Singapore gets it’s first Bitcoin 2 way ATM, known as the RoboCoin. Unlike the previous few machines which only accept cash for bitcoins this machine allows conversion from bitcoins to cash.
The machine is located in Telok Ayer, at the entrance of Bartini Kitchen. The Bitcoin machine is operated by Coin Republic, a bitcoin broker and consultancy firm.
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What Are Bitcoins?
Bitcoins are a form of digital currency which exists only over the network. Bitcoins can be used as a medium of exchange, just like money. Unlike paper currencies, which are backed by respective central banks, Bitcoins are not governed by any bodies, just a database of code.
Risks of Bitcoins
Bitcoin is currently not being regulated by MAS, but it does have huge implications. One of the potential problems is for Bitcoins to be used for money laundering. Speculators have also targeted the Bitcoin, causing the price to fluctuate wildly. Bitcoin wallets and exchanges have also been unstable and subject to hackers, the most famous one being the Mt Gox exchange which went bankrupt after missing coins.
Are Bitcoins Viable As an Alternative Currency or Asset Class?
Some people consider Bitcoins an alternative currency or even asset class. While there are certain limited places which accept Bitcoin payments, they are very rare and usually on an experiment basis only. As mentioned, the Bitcoin prices have been extremely volatile, hardly giving anybody a piece of mind as a currency.
For most alternative assets, the price appreciation comes from inflation. Inflation for commodities can be due to rising population, rising costs of producing the commodity etc. Likewise, the costs of ‘mining’ Bitcoins are becoming more expensive over time and the supply which is limited could help to support a base price. As more and more people embrace the technology, it could help to increase demand as well.
What Does Warren Buffet Have to Say About Bitcoins?
Warren Buffet is convinced that Bitcoins are not viable as a currency and won’t be surprised if they are not around in 10 or 20 years. It’s not a store of value and it’s been a very speculative instrument. He compares it to the Tulip bulb bubble which crashed a long time ago.
It would be interesting to see how the Bitcoins fare over time. However, Bitcoins are unlikely to be continue to grow without being regulated. The government central banks of different countries would have to come together to create a framework as Bitcoins have the ability to transcend geographical boundaries.
About the Author
Calvin Yeo is the Managing Director of Doctor Wealth Pte Ltd (www.drwealth.com), which is an online financial planning platform. He is also a Chartered Financial Analyst (CFA) as well as Certified Financial Planner (CFP).
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