AT Sydney’s Bitcoin Barcamp conference on Saturday, a mixture of libertarians, entrepreneurs and traders gathered to proclaim the future is virtual currency.
Mt Gox, Bitcoin’s biggest exchange that lost $US567 million of customer assets, or Silk Road, the web site that allows narcotics to be bought and sold using bitcoins, were not discussed at the conference.
Instead, optimism reigned among the mostly male conference participants who proclaimed that Bitcoin or a similar crypto currency was how people would pay for goods and services in the future.
They are not alone. Some on Wall Street agree.
“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” says Bank of America Merrill Lynch’s foreign exchange and rates strategist David Woo.
On a couch in the corner of the conference at the Australian Technology Park, Bitcoin broker CoinJar gave this reporter $20 worth of bitcoin which were then transferred offline to a bitcard that looks a little like a regular eftpos card and can be used like one.
CoinJar co-founder Asher Tan likens his company to a moneychanger. Mr Tan, 27, and Ryan Zhou, 19, started their company last year. It already has more than 20,000 customers across Australia who pay for pizza, beer and coffee using bitcoin. CoinJar, backed by Blackbird Ventures, prices bitcoins using a variety of offshore Bitcoin exchanges.
“We are treating Bitcoin exactly like money,” says Mr Tan.
But Bitcoin is not money, says Matthew Cridland, a partner at DLA Piper Australia.
Bitcoin in Australia is a non-monetary consideration, says Mr Cridland — it does not meet the country’s current definition of a currency.
In the future, Australia may define as currency so-called crypto-currencies such as Bitcoin. If Bitcoin is declared a currency then Bitcoin transactions will be subject to the goods and services tax as they are in Canada and Singapore, says Mr Cridland.
A bitcoin was worth the equivalent of $US20 at the beginning of 2013. It is now valued at $US630 after rising above $US1000 last year. There are about 11 million bitcoins in circulation worth about $US9 billion, according to George Samman from btc.sx, a bitcoin trading platform that allows leverage bets on bitcoin.
“There’s a lot of money to be made on bitcoin arbitrage,” says Mr Samman, who is moving to New York from Sydney to trade Bitcoin. Bitcoin’s bid-offer spread is as wide as $US15, he says.
Employees from Goldman Sachs visited CoinJar to find out more about the company that has traded more than $24 million worth of bitcoins in its first eight months of existence.
CoinJar makes its money by charging a 1 per cent fee when Bitcoin users exchange bitcoins for Australian dollars and a 2 per cent fee when Australian dollars are exchanged for bitcoins.
BitPos, a bitcoin point of sale provider that does business with CoinJar, charges a 1 per cent merchant fee per transaction. It has 25 merchants using its services including pubs and fitness clubs.
“The genie is out of the bottle,” says Jason Williams, a BitPos founder. “Crypto currencies will be as ubiquitous as the Australian dollar.”