The basics on Bitcoin for y’all who are clueless

Words by

Digital Reporter

Bitcoin. Bitcoin. Bitcoin. Everyone’s talking about it and frankly, it can get intimidating. Bitcoin is continuously gaining traction in the Philippines, prompting the government to raise concerns towards the virtual currency (VC) and all activities related to it. And as business‑minded millennials, we have to make sure we’re not left out. #FOMO

So here’s the basic info:

Used solely through digital platforms, meaning, unlike bills and coins, it cannot be held in one’s hand. It is used in purchasing products online, and is a form of investment for some because of its fluctuating value. As of writing, Bitcoin’s value per unit has plunged below the $10,000 from almost $20,000 just before 2017 ended.

The underlying technology behind Bitcoin and other electronic currencies is called “blockchain,” a network of interconnected ledgers or data bases that allows the easy access to and transfer of VC’s. (Here’s a related story about that)

Unlike physical currencies, VC’s are not regulated by any state or central bank, with the their security and verification as well as production highly dependent on cryptography. Hence, the attempt to regulate companies that serve as trading entities in many countries, including the Philippines.

The Bangko Sentral ng Pilipinas (BSP) in February last year issued an order requiring all VC providers present in the country to be under its watch. At present, BSP is in the process of authorizing 12 bitcoin exchange entities, following the approval of two VC exchanges last year.

The Securities and Exchange Commission (SEC) also recently issued an advisory, warning the public against investing in initial coin offerings (ICO), the counterpart of initial public offering in the startup scene. The announcement came after SEC’s previous announcement that it would look into the ICO of KROPS, a digital marketplace for farm produce led by Joseph Calata, chairman of now delisted agribusiness firm Calata Corp. The ICO was, later on, declared illegal.

Through an ICO, startups raise a certain amount of money for a project by selling a VC in return of another digital currency or fiat money. Fintech startup Qwikwire, for example, last December launched its ICO with an aim to raise $9 million for a new digital real‑estate market.

According to Zach Piester, co‑founder of venture development and innovation firm Intrepid Ventures, the country has a “really large and robust blockchain and [cryptocurrency] community.”

“Our hope in the ecosystem is that we can create new global financial systems based on the notion of transferring value without [a] third party,” Piester said during the first Blockchain & Bitcoin Conference Philippines last January 25 at EDSA Shangri‑La Hotel in Mandaluyong City. The event drew hundreds of local and foreign Bitcoin enthusiasts.

Jeremy Goodwin, CEO of peer‑to‑peer manufacturing network SyncFab, claims: “The reason why cryptocurrencies exist is that they were [a] product of financial crisis in 2008. With the corruption in the financial market and all the untrusted central banking system, they (cryptocurrencies) are [a] trust‑worthy medium of financial banking.” He added: “They can be used and de‑centralized and for which the system is set up by movement undertaken by some libertarians and some technologists who create alternatives to the existing financial, central banking system [in the form of] de‑centralized ledgers.”

Goodwin also said that cryptocurrencies are “meant to address double spending,” easing payment transactions by eliminating third party platforms.

For Luis Buenaventura, chief technology officer at BloomSolutions and author of the book “Reinventing Remittances with Bitcoin,” the number of people involved in VC trades is growing because of the “excitement behind the technology and the real‑world application of what blockchain is gonna do to transform many industries.”

“Humanity has proven itself not up to the task of managing its money. I think that our governments are particularly good at that, and we’ve seen it time and time again,” Buenaventura said.

“An alternative now exists that we trust more in math, in electricity, and in many ways [cryptocurrencies] feel particularly more sound as a solution.”