Unless you’ve been living under a rock, you might have heard the term Bitcoin bandied about lately.
Even though Bitcoin is to be popping up everywhere, there are still so many questions about what it is, how it's used, and what it means for businesses.
Is there legislation in place? Do businesses need to treat this cryptocurrency and the Blockchain differently? What’s in store for the future?
At Credas, we’ve done our research and now have answered some questions about the UK’s most elusive currency.
So buckle up, here comes the breakdown.
What we do know is that the network came into existence with the release of the first open source client and the issuing of the first bitcoins, and unlike traditional currencies, bitcoin has no central bank, nation-state or regulatory authority backing it up.
What are people using it for?
Bitcoin is used for all sorts of things – from buying pizza to the buying and selling of houses! Something to bear in mind is that as a digital currency, you can only pay for things using a digital wallet, similar to Apple Pay.
What’s right about Bitcoin and other cryptocurrencies?
One of the most popular features of is that it’s fast. Transactions are completed almost instantly and are confirmed in minutes. No more worrying about bank holidays or cross-country payments – Bitcoin is digital – it's completely indifferent to your location or time zone.
Another huge benefit of using Bitcoin is that it’s highly secure. Funds are locked in a robust cryptography system, and each user has a private key that can be used to access their bitcoins. Only one person has access to that key, so it’s near impossible to break.
Does it fall under the same regulations as other currencies?
The value, usage and understanding of Bitcoin have fluctuated over the years. While the number of businesses who accept it as legal currency is growing, the UK government has remained tight-lipped and offered little in the way of advice to many regulated companies – as they try and navigate this complicated area.
So how do businesses know what they should or shouldn’t be doing with Bitcoin?
It’s all new territory for the UK. The country has a well-established tradition of self-regulation, and without formal guidance, businesses are acting on their interpretation of what the rules ought to be. As a result, UK businesses are chasing regulators for rule clarification (as opposed to the other way around!), which is very unusual indeed.
What is HMRC saying about Bitcoin?
HMRC made no mention of Bitcoin in the latest release of Anti-Money Laundering 4th directive, so it’s still very unclear what the best practices should be.
How is it affecting the housing market?
Houses are actively being bought and sold by using bitcoin and given the anonymous nature of Blockchain (the underlying ledger platform that bitcoin is built on), it's more challenging to conduct the necessary identity checks on the people involved.
Can Credas help with Bitcoin and other Cryptocurrencies?
With the ambiguity surround this cryptocurrency and its use in the process of buying and selling houses, we believe more stringent verification processes could be of benefit at the point of sale.
Using our simple but powerful Credas technology means you can be satisfied that the person being verified is who they say they are, and that the ID document they present is valid, ensuring the human element is checked, even if the currency being exchanged is a little vaguer!
What’s next for Bitcoin?
Cryptocurrencies are still in their infancy, and with new versions being launched, it looks to be a long time before they become a mass market currency.
Bitcoin Gold is the latest variant to be announced, and that’s without considering competing currencies – such as ethereum, ripple and monero.
Given that none of these currencies is widely adopted or understood, our advice is that businesses should tread carefully within the regulated space and keep an eye on the horizon.
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