Since last year, the number of bitcoin merchants in Argentina has doubled, according to the Financial Times. This growth comes primarily from small businesses, which are showing the highest bitcoin growth and adoption rate in all of Latin America.
Argentina, South America’s second-largest economy, has been restricted from access to foreign currencies and has suffered from an overvaluation of exchange rates, unstable inflation and complicated economic dynamics.
This prolonged exposure to economic instability has motivated Argentinian merchants to shift from fiat-based financial platforms to bitcoin to avoid frozen payments which sometimes are locked up for two or more weeks.
Argentina has also been a key player behind the rapid growth of monthly bitcoin transactions in Latin America, as more businesses started to accept bitcoin to avoid the volatility of Argentinian Peso, which inflates around 20 percent each year.
Currently, Argentina has more than 150 local bitcoin merchants, including hotels, restaurants, bars and resorts.
An owner of a budget hostel in Buesnos Aires told the Financial Times, “I was suspicious at first, But I took the risk, and it was well worth it.” FT reported, “She takes credit-card payments from foreign tourists in return for the digital currency. At the moment, she can sell her bitcoins on Argentina’s unofficial currency market for 50 per cent more than she would get at the official exchange rate.”
Perhaps a blockchain-based parallel currency could provide a solution to the Greek crisis and be an alternative for Greece, Forbesreports. Lee Gibson-Grant, founder of U.K.-based digital currency consultancy Coinstructors, recently met with the Mayor of Agistri, an island in Saronic Gulf with a population of around a thousand people. The Mayor has agreed to start testing blockchain technology solutions in the island.
The single ATM on Agistri ran out money last week.
Kelly provides more detail in a CNBC post titled “Greek island agrees to test digital currency.” He is persuaded that the technology behind bitcoin can be used to create a store of value that is independent of the traditional banking system.
“The digital currency I created last year, Nautiluscoin, was designed to tackle this specific task,” says Kelly.“ We can now offer Greece a digital currency that is backed by gold and is integrated into a mobile-banking platform.
The Mayor of Agistri has agreed to allow the island to be a pilot program for a new monetary ecosystem, which will use Nautiluscoin. Over the coming weeks, the infrastructure for this project will be rolled out and the citizens of Agistri will receive Nautiluscoin to begin transacting.
Nautiluscoin will be backed by gold, which, according to Kelly, is still the most trusted independent form of money. Coinstructors, a partner in the project, developed drachmae.money and Dracmae Connect to create a transaction system. The system will charge a fee for each Nautiluscoin transaction, and the fees will be used to purchase gold for a “Nautiluscoin Stability Fund.”
That may sound a bit circular and chaotic, but probably the project developers haven’t had the time to fully detail the mechanism of the proposed monetary system. At the time of writing, the drachmae.money website still has a “Lorem ipsum…” placeholder for yet-to-be-written text.
“Using gold to back Nautiluscoin should give both tourists and merchants assurance that a digital currency is more than just lines of computer code,” says Kelly. “A digital currency like Nautiluscoin can be quickly deployed to kick-start the tourism industry. We have already begun to implement this plan and estimate that it will take 60 to 90 days to fully execute.”
Local businesses can create a loyalty program via Drachmae Connect, which enables tourists to book hotels and other services at a discount. While Agistri is a test case, the initiative could be applied throughout Greece, and Gibson-Grant is persuaded that a parallel digital currency would be an ideal solution for the nation. “A digital currency over the blockchain would be ideal right now for Greece and tourists,” he said.
Kelly notes that the project is inspired by the highly successful WIR Bank that manages and issues the private currency WIR franc in Switzerland. The WIR Bank was established by two Swiss businessmen in 1934 in response to a failing economy and currency shortages.
ING Bank hired global research firm, Ipsos, to survey 14,829 Internet users from 13 European countries, the United States and Australia. ING asked participants about mobile banking, payments and digital currency, such as bitcoin.
