Since its creation in 2009 by the elusive ‘Satoshi Nakamoto’, the cryptocurrency Bitcoin has grown exponentially beyond initial expectations.
The idea of cutting out the middle man – ie. banks – was naturally an attractive idea to many when Bitcoin emerged on the scene; whether to those enraged over the financial crisis, or those simply looking to avoid fees and hidden costs.
Anonymity when paying online, and the opportunity to bypass opening a bank account, similarly led to the rise of companies such as paysafecard, which allows people to pay online and in store without the need to enter personal details or be connected to a bank account or credit card.
The young company TransferWise – specialising in international payments – similarly attempts to leap frog over bank charges, and has become quickly and hugely popular even with those who see themselves as computer illiterate. Nakamoto, however, was naturally being much more audacious, and Bitcoin remained for the first years of its existence the preserve of tech geeks, mining away for rewards, and hovering up coins that would eventually dramatically rise in worth.
It was perhaps only a small step for Bitcoin to be then picked up by criminals and those surfing the deeper, darker shores of the internet. Due to the anonymity of Bitcoin – only the number of the e-wallet is displayed upon transactions – it quickly became the currency of choice for those buying drugs and weapons online.
London: Tech Finance Hub
Today however, it is well on its way towards mainstream usage. The BBC estimates that up to 100 000 merchants across the globe are now working in Bitcoin. The attraction for these companies is naturally the ability to receive 100% of payment for a product or service without a credit card company deducting 2 or 3%.
London has unexpectedly grown into a hub for Bitcoin and other cryptocurrency activities, as well as becoming the global centre for tech finance in general. Though London’s tech startup scene – dubbed ‘Silicon Roundabout’ – pales in size in comparison to that of Silicon Valley, the British capital is leading the way in tech finance, now hiring 44, 000 people in the industry, more than either New York or San Francisco.
Bright sparks who would have headed into finance before 2008, are now looking instead towards the startup scene. London currently plays host to young enterprises such as Blackchain, offering online wallets for Bitcoin; Coinfloor, a trading floor for cryptocurrencies; and Elliptic, which claims to offer an unhackable vault for your digital money.
How Secure?
Despite the hefty claim of Elliptic, there is still much to be wary of in regard to companies using Bitcoin. With the threat of cyber-attack rising each day – ‘there are two types of companies’, people are fond of saying, ‘those who have been hacked and know it, and those who have been hacked but don’t know it’ – the idea of holding purely digital money is daunting.
Storing bitcoin in cloud servers can lead to the money being hacked, or a virus can wipe them off your hardrive. Or, as this chap unfortunately discovered, there is no insurance or protection from one moment of mindlessness.
It may be a while before Bitcoin convinces the general public to reject conventional currencies. And by the time the case is made, governmental regulators will likely be ready to swoop in.