In the early 1990s, countless articles in American media explored the mysterious new World Wide Web being opened up by the internet. Many of those trying to make sense of this had little hands-on experience with computers for anything beyond word processing and solving arcane math problems, but millions were convinced that there was something for them in it, though they had yet to figure out what it might be. Very few would have predicted that less than 20 years in the future, the internet would be effectively a worldwide utility connecting a large share of the population through the phones carried in pockets and purses.
While use of the internet was dramatically growing, applications using it were being churned out at dizzying speed. One such use was the 2009 development of a digital crypto-currency best known as Bitcoin (though there are now other competitors) by reputed and mysterious math genius Satoshi Nakamoto. The digital money was created by a complex process that came to be known as mining, using high powered computers and could be transferred between owners and vendors in peer-to-peer transactions by cell phone, no fee involved.
The resulting currency was uncontrolled by government, a disruptive technology that threatened the structure of traditional finance, including the mainstream big banks. Like the internet, early Bitcoin enthusiasts weren’t sure exactly what to do with it, but they saw promise.
Columbia law professor Tim Wu covered a frequently raised concern about Bitcoin in a New York Times piece:
“[I]s it really worth anything at all? It is based on a “block chain,” a technology that creates a decentralized public ledger and rigorously tracks transfers. It is maintained by its users, and no government can mint more coins. Bitcoin isn’t backed by any sovereign, and unlike a stock or a bond, it gives you a claim to nothing other than Bitcoin itself. Yet that illusory quality is true of most forms of money, a shared hallucination that we tolerate as long as it works. If enough others value something, that can be enough to make it serve as a store of value. Sure, Bitcoin will crash again, but over its lifetime, it has already withstood multiple crashes, runs and splits. It actually feels tested.”
And, especially in its early days, there were plenty of PR bumps in the road for Bitcoin as some explored its use for various illegal activities, but these have appeared to fade away with time. The Bitcoin news of the day became the sharp climb in its value, despite the negatives.
Guam entrepreneur Benny A. Pinaula has been involved in the Bitcoin market for three and a half years. That makes him in this chaotic field, an early adopter. He’s also promoting it through the USI-Tech firm. He’s spent a lot of time figuring out how it works and how to explain it. “Most of the objections I hear are from people who are uneducated about the technology. So they’ll say things like, ‘it’s used for drugs,’ or ‘it’s for money laundering.’ ‘It’s going to get hacked’ or some other thing that they’ve seen or read on the internet. And that’s fine, but to me, if you make those kind of claims, it would be wise for you to look a little bit further and maybe find out a little bit more. Bitcoin has been used for dark internet, but, so has the dollar. That’s not a good enough reason not to get involved in the technology. Terrorists use it. Well, terrorists wear shoes, and they wear t-shirts and they drink coffee. Are you going to stop all of these activities?”
And of course earlier in the history of the internet, many users were afraid to input credit card information, based on similar fears, though the seemingly unstoppable tide of internet commerce suggests these concerns have disappeared.
Another Times opinion writer, Kevin Roose, experimented with Bitcoin in 2013, purchasing one coin, which was then valued at about $140. He sold it a week later at a small loss, unimpressed by the experience and pronouncing the “Bitcoin dream all but dead.”
“Hoo boy, did I blow it,” Roose wrote recently. “Today, the Bitcoin I sold for about $140 would be worth more than $15,000, and cryptomania has seized the entire world. As of this week, Bitcoin futures are trading on the Chicago Board Options Exchange, and Coinbase, the largest consumer trading platform for Bitcoin, briefly crashed last week because of a huge influx of traffic. And while experts are warning that the exuberance around Bitcoin is a classic sign of a bubble, few think it will disappear altogether even in the event of a crash.”
Those with fears about a Bitcoin crash or correction, depending on how you look at it, were provided with plenty of material for holiday discussion, as Bitcoin and other crypto-currencies took a sharp hit the weekend before Christmas. A few days earlier, Bitcoin was valued at $16,599.99 on one U.S. exchange and over $19,000 in Korea. A couple of days later, Bitcoin dropped briefly to around $10,000 and then went back up to about $14,500. One trader dismissed this as “normal volatility,” which may very well be the case in the crypto-currency universe.
And it continued after the holidays. A week later in January, Bitcoin hit $16,699.66.
When Pacific Island Times first reported on Bitcoin last June, we heard from another Guam enthusiast and advocate, Joey Zervoulakos: “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 $1,600 and $1,700,” Zervoulakos said.”
In Asia, Bitcoin has proved to be a big hit particularly in Japan and Korea. In the Philippines, 7-11 stores have ATM machines to transfer money transfers into pesos, a discouraging development for firms such as Western Union which have already scaled back money transfer operations on Guam and elsewhere in the region due to reduced revenue. It’s also been a boon for millions of people who are without bank accounts or access to traditional finance. If they have a smartphone, as many of them now do, they’re ready to go.
Meanwhile, Guam has hardly lagged behind in Bitcoin enthusiasm, though the sharp increase in its value has started to change behavior, making its owners feel more like stockholders than credit card holders. Benny Pinaula and others say that the original concept of using the currency to buy actual goods hasn’t developed. Surprising many, this hasn’t slowed the rise in Bitcoin’s value.
“In the early days, when I got involved in Bitcoin, I would buy a cup of coffee for five dollars, right. And so, looking back at those days and where the price is today and we’re at $19,370, per one Bitcoin, when you calculate the number of times that Bitcoin has increased, that was maybe around 64 times. So that coffee I bought back two years ago for five dollars is roughly around $320 today. So yeah, early on, it was fun, but when you put the pieces of the puzzle together, you realize that, hey, I just drank a $370 coffee.”
Pinaula guides early investor and Bitcoin Technology Consultants co-owner
David McConkey through an initial transaction on the Bitcoin ATM
Now much of that coffee was likely sold at Brewed Awakenings, a Guam coffee shop which is a gathering place for many of the local Bitcoin cognoscenti, who were on hand recently to watch the unveiling of the island’s first Bitcoin ATM. As Pinaula told the group, “Guam was one of the first places to adopt Bitcoin in a very, very fast fashion. We’d like to commend all the business partners and we have about 66 businesses on island who accept Bitcoin and again, we want to recognize those businesses, those partnerships, because they’re helping grow the system for us.”