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A bit about Bitcoin

Geoff Helisma

 

There’s a sign on the outside wall of the Bak’d Hot Bread (formerly Yamba Street Bakery) announcing that it accepts Bitcoin; the Independent spoke with proprietor Will Trevithick about the cryptocurrency, which was last week valued at $74,500 AUD.

The bitcoin.org website asks on its FAQ page, Is Bitcoin really used by people? The answer is yes and, while it’s an apparent rarity among on-street shops, one Yamba business accepts the digital currency.

The currency’s creation is attributed to Satoshi Nakamoto, who published the first bitcoin specification and proof of concept in 2009. “Satoshi left the project in late 2010 without revealing much about himself,” the Bitcoin FAQ states.

“The community has since grown exponentially with many developers working on bitcoin.”

Yamba Street Bakery proprietor Will Trevithick says trading with bitcoin, rather than dollars and cents, “is pretty much the same as accepting eftpos; you come in with your phone, scan a QR code and put in how much it [costs]”.

“So if I take $5 for a sale, I get $5 of their bitcoin added to my digital wallet; it’s a peer to peer transaction; there is no bank or third party in between.”

GH: In that context that would mean, I assume, that your digital wallet would also grow based on the stock market, where they are traded as shares rather than like money?

WT: Yeah, that’s pretty much the best way to look at it: one bitcoin is like one share in a company. But each Bitcoin can be broken down

into eight decimal points, so you can have 100 million portions, each of which is a Satoshi – 100 million Satoshis make one bitcoin.

GH: Is it like the stock market, where extra shares can be issued to raise additional capital and possibly decrease the value of the existing bitcoins?

WT: No, there can only ever be 21 million bitcoins. They are created at a decreasing and predictable rate. The number of new bitcoins created each year is automatically halved over time until there is a total of 21 million bitcoins in existence. The people mining bitcoin, who process transactions and secure the network, authenticate the transactions and are rewarded by the network for their services. So it’s a heap of computers world-wide keeping the security of the network going. I think we’re at about 18 million bitcoins now, so there’re only three million to be mined into the future.

GH: How did you come to the conclusion that trading bitcoin as a small business was a worthwhile thing to do – you’re sort of like a pioneer in some ways?

WT: There are not many people in Australia [doing it]. We’re fairly far behind the times with the bitcoin scene. We started in 2017 after six months of research. We didn’t want to put our money into something that would go to zero.

GH: Do others ask about it or trade with it?

WT: Every second day we get people asking about it, which is quite surprising. It’s more so the older generation. A lot of the young people under 21 have grown up with it and understand that kind of technology. [But] it’s very rare we have people coming in [spending] it; most people are just buying it because the price is going up so quickly.

GH: So why did you put the sign up?

WT: Just to help promote bitcoin and get it out there, really, because it’s such a small portion of people who are buying and owning it. We believe it’s going to be huge in the future, because the technology’s there.

GH: Like money, its value is set by the market, but is it a form of pure capitalism without any corruption of process over the top?

WT: It can’t be manipulated by governments printing more money … that’s why I think, this year, a lot of people have jumped on board – because there’s been a lot of printing [of money] around the world and that’s devaluing everyone’s currency. The more they print, the less buying power citizens have, and that’s never going to stop.

GH: One bitcoin is valued at $74,500 AUD at the moment. Its value is pretty volatile as an investment, isn’t it?

WT: About four or five years ago they were only about $200 to $700, and then they ran from that to about $20,000 in around five weeks. The volatility scares a lot of people at first, but after two or three years, the industry is what the market is – it’ll rise 100 per cent, then drop 30 per cent, rise 30 per cent and then drop 30 per cent … and so on. That’s the downside, but that’s only looking at it at the micro level.

GH: What if you want to cash out, if you’ve made a good profit in the market?

WT: It’s just the same as everything else; you just sell it back to Australian dollars and put it back in your bank account, or you can just spend it as bitcoin.

 

Will Trevithick accepts payment by bitcoin at his Yamba business.

Image: Geoff Helisma

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