BUENOS AIRES — Latin American networking site Taringa! reported last month that it had struck a deal with Xapo, a “bitcoin wallet” service, that allows users to be paid in the Internet currency for goods and services. While the deal was valued at no more than $750,000, it has sparked a new round of debate over bitcoin’s true nature. Some have warned that the new form of digital currency is entirely speculative and legally invalid, while others see it as the world’s the most “trustworthy” and stable monetary unit.
Taringa! aims to use bitcoin to pay users generating advertising revenue with their “quality content,” says Hernán Botbol, a co-founder of Taringa!, which has about 75 million monthly users. How much content can qualify as “quality,” and how many people are ready to pay for it, is itself an open question.
But the deal comes as bitcoin is itself facing fundamental questions about its viability. It is “more a curiosity than a practical thing,” says the economist Pedro H. Rabasa of Empiria, a consulting firm. Yet its scarce use does not remove risks of volatility. Between late 2013 and February 2014, its value soared from $100 to $1,000, before dropping to $625. Today it is worth around $240, amid constant oscillations.
Miguel Boggiano, CEO of Carta Financiera, an investment firm, says on average there are some 200,000 transactions a day worth around $50 million. “Clearly this is no threat,” he says to the stability of the world economy. Still, several countries (China, Estonia, Lithuania and Indonesia, among others) have issued warnings on bitcoin’s lack of legal backing. Russia has banned its use outright.
The founders consider the alarms unjustified. They agree the “crypto-currency” is volatile, but insist that it will eventually stabilize. Its volatility comes with being a “new currency,” says Boggiano. “In 1992 connecting to the Internet was also difficult, and bitcoin is steadily rising. In five to 10 years’ time, it will be worth between $500,000 and one million U.S. dollars.”
Online bank to bitcoin
Before launching the bitcoin wallet service Xapo, Wenceslao Casares was involved most famously in Patagon, a putative online bank created in the 1990s. In 2000, Casares and his Patagon partner Constancio Larguía sold 75% of their online firm to Spain’s Santander banking group, for $476 million. Much of that money disappeared when the firm crashed. Casares lives in California today, and two years ago founded Xapo, which some have dubbed a bitcoin “vault.”
Bitcoin was born in 2009. Its promoters says it is an inviolable technology or code that does not need, or have, the backing of a government, which is cited as an advantage. For others, that is the risk. The currency is traded on specific websites. In February 2014, the Mt. Gox site, which operated in Japan, suddenly blocked fund withdrawals by users before going bankrupt. Its owners were taken to court.
The idea of bitcoin “is good,” says Boggiano, though he notes that it remains difficult to get enough people to use it in payments. “I am not saying it is nonsense, just that it’s early to say whether or not it will finally be accepted.”
In Argentina, Ripio.com is one platform where bitcoins can be traded. Its founder, Sebastián Serrano, says the website has 20 operations a day on average, and 1,000 registered users. He tells us he is certain “it is the money of the future,” observing that already 100 businesses in the country accept it for payments. Yet his website cautions users: “Buying and selling bitcoins entails risks. Please use your best judgment.”
Source: worldcrunch.com