The report has some sobering insights into how Bitcoin adoption is going in the West, including what consumers see as the biggest benefits and problems of mobile payments.
1. People Are Using Less Cash
According to European consumers, cash is on its way out. When asked if their use of cash has declined over the last year, 50 percent of European participants said yes. And out of the group who answered yes, 80 percent think that trend will continue throughout the next year. 50 percent in Australia and 54 percent in the United States felt that their use of cash had declined over the past year as well.
Austria and Germany had the lowest percentage of people thinking they were using less cash, with only 31 percent saying yes. Turkey, Poland and Italy had the highest, with 60 percent or above saying they were using less.
2. Trust is the biggest barrier
Forty-two percent of European survey participants who have not used a mobile payment app say, “I don’t trust it” is the biggest reason. Trust was closely followed by “Not yet having an opportunity to use it”, which got 41 percent. Following were “I don’t understand it” at 10 percent, “It’s no easier” at 9 percent and “It’s more difficult to track what I spend” at 8 percent.
Participants who had mobile payment apps were asked whom they trusted the most to make mobile payment apps. “My bank” came in first with a whopping 81 percent. Named groups (Google, Apple, etc.) came in with just 5 percent, while social media websites (Twitter, Facebook, etc.) got 4 percent. Only 2 percent of participants said other banks.
3. Is Bitcoin the future of payments?
The majority of participants in the Netherlands, Luxembourg, United Kingdom, Germany and Austria said no. And 72 percent of participants across Europe either said they didn’t have an opinion or no. Australia and the United States fared slightly better, with less than half disagreeing.
However, 45 percent of Turkish respondents answered Bitcoin was the future of payments. Turkey scored the highest and was followed up with Italy at 43 percent and Spain at 33 percent.
These countries also had the highest number of people who have used the digital currency in the last 12 months (as you will read next).
4. Bitcoin awareness still low, but users are believers
Despite media hype and regularly making headlines, many Europeans still don’t know what Bitcoin even is and only tiny portion have actually used it. When European participants were asked whether if in the past 12 months they had used digital currency, 24 percent responded no, 49 percent responded they had no idea what it was, and only 4 percent responded that they had.
Fifty-two percent of Australian participants responded that they don’t what Bitcoin is and 43 percent from the United States responded similarly.
Turkey had the highest percentage of people who have used the cryptocurrency, with 9 percent responding yes. Italy and the United States tied for second with 7 percent. Poland was third with 6 percent, and Spain came in fourth with 5 percent.
The European countries with the highest amount of cryptocurrency users were also the countries with higher percentages of people who believed it was the future of payments.
5. Non-Bitcoin mobile payments are winning
While mobile payments as a whole remain niche and nonmainstream, it seems Bitcoin is losing to more conventional mobile payment apps created by banks and financial technology (fintech) startups. While countries such Turkey and the United States had more than 60 percent of participants saying they are using mobile banking apps in the last 12 months, none of the countries had more than 10 percent of people who had previously used Bitcoin.
The study shows mobile payments as a whole are growing, and the countries with the highest adoption of mobile banking and payments also tend to have the highest percentage of people who had used and believe in Bitcoin.
You can read the survey’s findings for yourself here (download).
Many people know the symbol of Bitcoin. Many people might know the symbol of Litecoin. Even fewer know the symbol of a Dogecoin. There are hundreds of cryptocurrencies that have been developed, but what’s the symbol for “cryptocurrency?”
Brand Me Crypto, a design contest sponsored by Vogogo and Cryptsy, is hoping that one concise brand can be created that will epitomize the true brand of cryptocurrency.
“I found myself and our designers struggling to visually articulate cryptocurrency as a whole without inundating our designs with 5+ more coins just to communicate the overarching cryptocurrency conversation and message,” said Chantel Meeley, head of marketing and creative at Vogogo.
