A FLAT Glasgow’s south side is the first property in the country to be bought with digital currency, rather than Sterling.
A Corby businessman, Peter McGowan, last week purchased the two-bedroom apartment in Bridge Street for 10 million Scotcoin, the equivalent of £60,000.
“It’s something than didn’t cost a lot of money. It’s a long-term punt,” he said.
McGowan bought the flat from Glasgow businessman David Low, who owns Scotcoin’s intellectual property. The two are also friends and business colleagues.
They first met more than 20 years ago when Low, the prime mover in Fergus McCann’s takeover of Celtic football club, fronted a Celtic roadshow in Corby. “I was preaching the gospel according to Fergus,” Low said dryly
McGowan owns an electrical contracting company in the town. He was born there in 1967 to a Scots couple who moved two years before from one steel town to another, Motherwell to Corby, although both places have gone from boom to bust.
Both invested in Scotcoin shortly after the currency’s launch in 2014.
“Peter wanted a flat and I wanted more Scotcoin,” Low said of the sale, “so we’re both happy.”
It may have been the first digital house sale but the transaction was still subject to normal conveyancing rules and procedures. “We commissioned a Home Report, which gave us the fair value of the flat in Sterling, which we translated into Scotcoin on the day of sale,” Low added.
“And because it’s not my principal home it’s subject to the Scottish Government’s Land Buildings and Transactions Tax,” said McGowan, “meaning that I will be paying three per cent, £1800, into their coffers.”
For cryptocurrencies to really succeed, says Low, “they have to be more user-friendly. They are now a viable store of value but they have to break through to mainstream and main street sales, and hopefully this is deal helps it on its way.”
There have been real estate sales in the US, with one Florida mansion going for the Bitcoin equivalent of $6.4m. “Not quite Bridge Street,” says Low.
If you had invested £2000 in Bitcoin five years ago you would now be a millionaire. That same investment, as late as last December, would see you today with a return in excess of 500 per cent on your money. The cryptocurrency, despite occasional blips and falls, hasn’t so much taken off as blasted into financial hyperspace, largely because more governments and financial institutions recognise it as a valid means of exchange.
It really began to really take off in April this year when the Japan Government recognised Bitcoin as a legal method of payment, and brought exchanges under anti-money laundering rules.
At its simplest Bitcoin, is an encrypted digital currency, created and held electronically, that uses decentralised technology for secure payments and storing money anonymously that doesn’t require conventional banks. As there is no central bank, no one controls it.
Bitcoins aren’t printed like pounds or dollars. And although Bitcoin is the main cryptocurrency there are hundreds of different, smaller ones, like Scotcoin, all benchmarked to the rise, or fall, of the main player.
“A rising tide floats all boats,” is how Scotcoin director Willie Fleming puts it. The corollary is that a falling tide beaches or holes them.
There are as many as 5.8 million users throughout the world that have cryptocurrency wallets, according to research from the University of Cambridge, the majority of whom use Bitcoin.
The currency was invented in 2008 by an unknown programmer, or group of programmers, called Satoshi Nakamoto. Various stabs have been made at identifying him. But what he, or they, did was to introduce the it worldwide using open-source software. It works peer-to-peer so that transactions take place directly between users with no intermediary. The transactions are logged in a public ledger called a blockchain.
The blockchain isn’t software, it’s decentralised information on every participant’s computer with dealings kept in electronic wallets – so hacking one location won’t, in theory at least, harm the entire network. However individual computers, and trading exchanges, can, and have, been hacked.
Because trading isn’t overseen and payments and receipts can be performed anonymously it’s the perfect medium for drug dealers and criminal enterprises, although reputable currencies and traders abide by the prevailing laws in the countries they operate in. For instance, you can’t buy more than £100 of Scotcoins in any one week without revealing your identity, to satisfy UK money laundering regulations.
And because there are finite limit to the number of Bitcoins in circulation (21 billion, and 1bn for Scotcoin) there is not – and never can be – any quantitive easing (printing more of them) affecting the value of the currency, which is subject only to the market rules of supply and demand.
They can be bought through brokers or through Paypal or, for Scotcoin, at exchange.scotcoinproject.com.
In May 2010, with Bitcoin less than two years old, a Florida computer programmer called Laszlo Hanyecz had more of them than he knew what to do with. Each coin was then worth less than one cent and with nothing to spend them on his online wallet was bulging. He decided that he was going to make the world’s first actual purchase of goods using them. So he promised in a dedicated online forum, “I’ll pay 10,000 bitcoins for a couple of pizzas. Like maybe two large ones so I have some left over for the next day…”
Four days later, a Californian teenager called Jeremy Sturdivant ordered the pizzas online ¬ either from Domino’s or Papa John, he can’t recall – and had them delivered to Hanyecz’ house. At the time the 10,000 coins were worth $41 and as Sturdivant paid $25, or £19, he reckoned he had come out ahead. And when he traded them a little later for $400 he was well chuffed.
Today that pizza transaction would cost ¬ in the real-world equivalent – £33.4 million. On Friday a single Bitcoin was trading at £3346.