Why Singapore doesn't need Bitcoin

Why Singapore doesn't need Bitcoin

Summary: The island will get its first Bitcoin ATM in March, but does it really need another currency which main appeal is the anonymity it offers, especially since Singapore is reportedly susceptible to money laundering?

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It's cool, it's hip, and it's virtual. Bitcoin has garnered much attention the world over, including here in Singapore where news broke this week that the island will be getting its first Bitcoin ATM. The question, however, is whether the country needs another currency, especially one that carries with it inherent risks.  

Singapore-based trading platform, Bitcoin Exchange, purchased a Lamassu system and is scouting for a location to place the ATM, which will begin operation in March. The company plans to acquire more units if demand grows, according to Bitcoin Exchange's director Zann Kwan. 

She told local newspaper MyPaper that Bitcoin buyers in Singapore currently need to wait at least a day after transfering money, including service fees, to an overseas exchange before they receive their Bitcoins. "This is not cheap and defeats the concept of bitcoin... A Bitcoin vending machine makes it very easy and safe to buy Bitcoin, and avoids such additional costs and other risks," Kwan said, pointing to the possibility sellers might default on the transaction. 

She told CoinDesk.com the company had yet to decide from which exchange it would base its rates. "There are a few bars that are accepting Bitcoins now and people are talking about it, but you need a few people to start the ball rolling, then the momentum will pick up," she added.  

According to Lamassu, an ATM unit is priced from US$5,000 and can issue Bitcoins in 15 seconds. Another Bitcoin ATM manufacturer, Robocoin Technologies, last month said it was negotiating plans to bring its kiosks to Hong Kong

While countries such as China and Thailand--and possibly India and Indonesia--have outlawed the use of the currency, Singapore has chosen a different route by choosing not to regulate it, but warning businesses and individuals they will trade with Bitcoin at their own risk. The country's Inland Revenue Authority last month outlined tax requirements for transactions involving the digital currency

That my government has somewhat embraced Bitcoin isn't surprising, since it traditionally has been deemed to be business-friendly. In its annual report released last October, the World Bank again ranked Singapore the world's easiest place in which to do business, offering the most business-friendly regulatory environment for local entrepreneurs. 

Inherent risks may damage Singapore financial reputation

This friendliness, however, has brought with it global critics who say the nation has become a tax haven and hub for money laundering activities. 

Add Bitcoin to the equation, and such risks may exacerbate. The currency's biggest appeal is the anonymity it affords its users, and it is this trait that has led to the associated risks, including money laundering and funding of illegal activities. 

In a risk assessment study released last month, the Singapore government said the country was potentially susceptible to money laundering and terrorist financing, adding that some sectors needed stronger oversight to mitigate such risks. The report assessed 14 financial and 8 non-financial sectors in the country including banks, money changers, casinos, and money lenders. It noted that internationally-oriented and cash-intensive sectors, in particular, were at risk. "Full banks face higher inherent risks, owing to their large customer volumes and the international nature and the international nature of their transactions," it said. 

Bitcoin also is international by nature, as is its transactions. Furthermore, its appeal to buyers and sellers who seek anonymity has led to illegal activities and the sale of contraband goods, some of which eventually shut down sites such as Silk Road and Sheep Marketplace

It is such risks that have led China and India to warn against the use of the digital currency. Nonetheless, this hasn't stopped retailers and consumers from lapping up the currency of the month.  

A "cool" novelty for merchants, but not compelling payment option

Some merchants in Singapore have started accepting Bitcoins, including Bartini Kitchen, Squash Passion, Artistry, and Hospoda Microbrewery. I asked fellow ZDNet blogger and restaurant owner in Singapore, Howard Lo, if he planned to follow suit. Here's his reply: 

"Bitcoin is cool and I think there's a certain PR value for accepting Bitcoins. The geeky folks, of which there are many in Singapore, would probably come check you out just to see what it's like to do a transaction using Bitcoins.

But is it worth training the staff and implementing the infrastructure to support Bitcoins? To be honest, I don't know what is needed to actually accept Bitcoins. I imagine it's just an electronic transfer into the Bitcoin account. But I'd want to figure out if it is worth the tradeoff in time to support just 1 or 2 people per week who might actually pay by Bitcoin.

