The bitcoin bloodbath has wiped more than $40 billion off the market value recently but Kiwi crypto-currency traders say they are still busy.
“The whole industry has been a lot quieter since the peak period around January, but there is still plenty happening,” according to Alan Booth, chief executive of the Christchurch-based Cryptopia exchange.
While bitcoin may be popular with currency speculators, few people appear to use it for everyday shopping.
Bitcoin hit a peak of US$17,000 (NZ$23,416) per coin in January, and has fallen nearly 70 per cent in value, leading some commentators to question whether it is a failed experiment.
* Massive contradictions surround the value of Bitcoin
* ‘I lost more money in Bitcoin than most people will earn in a lifetime’
* Investing in bitcoin is indefensible
* From a two-man operation a year ago, Cryptopia surges on bitcoin
* Pac-Man meets bitcoin at Blenheim arcade
Blenheim retailer Dave Scoon who runs Arcadia Arcade said customers could pay him in bitcoin but only a handful had done so for small value transactions.
A new Arcadia outlet due to open in Christchurch would also offer bitcoin as a means of payment. Sales were carried by using an app designed for the purpose, he said.
“My son lives and breathes it. It was his idea. The US banks hate it because if it took off it would ruin them,” Scoon said.
Auckland plumber Mr Pipes offered bitcoin as means of payment but owner Craig Young said no customer had done so yet.
A map of retailers who accept bitcoin shows about 16 of them in Auckland,although numbers may be much higher. A jeweller who preferred anonymity said no one had yet offered bitcoin. He had become interested in investing himself and sold before the meltdown but said it could be difficult to cash up because it required a buyer to match the seller.
A Westpac spokesman said the bank was comfortable with people investing in bitcoin and crypto-currencies as part of a long term portfolio but not for speculative trading.
Indian authorities have just outlawed bank customers trading in cypto-currencies, and other countries are tightening rules.
Meanwhile the Cryptopia exchange was seeing more activity from institutional investors as part of their portfolio investments, chief executive Booth said.
“I think 2018 is the year of reckoning, whereas in 2017 pretty much anything got listed anywhere. It didn’t really matter how functional the coin was or whether it was legitimate or not.”
Earlier this year Cryptopia experienced problems managing the huge surge of traffic from traders, and it lost support from its banker ASB.
“We’ve secured alternative banking and all trading is up and running, with a lot of work having gone into improving systems.”
Booth said Cryptopia now had about 100 people working for the company, including contractors – from just two a year ago.
“We’re still recruiting and have vacancies. We’ve also opened offices in other time zones, such as the UK so that we can support around the clock.”
Cryptopia had a stream of enquiries from institutions and financial advisers keen to stay abreast of legislation, Booth said.
The significance of crypto-currency trading was equally about the underlying blockchain technology that crypto-currency traders were among the first to use, he said.
“It doesn’t require a central authority bank as a middle-man. Blockchain will likely be a key technology in many industries in the future.
“A good example is the Estonian government that has moved a lot of their core services to the digital realm using blockchain ledgers, with savings of up to 10 times.”
Booth said there were about 1658 Crypto-currencies, and not all would be successful.
Another Christchurch company called Coingrid is preparing to launch an “initial coin offering” later this year as a prelude to setting up a new currency trading facility.
“The development of the exchange will initially be funded through the sale of Coingrid tokens which will be sold to initial contributors in exchange for another form of crypto-currency called Ethereum.
The exchange is expected to launch early 2019.