Commentary: Bitcoin Adoption in the United Kingdom

Bitcoin Magazine
Commentary: Bitcoin Adoption in the United Kingdom
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This is a guest post by George Basiladze of Cryptopay.me.

Following mentions of U.K. chancellor George Osborne’s desire to make Britain a Bitcoin Capital last year and proposing a government investigation into the potential of the cryptocurrency and related technology, 2015 would appear to be an exciting time for Bitcoin in the United Kingdom

The “call for information” report issued by the last government in March was deceptively positive, despite a clear depiction of the regulatory minefield which must be navigated before Bitcoin can play a more significant part in U.K. business life.

It also appears that much interest is being directed toward the blockchain technology that informs Bitcoin from leading financial powers, many of which are based within the city of London. More interesting, though, is the gradual adoption by more and more members of the British public.

CEX is a chain of secondhand technology stores and a regular fixture on many British high streets. It is one of the more significant U.K. retailers that accepts payment in bitcoin; the nature of the retail outlets’ focus on technology means it has access to a massive cross-section of the current and potential cryptocurrency user base. Early adopters such as CEX serve the wider Bitcoin community by providing greater visibility to the cryptocurrency and leading by example in its faith in the alternative currency.

A significant difficulty remaining with U.K. Bitcoin adoption is existing financial authorities, namely the big British banks, who are ever reluctant to work with a Bitcoin-based enterprise. This means many Bitcoin businesses aimed at the British market are based elsewhere in Europe, resulting in U.K. customers facing two- or three-day delays when transferring fiat currencies to Bitcoin businesses as they must use SEPA transfers to European bank accounts.

Perhaps the government interest in cryptocurrencies will lead to renewed faith within British banks toward Bitcoin, and eventually Bitcoin businesses will be able to do their fiat banking at home. This would be an important step toward enabling cryptocurrency-based enterprise to become a significant player in the future U.K. economy.

The map provided by wheretospendbitcoins.co.uk shows a reasonably consistent spattering of Bitcoin-friendly businesses across Great Britain, with a great deal centered on the capital. The profile of a business that accepts bitcoin payments is surprisingly diverse, with everyone from trendy foodie bars such as La Porca in Camden to Sushi cooking school YourSushi, which has sites in a number of British cities, getting involved in the cryptocurrency.

Only time will tell if Bitcoin can overcome the almost novel, speculative light in which many see it, but it is the visibility of the currency across public life that ultimately has the greatest power to influence greater use. Policymakers have a responsibility to ensure the public has the protection and right to access the incredible potential of cryptocurrencies.

Entrepreneurialism is rife within the Bitcoin community and drives the currency forward; it is now possible to purchase almost any goods with bitcoin through the ingenuity of services such as giftoff.com which enables users to purchase a huge variety of gift cards for stores including Apple and Amazon using bitcoin and a range of alternative cryptocurrency.

Hopefully, development and adoption of Bitcoin will continue both within the U.K. and further afield across the rest of 2015, and perhaps 2016 will be the year that we can pay our rent and tax obligations using bitcoin, helping to push the international community to move toward accepting the legitimacy of the alternative currency.

There are still obstacles to overcome for Bitcoin, with headaches regarding the future of the block size causing issues for developers around the world working on the Bitcoin project; however, as always, it is an exceptionally exciting time to be involved with the cryptocurrency community.

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Ripple Labs Joins Fed’s Faster Payment Task Force
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Creators of the Ripple payment protocol, Ripple Labs, have been elected to the Federal Reserve’s Faster Payment Task Force Steering Committee.

The Fed created the Faster Payment Task Force earlier this year to tackle the challenge of upgrading the United States’ outdated payment infrastructure, which lags behind Europe, and, in some cases, emerging markets such as China. The committee will help execute and discuss a payment strategy laid out by the Fed earlier this year.

The central bank’s main goal is upgrading the country’s domestic payment system used for   e-check settlement, called the Automatic Clearing House (ACH). Developed in the 1970s, it takes 1-2 days for it to clear a payment, something that simply won’t do anymore in our fast-paced world, according to the Fed.