The fluctuation in the value of Bitcoins is worrying. There's the possibility of making a lot just from that fluctuation, but what if the value drops dramatically? Alternatively, do I convert the Bitcoin into Singapore dollars at the end of each night? That could be a hassle.

And how do I display my prices in Bitcoin? Let's say a S$15 lunch set…do I change the Bitcoin price every day since the currency fluctuates so much? 

I'm not concerned about someone hacking my Bitcoin account, but I will need to look into what kind of Bitcoin fraud happens. Whether it's a customer perpetrating a fraud on me or someone pretending to be my restaurant and somehow getting money from someone else." 

Indeed, money laundering risks aside, there remains many questions about the viability of Bitcoin. Why would it appeal to Singapore consumers who already are used to cash, electronic payment NETS, credit and debit cards as payment options? 

Sure, Bitcoin is universal and currency-agnostic, but purchasing in a foreign currency isn't an issue for Singaporeans who are very familiar with e-commerce. The one attraction in this case would be the ability to transact in a currency that's stable so online shoppers will know how much they're spending and won't lose out in the local-foreign exchange. But with its highly fluctuating and volatile state, Bitcoin currently is unable to offer this. 

And for the merchants, as Howard pointed out, there currently are few reasons for him to want to offer it as a payment option.  

In the Sheep Marketplace incident, Reddit user "kyerussell" rebuked anyone for thinking they could get their money back. "It seems that this subreddit is full of people that don't understand the fundamentals of bitcoin and somehow think that this'll result in people getting their money back. It won't. That's the point of bitcoin... You aren't going to get anything back. None of you are going to get anything back, and it's by design. This is EXACTLY how Bitcoin is supposed to work. Bitcoin would be fundamentally broken if you somehow got your money back."

And unlike theft of real cash, it remains to be tested if there will be legal recourse for the loss of the digital currency. As a ZDNet reader pointed out: "Really, I would say it is exactly like black market cash."

With all the associated potential risks, and many unanswered questions, there is little reason to choose to transact in Bitcoin over traditional payment options. If its value stabilizes, and governments start recognizing it as a legal currency with a proper framework for consumers to seek recourse, perhaps then. But, just not right now.

Topics: Banking, E-Commerce, Singapore

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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10 comments
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  • I'm quite sure...

    ...Singaporean banks already trade it. Singapore is a reputed hotbed of capitalism, so if there's money to be made, and it doesn't threaten the ruling party, or its concept of public morals, Singaporean firms will try to make it.
    John L. Ries
    • Where does it say Banks accept bitcoin?

      The bitcoin company has installed their own atm not connected with any bank. you sure can put cash in there are buy bitcoins. They keep the cash.
      maharawj
  • Why Singapore Need Bitcoin

    Our response:
    http://www.bitcoinexchange-sg.com/2014/02/our-response-to-zdnet_6.html
    bitcoinatmsg
  • Why nobody is addressing the real issue about bitcoin

    Is it really a currency. As far as I know it seems to converting your electricity to bitcoins. Add the investment of your computer.
    You just invest in a computer and keep it running and you get bitcoins.
    Where is the value?
    I think you should be clear that a BANK DID NOT Start accepting Bitcoins cause when you say ATM people think of a bank.
    Bitcoin is really some play currency, and this unwarranted attention it is getting might actually make it a real one. Oh that would be the day
    Google or any server company would become millionaires. They have to just run bitcoin generater on their server "FARM" and generate billions of bitcoins from their unused CPU cycles on their servers. They cud program it to have the last priority
    When you consider that you realize who stupid this entire concept is
    maharawj
    • Ignorance+ Nonsense

      I had these words with my account BA graduate nephew working with a large bank:
      Me: Have you heard of bidcoin?
      He: It's a ponzi scheme.
      Me: why?
      He: It's an internet currency, they are selling you air!
      Me: Do you know how bitcoin really work.
      He: Nope.
      People who does not know a thing about bitcoin (except hearsay from 'grandmother') talks as if they really know. This is mostly hearsy opinions, and as they say "everyone has one...like an... "
      NASDAQ/BoA may crash to zero, but bitcoin can never! - because there are no big corrupt institutional players which may be forced to dump or go BUST. Bitcoin will go to ZERO the day when there is NO MORE INTERNET.
      meAbdullah
      • It's not really a Ponzi scheme

        In a Ponzi scheme, the promoter pays early investors with the proceeds of later investments; keeping things going as long as he can until the money dries up, at which point he skips the country. There is no evidence that I'm aware of that suggests that Bitcoin promoters are doing anything like that.

