On Saturday, March 28th we had a wonderful information session at the BitCoin Korea center in Itaewon capped off with a delicious lunch at Dillinger’s where some of our members actually paid for their meals with BitCoin! For those of you who weren’t able to make it, here’s a brief summary. Whether it is the future of banking or whether it can take down banking systems or sovereign fiat currency, it really does make us reassess how we can more accurately cover the convergence of tech and finance.
BitCoin comes literally from a computer program that is attributed to be the creation of ‘Satoshi’. Nobody knows who he/she/it exactly is. People have tried to hack IP addresses and the source code itself to find out who made this thing. No success. However, the BitCoin community notes that Satoshi writes on forums with perfect British English grammar.
There are 21 million BitCoins available and almost 14 million currently in circulation. The market cap at the moment is 3.8 billion dollars. So you can see it’s quite small and probably a big reason why major entities probably don’t take it *too seriously at the moment.
The first Bitcoin purchase was a pizza (or two) in Florida. It cost 10,000 bitcoins. At the time, that was worth $20. Now ONE bitcoin is worth about $250.
How new Bitcoins are released is also closely tied to how the system is maintained. You can think of Bitcoin as a ‘wikipedia’ system of banking. There’s no physical branch, office, server etc. where the Bitcoin is centrally located. This is where the explanation got a bit too technical for our introductory seminar so I will try to best describe it. (Please forgive any errors and contact the center for greater clarification).
Users maintain the bank. Think of crazy coders or computer science programmers constantly keeping the bank in motion. How? ‘Satoshi’ the mysterious founder created the self-sustaining system to release 25 bitcoins each time a ‘puzzle’ is solved. Solving this ‘puzzle’ actually is ‘confirming transactions’ or essentially doing the work of maintaining the bank. So individuals around the world racing for these bitcoins have incentive to keep the bank in operation. This is where it gets all Matrix-y. People actually build hardware add-ons to outgun each other in terms of data processing speed to solve these puzzles.
The marketing and consumer value promoted by Bitcoin is that you can facilitate overseas remittances quickly and with fewer fees that traditional methods. They are pushing for more consumer adoption at retail chains. The mainstream adoption seems questionable at this point since there are too few outlets and also too many questions surrounding this system for the average Joe to quite trust it.
The actual community of heavy users seem to be techies, early adopters, programmers racing for those bitcoins, anarchists, libertarians, day traders and investors. It’s supposed to be a consensus driven system and there are 5 people in the world who have access to change code (which means power to change the bank’s regulations). These people’s identities are public and they’re heavily tied to the community’s interests and change is slow.
There are 4 actual bitcoin only ATMs in Seoul and 7,000 regular atms and 7-11s that accept the OKBitcard can facilitate deposits.
But there are risks that may not even be on the radar of people who use regular money. Bitcoin can be stored in your phone only and like losing a wallet of cash, you can lose your bitcoin if you lose your phone. It can also be stored with a provider or exchange. And sometimes the exchange and provider can be the same. The reputation and governance of the exchange is important. It’s like whether you trust a bank with good reputation vs. shady savings and loan operation. But how are regular consumers to know? It’s a bit too reliant on Silicon Valley-like tech savvy to operate. It’s a digital divide right now between techies who think this is so obvious vs. non-techies who don’t even know what questions to ask. Various security add-ons and supplemental apps started making this feel like a never-ending world of the Matrix.
But since we’re journalists at least we had the questions part down. Nevertheless, more questions upon more questions kept pouring out and turned our 30 minute discussion into a 2 hour Q&A. Whatever our members may have felt about BitCoin, we all came out with the feeling that we went through a fascinating journey!
– Sean Lim, Regional Vice President, AAJA-Asia (Seoul)
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