What's going on with the UK and bitcoin?

Wednesday 22 July 2015

Britain remains confused about digital currencies, with recalcitrant banks not toeing the government line. Here are some insights from Andrin Ehrenmann of UK exchange CryptoMate.

One of my first articles for BitScan was about the UK’s ambivalent approach towards bitcoin. 18 months later, the problematic banking situation is still much the same, but crypto businesses are increasingly setting up shop here anyway. A little while ago I spoke to the guys at CryptoMate, a new P2P British crypto exchange (it has to be P2P because the banks won’t allow a regular exchange to operate). Aside from talking about their business, I asked them for their take on where the country is headed with bitcoin and other blockchain tech.

Read also: The curious picture of bitcoin in the UK 

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What's your sense of why UK banks are so wary of bitcoin, even though the government has expressed a pro-crypto stance?

I believe that banks in general are wary of bitcoin and other cryptocurrencies, because they fear them to a certain point. They’ve held a monopoly on money for a long time and we think the thought of a currency that they have no control over scares them a little. Of course they will never say this publicly, but this is what we at CryptoMate believe to be true.

It’s still not certain that bitcoin can really become direct competition to fiat currency, but its impact on the whole banking and finance sector is huge. Bitcoin challenged the banks to improve their service, which in our opinion - regarding transaction times and fees - is very poor. They really have to work on offering people better solutions to handle their finances, because bitcoin was the first true alternative to the traditional and old fashioned banking practices.

What about the government?

As for the British government's stance on crypto, we are very glad that the Conservative government have come out in apparent support for the sector. But whether they really mean it is a different matter. Actions speak louder than words, and if they decide to go down the ‘BitLicense’ route then we believe it will be a disaster for the British crypto startup scene. The way they treat it is still vague - it is essentially unregulated according to HMRC - so some more clarity on the government's stance would be helpful for bitcoin-based businesses.

What do you see as some of the biggest challenges and opportunities in crypto - both in your own business and the wider crypto ecosystem?

The biggest challenge in crypto is to become accepted and also used by the general public. It takes a lot of time for this to take place. When it comes to money, people are most likely very conservative and wary of new technologies. One of the big obstacles is that crypto users have to take full responsibility of their money. That’s a big issue in a time where everyone just relies on other parties and tends to blame someone else for their personal failure. The mindset of the world’s population really has to change for bitcoin and other cryptocurrencies to succeed. It’s a chance to change the world and everyone can contribute his part, but we need to change ourselves first.

After all, crypto won’t be used if it’s tied to fiat like it is right now. We need to establish a crypto-only ecosystem, a system that doesn’t need banks. [Editor’s note: Preach, Brother!] To be honest, I myself only own bitcoin because I like the technology and the idea behind it. I sometimes use it to buy some things that I need and that can be paid with bitcoin. But I wouldn’t use it to pay for all my expenses right now, it just makes no sense in this early stage. No person who isn’t attached to crypto would use bitcoin as his preferred tool for payment. They have to buy bitcoin first, pay fees to get their bitcoin, most likely need a bank account to pay for their bitcoin, wait until they have their bitcoin in their wallet and after they paid, the merchant will most likely sell their bitcoin immediately for fiat. The whole payment process could have been solved faster - and with less effort for the individual user - if he just paid for his stuff with fiat directly. When we are able to find a solution to get rid of this unnecessary process, bitcoin and altcoins will have the chance to succeed.

What implications does this sea change have for CryptoMate?

It also means that our business model has to change at this point. When cryptocurrencies really reach mass adoption there is not much of a need for crypto to fiat exchanges anymore. I'm curious to see how it turns out in the future, and I'm confident that bitcoin, or at least the blockchain, will contribute their part to personal freedom and financial independence in the long term.

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