Barclays set to become first UK high street bank to accept bitcoin
- Company set to partner with a ‘bitcoin exchange’ or spending platform
- Has two bitcoin ‘labs’ in London and has been collaborating with start-ups
- Bought with real money and traded online, a bitcoin is worth around $230
- It can be traded instantaneously without a bank acting as a middleman
- But Barclays and others see its potential to reduce infrastructure costs
Barclays will be the first UK high street bank to accept bitcoin later this year, the company has announced.
It plans to allow people to make charity donations using the virtual currency by going into partnership with a ‘bitcoin exchange’.
Such spending platforms are essentially a way of allowing transactions to be carried out instantaneously without a bank acting as middleman.
But not wanting to be left out and seeing its potential to lower infrastructure costs, Barclays has been experimenting with two bitcoin ‘labs’ in London and collaborating with start-ups, reports The Sunday Times.
It has around 75 staff looking into bitcoin and block chain at offices in Notting Hill and Old Street, close to the City of London.
Block chain is the database which records all bitcoin transactions and Barclays are not the only bank looking into its potential, with UBS also getting in on the act.
Barclays also uses a refurbished warehouse in Whitechapel, east London, to host get togethers between bitcoin enthusiasts.
The bank’s chief design and digital officer Derek White the aim was to ‘invite start-ups, academics, the government, to work at the space to connect with others that are interested in the bitcoin and block chain community.’
The currency has friends at the top of politics too, with David Cameron taking a bitcoin provider on a British trade mission to southeast Asia this month.
WHAT IS BITCOIN? DIGITAL CURRENCY SOME SEE AS THE FUTURE OF MONEY
Bitcoin is a virtual currency which can be traded and used like money online and can be purchased with real cash
It is not backed by any government and has a fluctuating value. It has had a volatile history, with a rapid rally in 2013 that boosted its value to more than $1,150 per bitcoin at one point .
It is currently trading at around $230, making the value of the more than 14million bitcoin in circulation about $3.2billion.
The first coins emerged in 2008 and the trading network was set up in 2009. Users choose a virtual wallet from one of the various providers which enables them to receive, give and trade coins from other users.
Detractors worry that it makes it easy for users to buy products anonymously from websites like Silk Road, an underground marketplace for drugs and other illegal goods which was shut down in 2013.
But advocates argue that using cash for illicit trades is easier and less traceable, pointing out that most U.S. banknotes are contaminated with cocaine.
Some dismiss it as a Ponzi Scheme while others tout it as the future of money.
The block chain – a ledger or list of all of a digital currency’s transactions – is viewed as bitcoin’s main technological innovation, allowing users to make payments anonymously, instantly, and without government regulation.
In March the British government announced plans to regulate digital currency exchanges to prevent their use in money-laundering and to help to develop a set of standards for cryptocurrencies.
Backers of bitcoin praised this for lending legitimacy to the currency – which unlike traditional money has no printed form and remains outside the control of central banks – without stifling innovation.
Shoreditch in east London is a hub for bitcoin enthusiasts. It is home to CoinScrum which, with 2,200 members, is the biggest bitcoin networking group in the world.
Londoners can change cash for bitcoins at seven ATMs in the capital, and use them to pay for anything from tantric massage to a designer dress, a pork chop to a pint of beer. One company even allows rent on property to be paid in bitcoin.
Britain made bitcoin trading exempt from value-added tax last year. Other countries have yet to decide how to tax bitcoin, since its independence from any central bank means it does not fall into the traditional definition of money.