Written by Ashley Boncimino
With eBay’s addition of ‘virtual currency’ categories for Bitcoin and Alt-bitcoin related activities, the question remains: What does bitcoin hold for businesses within ASEAN and how might it change the marketplace?
The answer is not a simple one, though it is clear the virtual currency is more than just buzz. For example, Singapore recently recognized bitcoin by announcing plans to regulate it, while bitcoin ATMs are popping up from Japan to Malaysia. In other words, governments are paying attention.
On a retail or merchant business level, bitcoin wins over credit cards and other digital payment systems because it makes backcharging a thing of the past. Backcharging is a way consumers can typically reverse their purchase if they change their mind, have an undelivered product, or are otherwise unsatisfied with the good or service. Backcharging is the plague of online merchants, of which many sell items manufactured in ASEAN countries. While Bitcoin payments may take additional setup, it may be worth the investment, so these online businesses could avoid mentioned issues.
While the impossibility of backcharging may be a boon for retailers and merchants, consumers are faced with a different problem. Bitcoin is much less forgiving than credit card and other digital payments, as the process is completely irreversible. Faced with erroneous transactions of any kind or of undelivered or unsatisfactory products, consumers can only request their money be refunded. It would be up to the seller or merchant to decide; to be an honest trader or keep the cash.
However, merchants using bitcoin would also have to deal with the currency’s infamous volatility. While the currency remained relatively stable in the first three quarters of last year, it skyrocketed to over USD 1,100.00 per bitcoin in late November and has been on the fritz ever since. For example, bitcoin has been worth over USD 800.00 per bitcoin to less than USD 400 per bitcoin within last three months.
For high-transaction merchants, even slight variations in rates can add up. If Company A sells 1,000 widgets for XBT 1.00 (one bitcoin) each, an exchange rate shift of USD 500 per coin to USD 490 per coin, means a loss of USD 10,000. However, as of now some Bitcoin payment systems are offering to convert customers’ payments into the merchant’s local currency in real time to reduce such risks.
Bitcoin also eliminates other exchange rates, say from the Malaysian Ringgit (MYR) to Singaporean Dollar (SGD) or vice versa. bitcoins retain their value while still in the form of bitcoins, regardless of where or how they are spent between countries.
Bitcoin protects your identity, while remaining on the digital platform, combining the anonymity of cash with the ease of mobile payments. You do not have to disclose personal identity information in a bitcoin transaction, nor do you have to use a credit card number. Anonymous bitcoin addresses change with every transaction, which add a layer of security.
However, as Singapore’s government pointed out, the downside to anonymous transactions does little to prevent money laundering and possible fraud. The inability to be absolutely certain about the holder of a receiving account, or the inability to track the relative origin and destination of cash make it perfect for those looking to trick individuals and businesses out of their money and later cashing out paper-trail-free.
The largest, overarching drawback for those wishing to incorporate bitcoin transactions into their enterprises is governments’ suspicion, rejection and even banning of the virtual currency. Additionally, bitcoin is still a rare currency in terms of retailers, merchants, suppliers and consumers dealing in bitcoins. It may be a while before you can both buy your coffee and order another dozen reams of office copy paper in the digital cash.
XBT 1.00 = USD 426.99 (XE.com 2014-04-28 05:03 UTC)
XBT 1.00 = USD 449.99 (XE.com 2014-04-29 17:00 UTC)
–Edited by Mohamed P.Hassan