Brave New Digital Currency World
The Bitcoin Co-op in Vancouver has changed a lot since a group of 10 or so tech savvy programmers and libertarians began meeting in a local coffee shop one year ago.
“Those guys are still there,” says Gerald Cotten, co-op director and founder of Quadriga CX Bitcoin Exchange. “Now up to 65 people from a wide spectrum of areas come to the meetings, including professionals, investors, merchants and consumers. A month ago a 78-year-old woman showed up wanting to learn more. That just shows there’s been a huge shift in recognition and interest in bitcoins.”
The conversations have also changed over that time. “A year ago they were very technical. Now it’s a lot more about how everyday people and online merchants can incorporate bitcoins into their daily lives.”
Cotten does much more than bring bitcoin enthusiasts together. As founder of Quadriga CX, he has been focused on developing the most secure, easiest -to-use trading platform to simplify the buying and selling of bitcoins for a growing audience. The company’s approach has captured the attention of investors such as VFS Securities, a Vancouver-based venture capital firm that
focuses on Internet startups and other technology-based ventures.
The timing of the December 2013 launch proved fortuitous in an unexpected way. In February 2014, Tokyo-based Mt. Gox, the world’s largest Bitcoin exchange, fell victim to hackers, leading to estimated losses in the range of US$400-million.
“It changed the dynamics of the industry,” Cotten says. “Since then the biggest exchanges are in Slovenia and Russia. As a result, we’re seeing more business from clients who don’t want to rely on a foreign entity. People like the fact we’re located in Canada and know where their money is going.”
Since its inception, the company’s pillars revolve around the key issue facing the industry today: security. The company says it employs some of the most advanced security measures in the industry, including Cold (i.e. offline) Storage for a majority of bitcoins within its system, advanced encryption, custom operating systems and software, and a partnership with CloudFlare, a leading online security firm.
Moe Afilal, COO of Webilize, a Vancouver-based software developer for bitcoin projects, stresses that security is a significant issue in the digital currency world. “The first and biggest exchange collapsed due to stolen funds and is now in bankruptcy. Ensuring complete safety and security is a big and challenging task.”
The fact that bitcoins are holding steady in the US$450 range today after a devastating hit is a clear indicator the technology is sound, he adds. “It’s such a new market. But everyone is ensuring they are taking proper steps to protect themselves. What’s important is the technology. That’s the key to all of it.”
He contends that Bitcoin is actually one of the most secure currencies in the world. “It can be so secure, sometimes it’s daunting to use. Only you know your password. If you forget it that’s it, because that information is not connected to any network.”
In addition to its advanced security features, Quadriga CX has also made a point of introducing a number of unique features and functions that make it stand apart from its predecessors, Cotten notes. “We’re putting pressure on early market entrants by doing everything they did, but exceptionally better. We have a lot more funding options as well charge much lower fees.”
It offers more account funding options and withdrawal options than any exchange in the country. One of the main features, Interac Online, is an industry first. It allows users to fund their account instantly from the comfort of their own home and buy bitcoins instantly. “It’s the fastest way to get bitcoins in the country,” he says. According to industry experts, this is a game changer for the Canadian bitcoin industry.
Another new feature is the ability to trade bitcoins for gold, in addition to Canadian and U.S. dollars – yet another industry first.
Quadriga CX is also the first bitcoin platform in Canada to hold a money services business (MSB) license from FinTRAC (Financial Transactions and Reports Analysis Centre).
Its per-trade rate of 0.5% is far below other trading platforms which charge 1% to 1.5% per trade. In addition the company has recently launched an ATM in Vancouver – the second in the city and the first Lamassu bitcoin ATM in the country, a technology platform that allows consumers to purchase bitcoins in less than five seconds. With the other bitcoin ATM, users have had to wait anywhere from 10 minutes to two weeks for transactions to be processed.
As business grows, Cotten firmly believes the bitcoin has gone through many of the growing pains of the last four years. Now that prices are stabilizing, it is becoming a more trusted currency for merchants and consumers. “While traders love the early volatility, stability ultimately gives bitcoins more value as a currency for buying things.”
In terms of bitcoin adoption, he believes Canada is at the forefront. “There are more merchants accepting them than in any other country in the world and the government is relatively accepting.”
He points out that the Canadian government had a run at creating a Canadian dollar digital currency with the MintChip when the bitcoin was in its infancy. “The interesting thing was it was a government creating it. Even though they discontinued MintChip, it demonstrated how open it was to a digital currency.”
More recently the Bank of Montreal announced it would be open to dealing in bitcoin transactions, provided the currency becomes more clearly regulated.
“This is the first endorsement by a Canadian bank which is a sign that there is a strong future for bitcoins,” Cotten says. “We’re already seeing people we would never have expected trading them.”
Where trading platforms are concerned, Afilal believes, the winners will be the exchanges that make it easy for people to create an account, fund it and get verified and is ready to handle any incoming amount of clients. “Once the markets rally, there will be a huge influx of people wanting to get verified and trade. It’s important for them to have an exchange that can keep up. Quadriga has got everything in place to handle that.”