last December, DBS Bank launched a blockchain-based digital exchange that enables investors to trade cryptocurrencies and companies to raise funds through tokenization of assets.
According to Raoul Pal, global macro investor, the Singapore sovereign wealth fund Temasek Holdings has apparently bought bitcoin from miners.
What is cryptocurrency and bitcoin?
Image credit: Blockgeeks
Cryptocurrency is the technology that acts as a medium for conducting financial transactions and using cryptographic technology to provide a secure platform for transactions.
On the other hand, Bitcoin is the digital currency that uses cryptocurrency. Founded in 2008 by Satoshi Nakamoto, it was created to speed up cross-border transactions, reduce government control over transactions, and simplify the process without the need for third-party intermediaries.
The main differences between Bitcoin and cryptocurrency / Photo credit: Vulcan Posgt
There are many properties of Bitcoin that make it unique and unprecedented in the history of money. For example, they are immutable, transparent, and private.
This means that it is impossible to counterfeit or forge Bitcoin, every transaction is recorded on the blockchain, and it is almost impossible for an outsider to identify the owner of a Bitcoin wallet.
While the properties of Bitcoin remain largely the same, an increasing number of uses and applications for Bitcoin are being designed exponentially.
Some use cases of Bitcoin include a cheap peer-to-peer payments network – also the one most used by the public – a darknet currency and, more recently, a financial asset that many are investing in.
Why do companies accept Bitcoin as a payment method?
The increasing popularity of cryptocurrency payments isn't the only reason for companies to accept them. There are myriad compelling reasons that could lead companies to adopt the new payment method.
First, transactions made are permanent and cannot be modified or deleted, which greatly reduces the likelihood of fraud. Depending on the payment gateway, additional security services can be provided. This helps build trust between companies and their customers.
Next, privacy is guaranteed, as anonymity is a hallmark of cryptocurrency payments. The amount of data collected will be significantly less than that of traditional banks, which could be a selling point for customers.
Photo credit: Inside Bitcoin
These are just some of the reasons why companies offer cryptocurrency payments. In Singapore, a Kopitiam branch has even started accepting payments in digital currencies such as Bitcoin, Ethereum and Kreatan.
Kopitiam converts the cryptocurrencies into fiat every week with the help of its fintech partner. It also carries the risk of currency fluctuations. Stand holders at the food court will then receive their receipts in Singapore dollars.
According to a report by Inside Bitcoin, Alden Tan, CEO of Kopitiam, said allowing cryptocurrencies in the system would help them learn more about the payments ecosystem.
Other stores that accept cryptocurrency payments in Singapore include Epic Gear, Oyster Bar, Artistry, and more.
Progress is slow in Singapore
Although cryptocurrency trading is gaining traction in Singapore, it remains small compared to stocks and bonds.
The combined peak daily trading volume of Bitcoin, Ethereum and XRP accounted for only two percent of the average daily trading volume of securities on the main exchange last year.
This means that with current trading volumes, the number of people who might be interested in cryptocurrency payments in Singapore is unlikely to be significant enough for widespread adoption.
In addition, Singapore has already had problems transitioning to cashless payments. Although digital payments like PayNow have been on the run, Singaporeans are still loyal supporters of cash. There are now 4,100 ATMs and cash withdrawal points, up from 3,700 five years ago.
Ong Ye Kung, board member of the Monetary Authority of Singapore (MAS), said in a speech in parliament this year that "cash will continue to be a familiar and convenient form of transaction".
This is exacerbated by the problem of the aging society in Singapore as the older generation is more skeptical about technologies such as digital payments.
Since cryptocurrency payments are such a new payment method, they are likely to be skeptical and criticized by citizens. In addition, the government recently warned Singaporeans to "exercise extreme caution when trading cryptocurrencies," which could result in lower acceptance of such payments.
These warnings could go down well with Singaporeans given the fluctuations in Bitcoin prices. Additionally, Bitcoin transaction fees can be as high as S $ 22.53 per transaction.
While cryptocurrency payments are unlikely to be widespread in Singapore, early adopters will continue to buy and invest in them, and we would likely see more uses of blockchain technology.
Selected image source: SIRIN LABS