How the future of currency looks set to shake up the travel industry
Most people have heard of Bitcoin by now – the mysterious electronic currency created by “Satoshi Nakamoto,” a nom de plume identifying the inventor, or inventors, of Bitcoin. Dramatic surges and wild fluctuations on the stock market have brought the cryptocurrency into mainstream consciousness, with a frenzy of investors pouring money into “mining” operations like a modern-day gold rush. Mining in the 21st century, however, is slightly different. In very simple terms, it works like this: every ten minutes, a puzzle is formed that specially programmed mining computers race to solve. The winner receives a block of Bitcoin (currently one Bitcoin is valued at $7,368) and the puzzle resets. Alternatively, Bitcoin can be purchased with fiat currency (legal tender that is backed by its government).
By creating Bitcoin, “Nakamoto” also invented the concept of the blockchain: a database that is immutable, secured by advanced cryptography (encryption and codes) and backed up with identical copies of information on a global network of computers – something that occurs during the mining.
By design, this network is not controlled by a single authority, and has so far proven impossible to hack. The technology is complicated, but the concept is simple: blockchain is essentially a ledger or database that is open and decentralized, and allows for the creation of censorship-proof, secure, borderless, paperless currency that can’t be tampered with or changed. Bitcoin was the first, but it’s been followed by many others, including Etherum, Litecoin, Dash and Monero.
Hackproof security has always been a concern in the world of Internet payments, but experts like Leonhard Weese, founder of the Bitcoin Association of Hong Kong, feel that it’s the conventional banking system that is unsecure.
“Credit cards are a bit of a mess from a security perspective,” says Weese. “All the information you need to spend on a credit card is written on the card. Anyone who observes it can use it.”
The breakthrough of blockchain comes down to “trustlessness,” according to Clifford Choi, technical advisor at Emurgo, a blockchain venture fund and incubator. “You don’t own the data you give to Facebook,” says Choi, “you just have to trust them with it if you want to use their services. It’s the same for the money in your bank account, though most people don’t read the fine print.” With a currency on a decentralized blockchain, such as Bitcoin, there’s no need for trust in an institution – what the ledger shows is yours and you can store and spend it without the need for a bank.
NEW CURRENCY EXCHANGE
For travelers, one immediate advantage is currency exchange. Blockchain enables overseas transactions to be completed without paying bank fees or inflated exchange rates, as travelers can exchange cryptocurrency for local currency with fewer intermediaries.
At present, this can be done at cryptocurrency ATMs or by physically trading with someone on the ground. A number of FinTech solution providers are rapidly emerging to help facilitate this. Bitspark is one such pioneering company, which offers 100,000 physical locations around the world for people to send and receive cash via blockchain technology.
Digital currency exchange ventures can also be used by businesses trading in Bitcoin to seamlessly exchange the value into their home