But it wasn’t as simple as just hiring a design firm to come up with a few different concepts. It was important that Brand Me Crypto kept true to the culture that has sprung up from cryptocurrencies. As it says on its website, it needed to be “designed by the people, for the people.”
The two companies joined forces and launched the Brand Me Crypto initiative on October 28, 2014, inviting designers from around the world to submit their concepts. At the end of the contest, designers from 89 countries across five continents had submitted their ideas of what the brand should be.
The contest is now in its final stages. Five designs are being voted on from around the world. Anyone is eligible to vote on the design. More than 7,000 votes have been tallied, and voting ends on March 31, 2015 at 11:59 MDT.
The winner will receive $10,000 in USD or the cryptocurrency of their choosing as well as recognition on open creative licensing rights.
“I am excited to see that the final brand the world population selects and looking forward to having one visual identity that represents this new currency,” Meeley said.
The idea of a government-sponsored digital currency has been around for quite some time. See, for example, the unconfirmed rumors reported in a March, 2013 discussion on the Bitcointalk forum titled “Fedcoin: A centrally-issued alternative to peer-to-peer currencies.”
Andolfatto’s central thesis is that the government could solve the problems of digital economies as follows:
“Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD. [Consumers and businesses] will have all the benefits of Bitcoin – low cost, P2P transactions to anyone in the world with the appropriate wallet software and access to the internet. [I]n short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity.”
Finextra blogger Tom Hay notes that Fedcoin contradicts the radical ideology of those Bitcoin enthusiasts who want a fully P2P economy not centrally controlled by the state. But from a government perspective it’s an interesting idea, because it links the stability of fiat currency to the speed and convenience of the Bitcoin technical platform. He adds:
“Ecuador has already launched a government-backed digital currency pegged to the U.S. dollar. [T]he Ecuadorian system is not based on the blockchain, and indeed Ecuador has banned Bitcoin and altcoins, but the Philippines are considering issuing a blockchain-based e-peso. The idea of digital fiat currency clearly has legs.”
So is the rise of FedCoin inevitable?
The film “The Rise and Rise of Bitcoin” is a fascinating recap of the rebellious history of Bitcoin since its inception in 2009 all the way to the Mt. Gox fall and the arrest of Charlie Shrem in early 2014. The film tells a typical Internet story of idealistic hackers who want to change the world and their unstoppable rise… until the big boys take notice.
Those old enough to remember their “Internet moment” of enthusiastic awe for the newborn Internet in the early 90s – yes, it will change the world so fast – remember also the rest of the story: from a plaything of geeks and techno-libertarian anonymous dreamers (a famous 1993 New Yorker cartoon observed that “On the Internet, nobody knows you’re a dog”), the Internet quickly became a tool of Big Capital and Big Government.
Today, old-timers use Facebook like everyone else, but know that everything we say and do online is monitored by governments and businesses all the time. We know that, short of taking pro-level privacy measures, there is no way to escape online surveillance. Today the Internet, like it or not, belongs to the establishment.
Perhaps it’s naïve to think that exactly the same thing won’t happen to Bitcoin.
The main appeal of Bitcoin for the original Libertarian and anarchist enthusiasts was the possibility of anonymous and untraceable transactions. But bitcoin transactions are traceable by-design to a bitcoin address, and anonymous only if the bitcoin address can’t be traced back to a physical person.
In practice, bitcoin transactions are easily traceable to their originators, and that’s one of the reasons governments will warm up to digital currencies. Forget using Bitcoin to escape taxes – in a state-controlled digital economy, the tax man will be able to find all your income and expenses in the blockchain.
Bitcoin transactions are faster and cheaper than traditional transactions, which is an important incentive not only for end users but for government agencies as well, as shown by the recent Bitcoin bills in Utah, New Hampshire and New York City. It seems likely that governments will try to appropriate selected aspects of digital currencies, and eliminate undesired aspects such as anonymity and volatility, to create efficient and cost-effective but fully regulated digital economies.
