A Dutch businessman Didi Taihuttu has been making global headlines in recent months because he literally sold everything he and his family owned – house, cars, furniture, clothes and shoes, EVERYTHING – to invest in bitcoins.
The family is now living a minimalist lifestyle in a small chalet at a camping ground in the Netherlands. They’re living off the money they’ve made from selling their stuff and their entire future rests on the success of bitcoins.
Taihuttu has so far doubled his money but isn’t thinking about selling. A single bitcoin is worth more than $11,000 and Taihuttu estimates its value will jump to at least $100,000 by 2020, so he continues to buy bitcoin and other cryptocurrencies.
To be honest, we don’t even know what bitcoins are. Maybe we should if they might be the way of the future.
We asked financial expert Paul Robinson from Kiwi brokerage service Token Room to explain what bitcoins are, how they work and why they’re relevant to New Zealanders:
Didi Taihuttu with his wife and three kids.
What are bitcoins?
Bitcoin is the first digital (crypto) currency; it was released in 2009. Bitcoin is both created and held electronically with no one person or group controlling it.
For the first time it made it possible for two people to transact digitally, peer to peer with no need to use an intermediary, such as a bank or financial institution. This meant fees and transaction times were greatly reduced.
How do they work?
The clever technology introduced with Bitcoin, the Blockchain, stores all the Bitcoin transactions on a type of accounting ledger on the internet. This ledger is completely transparent and shows all transactions across the network, although it doesn’t necessarily know who is making those transactions.
To keep a record of these transactions and to make sure that they are accurate, there are people or groups, known as miners, running computers all around the world, using software that solves mathematical problems brought about by all these transactions happening. If a miner solves this first and it is agreed by the other miners, then they are rewarded with Bitcoin and the transaction is approved and processed.
Why should New Zealanders care?
I believe that crypto currencies are here to stay. Much like telephone banking, online banking and credit cards changed the way that we transact, digital currencies can do the same.
Although much of the technology is in its infancy, there are companies working on debit cards that are backed by crypto currencies removing most of the fees that we experience now when we transact between each other.
A really powerful example in New Zealand about how cryptocurrencies can be used is in the remittance of funds back to the islands. Currently families pay high fees as high as 10-20 per cent to intermediaries to send money home, with the transactions taking days. With cryptocurrencies this is possible for a few cents and happens in a matter of seconds.
Are New Zealanders investing in them? Any examples?
Yes, New Zealanders are investing in Bitcoin. At Token Room most of our customers are telling us that they are buying them and holding on to them as an investment. Some of our earlier customers have experienced 1000 per cent growth on their initial investment.
However, the use of Digital Currency is rising globally. Japan, a technological innovator, has accepted Bitcoin as a legal method of payment, with other digital currencies looking to follow suit.
With this in mind my family and I are travelling to Japan mid 2018 to see how widely we can use Digital Currency and understand how it can be applied in NZ.
