Bitcoins has been the talk of most towns, for right, wrong and sometimes weird reasons. While we’ll get to the right and the weird in a bit, the wrong involves illicit transaction that is a possibility since the structure of the Bitcoin network is primarily anonymous.
It’s a system of peer-to-peer payment, a digital currency if you will, which can be purchased in exchange for real money from online traders. It is also a kind of a cryptocurrency (altcoin), considering it uses cryptography for controlling the money transfer. The biggest selling point of Bitcoin is allowing a cheaper alternative for money transfer as compared to Western Union or Visa. This is why slowly, but surely, bitcoins are climbing the popularity ladder.
Business Bay’s The Pizza Guys would be the trailblazers if the Bitcoin trail that they’re blazing catches more fire. Last month they started accepting Bitcoin as a mode of payment in their restaurant, which makes them – according to owners Rami Badawi and Amber Haque – the first in the UAE. In addition to another form of payment that enhances the Pizza Guys’ customer service, the fact that bitcoins come with lower cost of transaction as compared to credit cards, also works as a massive plus for the restaurant and their bid to woo most customers.
While this mode of payment might seem like upping the ante on tech, something credit cards were accused of when they first came to the fore, it really isn’t as complicated as it might seem. Whenever The Pizza Guys’ customers plan on paying via Bitcoin, the dirham amount of their bill would be converted to Bitcoins via the “wallet” application on their smart phones, which in turn conjures a QR code. The QR code can then be scanned through the customers’ smart phones and the same application to complete the transaction. The Pizza Guys will receive dirhams for Bitcoins through an online exchange service. The apps however only exist on Android, with Apple choosing to ignore the software.
If the people embrace Bitcoin, which is likely considering the low transaction charges, being the trendsetters for this latest innovation in payment could make The Pizza Guys the torchbearers for this groundbreaking Dubai customer service experience.
That the Emirates has been a little late in jumping aboard the Bitcoin bandwagon connotes that there is a multitude of doubters. In fact the noise generated elsewhere regarding Bitcoins naturally gives consumers and entrepreneurs in the UAE the feeling that something might be a little fishy about Bitcoin –which is exacerbated by the fact that it isn’t regulated by any central bank around the globe.
China, Russia and India are planning on outlawing Bitcoin, which has been dubbed a ‘Ponzi scheme’, by the Estonian central bank. Even the European Union has given it the thumbs down, citing the tendency of fraud and theft.
The arrest of Charlie Shrem, the foundation vice chairman of Bitcoin, owing to laundering $1 million, further added fuel to the fire. That has been followed by Mt Gox and Bitstamp – two massive Bitcoin traders – being suspended owing to the fact that they were under the hackers’ gun. And Flexcoin was shut down on Tuesday after a $600,000 hack attack.
While, of course there is a plethora of reasons to be skeptical about Bitcoin, one could argue that most of the uncertainty would be true for any other mode of payment as well.
It’s difficult to understand, the price change is volatile, not many people seem to be taking it seriously and there is hacking galore… so why Bitcoin then?
Like anything involving money, there is bound to be cynicism. You aren’t going to put any eggs in a basket if you don’t know the dynamics of the basket, or if you don’t trust the basket. However, when – or if – the shroud of cynicism goes away, bitcoins can be beneficial for businesses and consumers alike, and not only because of the low transactional cost and money transferring convenience.
Just the fact that Bitcoin provides an alternative to traditional money transferring means, makes it attractive. It can provide serious competition especially since it can woo people who do not have credit or debit cards. Also with Dubai being the hub of foreigners, the ease that Bitcoin brings in terms of transferring money to families back home, should eventually garner popularity.
The Who’s Who of finance in The Emirates might be a little reluctant in embracing Bitcoin but if their consumers are intrigued, they would obviously follow suit. Getting a vegetarian pizza at The Pizza Guys for 0.034 Bitcoins using your smart phone wallet, as people did last month, is an enticing thought. However, the fluctuating value of Bitcoin means that last month’s 0.034 might be something completely different today.
The fact that altcoins, or cryptocurrencies, facilitate money transfer without the need of a middleman, which can be done anonymously as well, means that the payment mode will remain attractive. This is precisely why the likes of Litecoin, Anoncoin and Zerocoin have joined the altcoin party. The former is aiming for faster transaction and the other two offer complete anonymity, as they vie for a slice of altcoin popularity. The emergence of Bitcoin’s competitors clearly showcases that altcoins are here to stay.
Altcoins definitely are a bit of a double-edged sword. But one that looks like being a part of UAE Consumers’ payment arsenal sooner rather than later. Regardless of how much the fiscal big boys might want to delay it.
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