By Jon Lewes
The first known bitcoin commercial transaction was carried out in 2010 when programmer Laszlo Hanyecz paid with 10,000 bitcoins for pizzas he bought at a Papa John franchise pizza restaurant.
At the time, each bitcoin was worth less than a US penny…about $0.004 to be specific. The pizzas cost about $40, so Hanyecz needed 10,000 bitcoins to pay for them – by March 2013 the bitcoins would have been worth nearly $750,000 to the Papa John owners, or to whoever held the bitcoins by then.
Bitcoin Pizza Day has become as much part of folklore as Alexander Bell’s first phone call. However, it is remembered now not for the transaction for the two pizzas but more because of the price: those 10,000 bitcoins were by 2019 worth over $80 million, at $8 for each bitcoin.
Now in 2021, with the value of a bitcoin at around $40,000 as of mid-2021 the holder of the 10,000 “pizza” bitcoins would be holding a fortune of some $400m. However, tomorrow, theoretically, technically, the value of a bitcoin, and that fortune, could have dropped to zero.
Once you have a wallet, you’re able to buy bitcoins. You don’t need to invest thousands of pounds to get one single bitcoin. Instead, you can buy a fraction of one bitcoin. As a demonstration of how times have changed drastically since that first pizza transaction, there is now a crypto project for ordering pizza. It’s called Lightning Pizza, and it allows for a Domino’s pizza.to be paid for in bitcoin.
In further developments, AMC, the US cinema chain that owns UK chain Odeon, has announced that it will accept ticket payments and concessions in Bitcoin by the end of 2021.
Two questions that are asked ever since Bitcoin carried out its first test transaction on January 12 2009 is one, whether Bitcoin is here to stay, and two, what is Bitcoin.
To answer the second question first, Bitcoin is a decentralised digital currency, or cryptocurrency, one of many such cryptocurrencies, some 4,000 of them at the most recent count. Bitcoin is considered by its supporters, which includes the Gibraltar Government, to be the World Currency of the future.
A cryptocurrency is “a virtual or digital money which takes the form of tokens or coins” – “crypto” refers to complicated cryptography which allows for the creation and processing of digital currencies and their transactions across decentralised systems. Cryptocurrencies are typically developed by teams of coders who build mechanisms for issue of the currency, mostly through a process called “mining”.
Purchase of goods and services around the world can be made by bitcoin without any established regulations, restrictions or currency differences so bringing greater flexibility in its use. Bitcoin, say supporters, “is now slowly becoming the most used currency worldwide”. This they say is based on the reality that bitcoins and other forms of cryptocurrencies are being used in many countries when buying not only services and goods, mostly luxury/high-ticket items, but also everyday products such as pizzas and cinema tickets.
Returning to the answer to the second question, “is bitcoin here to stay” – that may depend on what “a long stay” means.
At present, there are 180 countries’ currencies across the world, “fiat” currencies, as recognized by the United Nations, with the five major traded currencies being the U.S. dollar, the euro, the Japanese yen, the British pound sterling and the Swiss franc.
By comparison, as of January 2021 more than 4,000 cryptocurrencies are in existence. With Amazon and Twitter, as well as many other global companies and financial institutions, moving in to the cryptocurrency space, it looks as if the stay may well be a long one.
Bitcoin in Gibraltar
The Gibraltar Stock Exchange approved in 2016 the listing of BitcoinETI, an asset-backed exchange traded instrument, that is invested exclusively in bitcoin, making it the first European regulated product for the new type of digital currency.
There has been since then an ongoing shift in the type of bitcoin purchaser, with Bitcoin going institutional. “Cryptocurrencies that started existence a few years ago as an anti-establishment tool to avoid government detection are now provided with “custody services” by authorised banks so that clients’ bitcoins are kept safe in their storage devices.”
Gibraltar has taken steps since 2018 to be further involved in the future of cryptocurrencies. Albert Isola, as Gibraltar’s Minister for commerce, digital and financial services, explained in 2020 that “the Gibraltar government has been quick to realize the potential benefits of building a crypto-friendly environment and expects that its Distributed Ledger Technology Regulatory Framework (DLT framework) will attract more crypto companies in the future.”
Mr Isola explained that “several known crypto companies have been granted DLT licenses by our financial regulator, the Gibraltar Financial Services Commission (GFSC) to operate from Gibraltar.”
At December 2020 the list of licensed companies included Huobi, the fourth largest exchange by daily trading volume, Coinfloor, the oldest crypto trading platform in the U.K., Covesting, which is another crypto exchange based in Europe, the Gibraltar Blockchain Exchange (GBX), operated by the local stock exchange, and the most recently licensed entity, digital asset platform Etorox.”
Xapo, a Hong Kong-based company with a physical branch in Gibraltar, offers “a bitcoin wallet combined with a cold storage vault and bitcoin-based debit card.” In 2019 Xapo received DLT permission from the GFSC, “allowing Xapo to use distributed ledger technology for the storage or transmission of crypto value and manage digital assets for our clients.”
Many more companies will be expecting to establish operations through Gibraltar as globally cryptocurrencies settle in for a long stay.