Pay kids' allowance in bitcoin? Sure

GOING MAINSTREAM: The virtual currency is gaining acceptance as global spending on bitcoin doubled in the past year. Factors attracting consumers to bitcoin include new apps and digital wallets which make it easier to use bitcoin.


    Sep 26, 2014

    Pay kids' allowance in bitcoin? Sure


    EARLIER this year, Mary Fons joined the Bitcoin Economy. She uses the digital currency to buy gift cards and office supplies. Her partner reimburses her with bitcoin for his portion of the rent.

    Unlike many of the currency's early adopters, Ms Fons is not a nerd or self-declared libertarian. She is 35, lives in New York and co-hosts the Love Of Quilting show on public television.

    "Why bitcoin?" she said. "Because I want to have options. I think it's a beautiful thing open to everyone."

    Ms Fons has company. People worldwide have opened 41 million bitcoin accounts, according to the Bank of England.

    While the total value of bitcoin commerce is not known, Gil Luria, an analyst at Wedbush Securities, estimates global spending on goods and services has doubled in the past year.

    Parents are dispensing allowances in bitcoins so their kids learn to be digital citizens.

    For instance, ten-year-old Jaden Shelton, who lives in Fairfax, Virginia, has been getting allowance in bitcoin from his father, Zach, for about six months.

    "If I was a father in 1995, I'd want my children to learn programming and to navigate on the Internet," said Mr Shelton, a 41-year-old project manager. "Fast forward about 20 years, and we have this technology, where bitcoin as a currency is just one application. It would behoove a parent to expose their children to this changing world."

    Consumers in emerging markets such as Brazil and Russia are also starting to use bitcoin to hedge against currency volatility.

    In recent months, bitcoin has attracted a more mainstream demographic, said Lui Smyth, a researcher at University College London's anthropology department, who surveyed users last year and again this spring.

    Last year, more than 42 per cent of the 1,000-plus people who took the online survey professed to be libertarians and anarcho-capitalists, who favour the state's elimination. This year, some 22 per cent of about 400 respondents described themselves that way.

    Another sign bitcoin is becoming mainstream: Last month, the Consumer Financial Protection Bureau, a United States agency typically focused on mortgages, credit cards and student loans, warned about risks relating to virtual currencies, such as scams and hacking.

    Factors attracting consumers to bitcoin include new apps and digital wallets which make using it easier to use bitcoin, and mainstream companies - more than 75,000, according to payment services Coinbase and BitPay - accepting the virtual currency.

    Most currencies are managed by central banks. Bitcoin has no central administrator - a network of volunteer computers validate transactions, which require encrypted electronic signatures.

    While advocates see digital currencies as the money of the future, bitcoin will have to overcome a number of hurdles, including concerns about security and price volatility, before becoming widely accepted.

    For instance, Japanese bitcoin exchange Mt Gox lost 650,000 bitcoins to cyber criminals earlier this year.

    The virtual currency has slid 44 per cent this year, hitting a low of US$361 (S$458) in April, according to CoinDesk Bitcoin Price Index, which represents an average of prices across major online exchanges.