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CurrencyFair and Bitcoin – An Unknown Future

January 31, 2014

Supporters and critics alike appear to agree on one thing; Bitcoin is the Esperanto of currencies. Much like that experimental language from the last century, it has abandoned the norm in idealistic and revolutionary fashion, blasting across national boundaries to provide a novel and truly global break with the past. But does the comparison end there? Esperanto was an unmitigated failure whereas Bitcoin is… well, here’s the thing; nobody yet knows whether Bitcoin is feted to rise to giddy heights or doomed to fall to crashing depths. 

CurrencyFair and Bitcoin

There are no bigger fans of disruptive innovation than the team at CurrencyFair.

Radical change to the status quo has been the pillar of fire which we have followed for the past five years.

We firmly believe that peer-to-peer money transfers should be quick and easy and cheap. Banks and their fellow financial service institutions had their chance to facilitate just that but chose instead to price gouge and obfuscate a process that we are committed to making as simple as possible.

Love Or Loathe It

There’s a lot to love about Bitcoin for those who love it a lot.

A cryptocurrency, it functions purely as a digital medium of exchange. With no central bank to set interest rates or issue new coins, its value rolls with simple supply and demand. Blocks of new bitcoins can only be obtained through “mining”; an intensive task requiring serious computer processing power (though of course, once mined, they can be purchased online by anybody). Unlike the currencies that we have all grown up with, there is a fixed number of coins. Much like a radioactive half-life, the coin value of each mined block is set to reduce over time, with the 21 millionth bitcoin ambitiously scheduled to be generated in 2140. With customer anonymity guaranteed and central governance of the currency impossible, there are many who have heralded Bitcoin as the beginning of the end for our everyday, “false fiat” euro, dollars and pounds.

What some herald as Bitcoin’s pros, others see as the cons which completely undermine it as a credible means of payment. Controlled anarchy, to mint a contradiction in terms, does not make for a stable currency. Nor is it necessarily a prudent option for those looking to see a return on their savings. While many early adopters have seen incredible returns, Bitcoin’s wild peaks and troughs can leave investments wiped out, potentially within hours if the market is roiling. These may just be the teething problems of a relatively untried and untested financial innovation but, crucially, they may not. Customer anonymity and ungovernability can also lead and have in the past led to bitcoins being used to make purchases from online bazaars of illegal goods – most notably, drugs.

So where, you may ask, does that leave CurrencyFair?

CurrencyFair and Bitcoin

As a payment services business, Currency Fair abides by the directives of the Irish Financial Regulator and the Australian Securities and Investment Commission. We are legally and ethically committed to help prevent financial crimes such as money laundering and the funding of international terrorism. To maximise accountability and transparency, we request customers to provide photo ID and proof of address when opening a new account. Adding any new currency to our roster takes considerable time and the anonymity that Bitcoin guarantees does not help in this regard. While it would be preposterous to assume that the average user is wiring money to Al Qaeda, CurrencyFair has no intention of lowering its security standards to meet those of Bitcoin. This isn’t about “Big Brother” watching you; rather, it’s simply in the interests of maintaining a professional level of trust and accountability.

We don’t know what the future holds. As other cryptocurrencies rise to compete with Bitcoin and as the entire concept underpinning them comes in from the cold, it may yet be possible to include them in the options on the CurrencyFair website. No company actively intends to do itself out of business and our conservatism in this regard is a matter of policy, not principle. We’re excited to see what’s coming down the track but it’s still too early to tell.

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