ESTHER TUNG 

The Peak (Simon Fraser University) 

Will you be paying for your lattes with Bitcoins soon?

BURNABY (CUP) — Since its unveiling one week ago, almost $100,000 has been exchanged for Bitcoins at the world’s first Bitcoin ATM, located at Waves Coffee House on Howe Street in downtown Vancouver, B.C.

Bitcoin is a virtual currency which has been gaining traction as an investment asset and viable alternative to legal tender.

In January of this year, one Bitcoin was worth about $130. On the heels of several high-profile press stories, including headlines of a Norwegian man who forgot he had purchased $27 in Bitcoins a few years ago and found that they were worth nearly $887,000 today, the value of one Bitcoin has skyrocketed to $700 at press time.

Simon Fraser University business student Michael Yeung, founder and president of the SFU Bitcoin Club, has put his school’s name in press outlets across the world with his involvement in promoting and facilitating the transition of Bitcoin into the mainstream.

He sees Bitcoin as a particularly strong disruptor of money services like Paypal and Western Union — which currently hold monopolies in their respective markets — but also eventually for credit cards and other monetary services used in many of our daily transactions. Fees are much lower at about one per cent compared to 3.5 to five per cent with existing financial services. The fee is returned to the persons who “mined” the Bitcoin.

Miners are people who contribute their computer’s processing power to the Bitcoin network in exchange for newly minted Bitcoins. The processing power contributed by miners is used to verify transactions occurring within the Bitcoin network.

Anyone can download the necessary software and become a miner. However, the mining process is designed to require more processing power every time a set number of transactions are verified. As a result, Bitcoins can only be produced at a preset, maximum rate.

Yeung said that growing Bitcoin as a mainstream currency will change the way people, particularly young people, think about money. According to Yeung, because there is only a finite number of bitcoins (21 million in total) that can be mined, “the value of a Bitcoin will only grow. This means that people are less likely to spend it unnecessarily.”

Yeung stated that this is the opposite of today’s economy, in which governments stimulate the economy by putting more money into circulation.

“This means that the money in your bank account loses value, which incentivizes people to spend it before that happens,” he said.

Currently the goal of the SFU Bitcoin Club is to push for the implementation of Bitcoin infrastructure, such as point of sale systems at campus businesses and Bitcoin ATMs on site. To this end, Yeung has begun approaching members of SFU’s administration.

Beyond simple transactions, Yeung has his sights set on SFU eventually accepting Bitcoins as payment for tuition fees, much like Draper University in Silicon Valley, Calif. has recently done. Draper is currently the only university in the world to accept Bitcoins, in addition to other non-conventional payments, such as shares in a student’s business or an in-kind donation of skills to the university.

“Doing this would put SFU on the world map,” he said.

Barrier of entry to accepting Bitcoin payments is extremely low, requiring a merchant to simply register with a service — like Bitpay — and have their unique Quick Response code on hand for customers to scan with their smartphones. A larger concern of merchants who may want to accept Bitcoin payments is the volatility of the currency.

There are several methods to reduce seller-side risk by protecting them from any drops in the value of Bitcoins — however, this protection also insures them if their value rises.

“Low risk, low reward,” Yeung said.

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Photo: antanacoins/flickr