We are fearful of the latest phenomenon. Not for ourselves but the uninformed main in the street.
What is it?
Bitcoin. Yes, you may have heard of it. The digital currency that is overseen by nobody but has been getting lots of attraction by a raise in value from 2013 at USD13 a coin, to around USD1,200 a year later.
How is Bitcoin created? Well, you can create Bitcoin out of thin air through a process called mining. Mining is the term used for running a series of calculations on a computer to verify the transactions that take place in the Bitcoin network. About every ten minutes, a new block of transaction data is created and the miners who created the block are awarded a few Bitcoin. Does this sound perplexing? Like a blackbox? Apparently, only 21 million total Bitcoin will ever be allowed to exist, with approximately 12 million of Bitcoin already mined and in current circulation.
You can buy Bitcoin using REAL money. Or accept Bitcoin as payment for your goods and services.
According to sources, just 47 people own 29% of all outstanding Bitcoin; 930 own 50%. Another 10,000 folks bring the total owned by the largest coin holders to roughly 75%, leaving 25% to be split among about 1 million small-change Bitcoiners.
What drives the value of Bitcoin? Manipulation and speculation.
Who accepts Bitcoin as payment for goods? Online gambling websites and a growing number of small establishments that accept Bitcoin in lieu of real world currency.
How do you cash out of Bitcoin? Through exchanges like Mt. Gox which act as intermediaries for currency transactions, converting wealth from Bitcoin to US dollars to other national currencies, back to dollars or Bitcoin. And that’s how you make money. You heard of what happened to Mt. Gox recently, right?
Mt. Gox, once the world’s largest Bitcoin exchange, shut down and filed for bankruptcy in Japan on 28 Feb 2014, claiming that about USD480 million in Bitcoins belonging to its customers and the firm were missing. Since Bitcoins exist as bits of software, they can be stolen from computers and servers used to run online exchanges, where Bitcoin can be traded for dollars, euros and other currencies
We are worried because there are already Bitcoin ATM machines in Singapore which allows you to exchange real money for Bitcoin. We fear that unsavvy Singaporeans will be persuaded to part with real money for Bitcoin on the promise that Bitcoin will rise exponentially in value.
MAS does not recognize Bitcoin as legal tender and has already cautioned about the use of virtual currencies. You have been warned. Because we care.
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