        Bitcoin is an alternative medium of exchange designed to hold its value by mathematically limiting the number of units that can ever be in circulation. As far as I can determine, its promoters are driven primarily by ideology rather than greed; and in the main, they are probably acting in good faith. But it still has zero intrinsic value (nobody buys Bitcoin for its own sake); is backed by nobody, and it thus far, it's been more of a speculative instrument than a medium of exchange. I still see it as a large scale macroeconomic experiment on how stateless, hard money (what Randians have been advocating for over half a century) will play out in the real world. To the extent it succeeds or fails, we learn something; and I think economists will be studying and commenting on it and its imitators for years to come.
        John L. Ries
  • Thanks

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  • The Singaporean position is actually the sensible one

    Trade in Bitcoin if that's what you want to do, but understand that's you're doing it at your own risk, and if you lose your shirt, you'll get no relief outside of bankruptcy court.

    I have little love for political machines like the PAP, but I'm more than happy to praise them when they do the right thing.
    John L. Ries
  • Bitcoin is the peoples' currency

    It is well documented that regular banks - and the banksters who run them - are corrupt and criminal operations. They operate illegal drug business, fund terrorists, falsify foreign currency trading documentation to provide cash to terrorists groups, finance wars, and bankroll illegal arms sales. For example http://www.fool.com/investing/general/2012/12/20/an-infographic-on-2012-bank-scandals.aspx

    A 2009 French article identified that as a direct result of the banksters created world financial collapse, some additional tens of thousands of child deaths will occur EACH WEEK because governments and aid agencies have less money. If we calculate based on 20K dead children per week, that's over 1 million children killed each year by the banksters; to satisfy their psychopathic greed. This alone - without considering the wars, unemployment, and human suffering etc they create elsewhere - makes the banking industry the most successful terrorist operation in the world.

    The banksters spent billions to get the banking laws changed and regulations dropped so they could change banking into gambling. Coupled with insatiable greed and gross financial negligence, the bank and finance industry created the 2008 world financial collapse that put millions of normal people out of work, precipitated family murder-suicides when people lost all hope, and threw millions of people into serious financial stress. Unemployment in the USA is not expected to drop to pre-2008 levels until at least 2020. 12 years of unemployment is a horrible consequence for millions of families.

    This article in response to a Wall Street finance parasite's letter about his own self-importance helps explain a few realities:

    http://www.fool.com/investing/general/2010/05/12/this-is-why-i-hate-wall-street-people.aspx

    And here is an insight into what some bankers think about how to deal with their clients:

    http://www.fool.com/investing/general/2010/04/19/goldman-sachs-and-the-art-of-ripping-your-clients-.aspx

    Who did blow up the economy in 2008 and why:

    http://www.fool.com/investing/general/2010/04/13/banks-blowing-up-the-economy.aspx

    And lots of apologies from the bankers for repeatedly doing the same old stuff – lying, cheating, exploiting and stealing from their customers – over and over again, so they can get rich quick:

    http://www.fool.com/investing/general/2013/06/25/deja-vu-all-over-again-the-55-greatest-wall-street.aspx

    Most banks are not run for the benefit of their depositors or their shareholders, but for the benefit of the executives, who suffer no financial loss for their greed and impropriety:

    http://www.fool.com/investing/general/2013/06/22/how-bank-of-america-defrauded-america.aspx

    Incompetent bank management a major contributor to the World Financial Crisis. Or executives acting dumb to avoid investigation? :

    http://www.fool.com/investing/general/2012/12/07/the-most-astonishing-thing-about-the-financial-cri.aspx

    The accounting “profession” aided and abetted the bankers' rape and pillage of our finances:

    http://www.fool.com/investing/general/2012/12/09/the-great-sewer-of-the-financial-system.aspx

    Over time, notable people have warned about the bankers' criminality. Given the deceit, and debilitating social/financial consequences chronicled in the above article, Thomas Jefferson's (3rd President of the USA) warning about bankers is rather prophetic:

    “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

    The banking system has been a significant contributor to the serious shift in wealth from the lower and middle classes into the hands of a few since the 1980's. Do some internet searches on the shift in world wealth. Normal people are doing it harder because banksters have control over finances and are abusing the trust we are supposed to place in them to responsibly husband our savings, pension funds, investments etc. There is a serious shift in world wealth. The world is heading towards a feudal society again, with a few extremely rich people and the rest barely surviving. Do some internet searches.

