The owner of Regina's only Bitcoin ATM says interest in cryptocurrencies is rising in the city. Dale Mychasiw owns Quick Bit Vending Systems Inc. and says his machine does eight to 10 transactions a day.
There are several factors that draw people to cryptocurrencies, says Mychasiw, but one of the main ones is it makes moving money around the world easier. “It was designed to be a digital cash system where we can send money from person to person digitally rather than a physical note from person to person,” he says.
“That payment network basically takes all the middlemen out of the equation to move money around the world.”
Mychasiw says cryptocurrencies are decentralized, meaning not controlled by governments or banks, which also makes it attractive to some people. People can move money without getting permission or having to give up personal information.
“Say you wanted to send $20,000 to somebody in Europe. You’d have to go to Western Union, you’d have to go to the bank, you’d have to give all your personal information, pay the fees for all the middlemen to move your money. So with Bitcoin,” says Mychasiw, “it takes all that out. You don’t have to ask permission to send money from one person to another.”
There is debate over the exact definition of a cryptocurrency. Jason Childs, an associate professor of economics at the U of R, says that a cryptocurrency is “a completely created currency that arrives out of a blockchain record-keeping system.” A blockchain is a public record that keeps track of all transactions, which can be accessed by anyone.
“They’ve got a blockchain, which is this record-keeping system that needs to be updated on a very regular basis,” Childs says. “Basically, every time there’s a transaction, somebody has to sit down and solve a cryptographic problem in order to update the blockchain.”
Childs is skeptical about the value of cryptocurrency. "There is no fundamental value to these assets," he says. "There is nothing backing this thing. It is only worth what you can sucker somebody else into giving you for it."
However, Childs does believe the blockchain technology that powers cryptocurrencies has potential to change the financial landscape. “I think all the back-end systems in banking, and international banking particularly, will start to look like blockchain. You’ll start to see that. The real power of the whole cryptocurrency thing is in the blockchain, not in the currency.”
Childs says this is valuable for any industry where it’s important “to keep track of who owns what when.”
Mychasiw has invested personally in cryptocurrencies, including Bitcoin, Litecoin, and Ripple, and offers advice to anyone looking to invest or who is already invested. “It is very important to educate yourself on wallets, exchanges, the blockchain, fees, don’t get caught up into the hype.”
“A lot of people consider it gambling when you’re investing into cryptocurrencies, and it is,” says Mychasiw, “so just invest as much as you’re prepared to lose, and if you do your research properly and take it slow, you can really do very, very well financially.”
Some people are less optimistic about investing in cryptocurrencies. Childs warns that cryptocurrencies, particularly Bitcoin, “have real hallmarks of a bubble.” He says this is why the price is so volatile.
Childs recommends having an exit strategy. “Know what your exit conditions are before you purchase and put an exit strategy in place before you buy. Know how you’re going to get out, because when this thing goes south I think it’s going to go south fast."
“General rule: know what you’re buying and why you’re buying it.”
