My Bitcoin “Aha” Moment
And the case for a global digital currency
We all have a Bitcoin guy (or girl) in our circle of friends. That guy who somehow manages to insert Bitcoin into any topic of conversation and will keep on telling you that “it’s the future man”. Basically, the guy who just can’t shut up about it. Since diving into Bitcoin in 2017, I feel like I somewhat identify to this description. The array of possible applications has always fascinated me, from free and instant remittances to the ability to store your hard-earned money in a currency that won’t hyper-inflate overnight. However, being the first-world privileged citizen that I am, none of these use cases ever really applied to me. Until recently.
In the Bitcoin community, people often speak of their “aha!” moment: the moment when Bitcoin’s value proposal cuts through the noise and appears to them as clear as day. It is the moment Bitcoin’s potential suddenly makes sense to you, like lifting a curtain and unveiling an unexplored world of possibilities. Depending on your situation and your needs, this can of course manifest itself in a multitude of different ways. It can happen as soon as you read the whitepaper, or several years later. Despite following closely the Bitcoin project for some time now, this “aha” moment only just happened to me.
In January of 2019, my girlfriend and I decided to move to Hong Kong. We had neither jobs nor a place to stay, but trusted that things would work out. After a week of hostel-ing and a dozen apartment visits, we were ready to settle down. But having lived in Belgium and with the Euro for most of our lives, we were about to discover in full effect what is was like to deal simultaneously with several currencies…
First of all, let’s talk about cash withdrawals. With no local Hong Kongese bank accounts, we are forced to use our Belgian cards. Although credit cards have widespread acceptance at most ATMs, the fees make it a no-go. On a withdrawal of 500 Euros, my bank will typically charge close to 25 Euros, which includes a fixed fee, a currency conversion fee and a commission fee. On top of this, you will need to pay the ATM fee as well, which adds a few Euros to the bill. All in all, you will be looking at paying 30 Euros. Thanks, but no thanks.
Now the obvious alternative is to use your debit card instead. Although you will still be paying all the different fees mentioned previously, your bank’s fees will generally be lower than if you were using your credit card. However, here you will run into two other issues: ATM availability and withdrawal limits. In Hong Kong, only a handful of international banks such as HSBC and UBS will accept foreign debit cards. Secondly, if you have to make a substantial purchase in cash, you will very quickly run into your daily withdrawal limit. In our case, having to pay a full month of rent in cash as deposit on top of running expenses was, as you can guess, somewhat above our 500 Euro limit. You could split your withdrawal over several days, but you’ll have to watch out for your weekly withdrawal limit of 1,200 Euro. We could debate the rationale behind limiting citizens to dispose of their own hard-earned cash, but that’s a topic for another day.
When you move to the online world, you would expect things to get better. But alas, that would be too easy. Having no proof of employment in Hong Kong, we had to pay several months of rent upfront. Two options presented themselves. First, you could do a traditional international wire transfer, on the condition that your bank supports the currency you need. I checked this with my bank, to which they answered that they did not support Hong Kong Dollars (HKD). However, I could still send the wire in Euros, on the condition that the receiving bank supported Euros and could convert them to HKD. If this was the case, they informed me this option would cost me a grand total of… 80 Euros. If you’ve made it this far in the article, you can guess that’s probably not the route I chose. The alternative was to use an international money transfer service such as Transferwise or 0FX. You will get lower fees and a better exchange rate, but will have to go through the hassle of researching, choosing the service that is available in your country and supports your currency, making sure it’s not a scam service, creating your account, wiring them the money, waiting for them to convert it to the currency of choice and wiring it again to the end receiver. In my case, it took a grand total of 6 days and several back and forths for the process to go through. Not exactly ideal.
Finally, we get to my true pet peeve: online payments. Having bought a laptop in Hong Kong, I needed to buy both a Microsoft Office license and an antivirus software. With my IP address signalling that I was in Hong Kong, my cards kept bouncing. When I tried to purchase an online course, my payment was systematically refused despite trying 3 different credit cards, and I had to reach out to customer service to resolve the issue. Tired of all this, I ended up getting a pre-paid credit card with a local online bank. But here again, in order to top-up my credit card with HKD, I had to do a wire transfer. After several days of the money not showing up on my balance, I reached out to customer service to inquire on the status of the transfer. Apparently, it had been stuck on stand-by somewhere in their process, but they informed me they had been able to locate the payment (lucky me!) and were transferring the money to my credit card.
Now I know what this must all sound like. An entitled millennial, whining about his first-world problems and how everything is such an inconvenience. And it’s true that I have a privileged situation compared to most people around the world. The money I hold doesn’t suffer from hyper-inflation and I have access to most capital markets around the world. I am not under any financial censorship and am free to show support to any political, religious or activist organization I choose. I don’t suffer from capital controls and am free to wander in and out of my country without worry of confiscation of my hard-earned money. And still, I can find use cases for a truly digital and peer-to-peer currency.
When you send an email, you don’t check if the recipient’s mail provider is compatible with yours. You just send it, and the other party receives it instantly. When you go on a website, you don’t have to check constantly if the domain name is accessible from where you are. And when you do decide to read an article online or listen to a song, you don’t need to order it and wait a few days before being able to access it: you just read your article and listen to your song, instantly. On the Internet, the transfer of information is instant and, one could argue, extremely cheap. Why should it be any different for the transfer of value, i.e. money? Why do we accept wire transfers that take up to a week to clear, and a pyramid of fees just to be able to use the fruit of our labor? Why do I need to pay in Hong Kong Dollars for my Spotify subscription if my computer sees that I am in Hong Kong? Why is my physical location important when I am buying purely digital goods and services that will only live on the Internet, such as my antivirus software or my online course? We have grown accustomed to this way of life. But what if there was another way?
As Jack Dorsey recently declared, the Internet has always wanted its own native currency, a truly global currency that will exist on its own territory and will not be limited by nation-state barriers. The Internet creates its own reality, and as we inexorably move toward a more global and connected world, money is the last domino waiting to fall, the last technology waiting to be disrupted and unified. When children see a screen today, they instinctively expect to be able to touch it and swipe between menus or zoom with their fingers because they were born with the technology. For them, the Internet, social media and smartphones are completely ubiquitous and allow them to be constantly connected to the world and communicate instantly and freely with anyone on earth. When the time comes for them to open a bank account, do you think that this generation that has grown up in the Internet will find it normal that their bank’s local branch is only open from 9am to 5pm, that transfers take up to 5 working days to clear and that any payment online in the “wrong”currency will either be refused or come with fees? People that are born today will always live knowing that the potential for a global currency exists. What they will decide to do with it will be truly fascinating to watch.
Disclaimer: the views expressed in this article are those of the author and the author alone, and do not necessarily reflect the official policy or position of any other agency, organization, past or present employer or company.