    When the banksters collapsed the word economy, they vaporised our savings, investments in education funds for our children, the value of our retirement pensions etc. But they walked away with multi-million $ commissions, golden handshakes etc. They are still doing it because they also buy out or intimidate the lawmakers. For example, the guy at the head of a major USA bank which collapsed in 2008 (robbing millions of ordinary people of their savings, pensions etc) as a result of it's corrupt activities, is now head of the USA's Federal Reserve.

    The Rothschild family banking operation - which is reported to now own half the world's wealth - operates a massive money making scam in most countries of the world. They own most central banks and they print the cash for many countries. They spend a few cents on ink and paper and pass the notes to the government in exchange for bonds (IOUs). The government must pay back to the central bank/note printing operation the face value of the note, plus interest. In the USA for example, most of the Federal Income Tax collected from regular people goes to paying back this money to the Federal Reserve. The USA's Federal Reserve started operation in 1913 and the same year USA Federal Income Tax was implemented; to collect money to pay back the debt. This is how most of the USA's nation debt is created.

    There are only a few countries the world world without a Rothschild operated/owned central bank. The list is getting smaller. Iraq and Libya now have a Rothschild style central bank. Iran is still left.

    “Let me issue and control a nation’s money and I care not who writes the laws.”
    - Mayer Amschel Rothschild

    “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.”- Nathan Mayer Rothschild

    "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."
    - Woodrow Wilson, some years after signing the Federal Reserve into existence in 1913 - the same year that Federal Income Tax was introduced to pay for the massive debt.

    Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that they had better not speak above their breadth when they speak in condemnation of it.”
    - Woodrow Wilson

    “The real menace of our Republic is the invisible government which like a giant octopus sprawls its slimy legs over our cities states and nation. At the head is a small group of banking houses generally referred to as ‘international bankers.’ [THE ROTHSCHILD/ROCKEFELLER FAMILIES!] This little coterie… runs our government for their own selfish ends. It operates under cover of a self-created screen…[and] seizes…our executive officers… legislative bodies… schools… courts… newspapers and every agency created for the public protection.” -John F Hylan

    All wars are banker's wars: https://www.youtube.com/watch?v=5hfEBupAeo4

    This is the core of how they do it. They artificially create money out of nothing, as loans. Those who borrow must pay them back real money based on the wealth they have worked hard to create.

    https://www.youtube.com/watch?v=JHQOX8EVNmE

    https://www.youtube.com/watch?v=iFDe5kUUyT0

    https://www.youtube.com/watch?v=mII9NZ8MMVM

    “Fascism should more appropriately be called corporatism because it is a merger of state and corporate power.” - Benito Mussolini

    The USA's President Kennedy signed a new law to get ride of the Federal Reserve, and introduced a new - US government printed currency - to eliminate the need to have ordinary people pay billions of $ in tax that funneled directly to the private owners of the Federal Reserve. President Kennedy was assassinated a few months later. His replacement reversed the law to re-instate the banksters monopoly over money printing/creating. Other elected lawmakers in the USA who have opposed the Federal Reserve's control over USA money creation have died unexpectedly; many in plane crashes.

    “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” - Lord Acton (ex Bank of England)

    Bitcoin offers a means for ordinary people to trade and exchange wealth without the intervention, greed, control, criminality, war-mongering, manipulation, assassinations, negligence, inhumanity, and corruption inherent in the present banking system.

    Which is why the present banking industry will complain a lot and do all it can to undermine the credibility and public confidence of Bitcoin.

    If ordinary people want to get free of the feudal yoke the banksters are quietly but deliberately imposing on 99% of humanity, Bitcoin - and other alternatives to traditional corrupt and criminal banking - needs everyone's support.
    Fair&Just