Joey Zervoulakos is a sometime computer geek, tech and gameplayer, but these days he’s staking out territory as a promoter and counselor on the new frontier of Bitcoin, the “cryptocurrency” which is quietly gaining a foothold in Guam, Asia and the rest of the world.
There’s a learning curve to Bitcoin. Zervoulakos first read about it in PC Gamer magazine. “I thought it was currency for a stupid game,” he said, but a knowledgeable friend later filled him in on the details and potential.
It’s what’s known as a “peer-to-peer” system. Two parties anywhere in the world with smartphones and “wallet”’ applications can transfer Bitcoins instantly without going through a bank account or other money transfer service, avoiding the steep traditional fees for such transactions. As this suggests, there are no actual physical coins involved.
At the same time, while serving as a currency, Bitcoin is a speculative investment, which despite occasional hiccups has been expanding in value for those who hold on to it. “I invested when [a Bitcoin cost] roughly around $200 and now today’s price is fluctuating between 16-hundred and 17-hundred,” Zervoulakos said.
Given the appreciation of Bitcoin he has experienced, Zervoulakos is hanging on to his holdings as an investment, rather than using the currency to purchase goods and services.
Once the technology is understood, business people get the math difference between Bitcoin and traditional credit/debit cards. “When they accept credit cards, they’re automatically charged two to three and a half percent on the credit card transaction. And that’s when I tell them, if you accept Bitcoin at your store, you don’t have to pay these enormous transaction fees and you can use it on line, so you can cash it out instantly. Cash it out through an ATM or deposit it into your bank account with almost no fees.”
Zervoulakos said the government of Guam could use Bitcoin or a similar currency to give taxpayers a break on car registrations and other fees. “If you go to Rev and Tax, and you use a credit card, they’re tacking on an extra two and a half percent that they’re supposed to be charged for and they’re actually charging us.” GovGuam would of course gain additional revenue if the value of Bitcoin continues to rise.
In a more idealistic pitch, Zervoulakos says the cryptocurrencies can help to bring participation in the economy to the many who can’t access financial services. “These are people who don’t have access to financial institutions, who don’t have birth certificates or Social Security numbers, I think Bitcoin is the answer because they can simply download an app and they can purchase things without going through a bank account.”
The purchase of a bag of dog food at the Harmon pet store, Little Wangz PetLife by a military member was likely the first Bitcoin purchase on island, Zervoulakos said “Little Wangz just held that $50 worth of Bitcoin for a couple of months. And I’m guessing that the price of Bitcoin then was about $400 and they held it for a while and when the price of Bitcoin went up to about $800 during the same year, the $50 that the military customer spent is now worth $100. So my suggestion is, hold your Bitcoins as an investment right now.”
Down the street from Little Wangz is Brewed Awakenings. The coffee shop is taking in Bitcoins for coffee and pastries from three to five regular customers daily. And in East Agana, Guam Autospot is willing to take in the currency for a Buick or some other ride in their inventory.
Many on Guam transfer money to the Philippines regularly and have noted a recent drop in the fees. Zervoulakos said the new competition has prompted Western Union to close down some Asian operations. He said unless Western Union and other remittance companies adapt to the new technology, it will be another case of Netflix demolishing Blockbuster in the video world.
“Even the poorest people in the Philippines have smartphones. I don’t know how they get it, but they all have a smartphone, and a lot of them don’t have bank accounts. So they can go to any coffee shop or any place that’s got WiFi, go online and get Bitcoin,” Zervoulakos said.
A popular Bitcoin app in the Philippines is Coins.ph, which says over 450 ATMs there are now open to this service. Coins.ph offers more than 5,000 other cash pickup locations with 24 different banks. If the customer wants to pick up the money, the service is free, but the service also offers a delivery option, for a small fee. All the ROP 7-11 stores accept and exchange Bitcoins.
A range of traditional investors appear determined not to be left behind. The New York Stock Exchange is investing in Coinbase, a U.S. dollar-Bitcoin exchange. According to Wikipedia: “the company also formed partnerships with Overstock, Dell, Expedia, Dish Network, Time Inc., and Wikipedia to power accepting bitcoin payments. The company also added bitcoin payment processing capabilities to the traditional payment companies Stripe, Braintree and PayPal.” Google is also implementing Bitcoin infrastructure in their systems and major national/international banks are doing the same.
Zervoulakos said what’s known as Bitcoin mining is best compared with gold mining, only in this case the tools are not picks and shovels, but extremely fast computers. How fast? Zervoulakos said the computers required these days outstrip Microsoft or Google’s capabilities. “Bitcoin mining is simply keeping the network secure and confirming transactions. And whoever does this the fastest is rewarded with the newly generated or discovered Bitcoins. And they are also rewarded with the transaction fees.”
Zervoulakos cautions that this decentralized currency offers the potential for great rewards and also presents opportunities for criminal activity not necessarily subject to the legal protections of the traditional banking system. Occasional attempts to tamper with Bitcoin by hackers and opportunists have caused temporary dips in its otherwise bull market rise in value. The criminals behind the current WannaCry ransomware case are demanding Bitcoin payment to release data from hundreds of thousands of computers. On Guam, one media company suffered a similar extortion attempt and after obtaining some Bitcoin, reportedly paid off.
If the creative destruction wrought by the cryptocurrencies takes out the traditional banking business model, Zervoulakos won’t be sending flowers to the funeral. “I hear a lot of smart people say ‘the only great thing the banks invented were the ATMs,” he said. “The nice thing about Bitcoin is that it gives power back to the people.”