To represent the interests of various stakeholders in the 300-plus-person task force, a steering committee has been elected by industry peers. Ripple Labs’ Ryan Zagone, head of research on the Business Development team, has been elected to represent the technology and nonservice banking provider sector. He, alongside 15 other committee members, will lead discussions on how to bring real-time settlement to the U.S. payment system.

“It’s a privilege to be selected,” Zagone said. “I look forward to leveraging Ripple’s global experience as the task force assess ways to increase speed, efficiency, access to, and competition in payments.”

One of many

Ripple Labs first got involved with the Fed’s payment initiative, at least to some degree, when it participated in the call for information by the central bank during 2013 and 2014, which helped shape the later published payment roadmap. And it appears the digital currency startup’s ideas might have caught some attention. As one potential solution for faster payments listed in the January 2015 report read:

[To] facilitate direct clearing between financial institutions on public IP networks using protocols and standards for sending and receiving payments.

A distributed architecture for messaging between financial institutions over public IP networks has the potential to lower costs compared to clearing transactions over a hub-and-spoke network architecture. A central authority would establish common protocols for messaging standards, communication, security and logging transactions.

It sounds a bit like Ripple’s hybrid cryptocurrency payment system that leverages centralized institutions over a distributed network. And already, three of Australia’s Big Four banks — Westpac, Australia and New Zealand Banking Group and the Commonwealth Bank of Australia — announced that they have been, or will begin, testing Ripple for real-time settlements between their subsidiaries.

Ripple might be one option on the table, but the rest of the Steering Committee is also packed with heavy hitters in the U.S. payment industry. Dwolla is a prime example and has already gotten traction with their real-time payment system FiSync. The U.S. subsidiary of global banking giant, BBVA, announced in April that through FiSync their customers will be able to send free payments which clear instantly.

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Coinbase Launches Instant Exchange to Help Users Avoid Bitcoin Volatility
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Coinbase users can now send bitcoin payments without being exposed to the digital currency’s volatility

Users with a fiat wallet (must be verified in order to get it) allows use of Bitcoin’s global payment network without being exposed to the price of the digital currency. Coinbase’s Instant Exchange deducts an equal amount to the bitcoin the user wants to send, effectively exchanging the two. The service is similar to one offered by Coinbase to bitcoin-accepting merchants.

As of today, Instant Exchange is available for users with a USD, EUR, or GBP wallet. After typing the bitcoin address and chosing a fiat wallet, users can hit the “Instant Exchange” button, and then send. A bitcoin amount equal to the fiat selected will be sent instantly, without exposing the user to bitcoin’s notorious volatility. The startup’s standard conversion fee of 15 cents will be deducted from each conversion, but sending payments to other Coinbase users is free.

The bitcoin is deducted from the user’s fiat wallet and not his or her digital currency wallet, meaning it can also serve as a way for users to instantly sell their bitcoin.

A different model

Volatility is a problem all too well-known in Bitcoin and is a chief complaint among people interested in using the technology’s payment network. Many services have looked to solve this problem by offering the ability to “lock” bitcoin to the price of the American dollar, British pound, and various other fiat currencies. Users can then unlock their bitcoin when they want to send them or be exposed to the digital currency’s price.

Latin American bitcoin startup Coinapult was first to launch such a service, but now many bitcoin businesses offer it, including Bitreserve, which designed its whole service around the concept.

One issue with these services is that though it makes storing the currency safer, it does not solve the problem when sending the digital currency. Also, if bitcoin’s price goes down, these businesses offering the ability to peg bitcoin will lose money. And though the price has been more stable in recent months, bitcoin’s price has declined dramatically over the last year, meaning that many “lock” services could be feeling some pain.

Coinbase’s model avoids the potential risk of being on the strong side of a price swing by exchanging bitcoin for dollars instantly, and not operating a one-to-one reserve (peg).

 

Image via Coinbase

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