The UK’s Economic Future and Britain’s Bitcoin Island – Bitcoin Magazine
This is an opinion editorial by Bitcoms, a Bitcoiner and contributor to Bitcoin Magazine.
Source: Google Maps
The British backdrop
Just days after the anachronistic spectacle of the Queen’s funeral – a bizarre echo of Britain’s long-lost imperial power – the pound fell to an all-time low against the dollar. A few years before Elizabeth II was crowned, a pound was worth more than $4. Shortly after she was buried, a pound bought barely a dollar.
Add the steepest rise in gilt yields in living memory and double-digit inflation – higher than any other developed nation – and Britain’s current economic situation looks worse than even the 2008 crisis. Back then, the chancellor may have been On the edgebut at least he could still buy himself a pint of beer for less than £1.
Source: The Times
Already well above £4 on average across the UK, the price of that pint looks set to rise much further: with the Bank of England already returning to easing, inflation may well get worse before it gets better. For us Brits, even drowning our sorrows is becoming increasingly prohibitive.
All over the world, when a local currency continues to lose a lot of value, people turn to Bitcoin. Ordinary inflation-ravaged citizens from Istanbul to Buenos Aires are increasingly using it to preserve their purchasing power and trade with each other. Is something similar about to happen in a G7 economy?
At first glance, this does not look imminent in the UK. From misleading reports on destructive energy use to inherent lack of value to conflation with the cryptocurrency casino, most Brits are happily drinking the mainstream media’s anti-Bitcoin Kool-Aid. As a result, Britons are generally distrustful of bitcoin, not only as an asset, but especially as money. “How can it be money if it is not legal tender? What is the use of money no one accepts?” And so on.
Unsurprisingly, therefore, few merchants across the country display orange B. In my hometown of almost three million inhabitants, I only know a lonely bar where you can buy a beer with bitcoin. So much for taking comfort in satoshis – the UK is a long way from mass adoption of bitcoin as a medium of exchange.
Britain’s Bitcoin Island
But there’s one tiny bit of Britain that’s bucking the wider trend: the Isle of Man, home of Manx, where a significant number of businesses already accept flat-rate payments. But how many? And why? The day after the Queen’s funeral I went there with my old friend @bitcoinshire to find out, and to see if we could survive a few days on nothing but Bitcoin.
The fundamental
Ellan Vannin Hotel. (Photo by @bitcoms)
The island’s first hotel to accept satoshis is the comfortable Ellan Vannin, where they serve first class Manx kippers for breakfast and where we were the first bitcoin paying guests. They recently started accepting bitcoin, after noticing more and more orange stickers appearing in local shop windows. Their motivation seems twofold: a belief in bitcoin as the future, as well as the opportunity for additional business from Bitcoiner tourists like us.
Karson’s Pharmacy. (Photo by @bitcoms)
As @bitcoinshire had forgotten to bring a toothbrush, we took a trip up the hill to Karson’s. As far as we could find out from one of the friendly pharmacists, the owner’s interest in bitcoin was the reason they had started accepting it a few weeks earlier. She was eager to be helpful and also suggested we spend a few more efforts on flu jabs. We politely declined.
Takeout kitchen. (Photo by @bitcoms)
On our return to the city, we grabbed some food at Street Kitchen, a lunch spot with a good selection of pan-Asian dishes. Being British, we washed it down with a cup of tea at Froth, a nearby coffee shop. After accepting Bitcoin for a couple of months, Froth now sees a small but steady stream of rate-paying customers most weeks.
So far so good: using only Bitcoin, we had secured ourselves good shelter, been well fed and watered, and even kept clean. It was now time to turn our attention to higher things.
Moving up Maslow’s hierarchy
Rex Motors. (Photo by @bitcoms)
Once they’ve sorted out the basic needs in life, what we Brits traditionally want next is a car. So we went out to Rex Motors, where after a few months bitcoin seems well embedded – they even have double prices on their website. They told us that they had already sold quite a few motors to locals who had chosen Rex simply because they accept Bitcoin. We particularly liked the look of their British prestige brands, but unfortunately a Jaguar or a Bentley was out of our planned budget for the trip.
Paying for perfectly drawn pints in Thirsty Pigeon. (Photo by @bitcoms)
Spitting feathers after the trip back, we repaired to the Thirsty Pigeon, a traditional British tipple where hearty bar girls pull perfect pints of cask-conditioned finest bitters. Traditional except for the fact that they take Bitcoin, of course. Just a few meters away, Bottle Monkey has a more progressive selection of beers for consumption on and off the premises. Their reasons for accepting Bitcoin remain unknown because “Chief Monkey” didn’t exist, but the genial “Squirrel Monkey” was on hand to sell us some excellent New England IPAs and stouts for satoshis.
Buying beer in Bottle Monkey. (Photo by @bitcoms)
At dinner time we not only got a warm welcome from the co-owner of pizza and pasta joint Monapoli – we got a wide-ranging discussion about Bitcoin and the future of money. They keep the bitcoin they take rather than convert it to pounds, as does next-day breakfast smoothie place Freshly Squeezed, where they’ve been taking bets for six months and quite a few bitcoiners come most days. This HODLing approach is a smart strategy—a passive, fee-saving, hassle-free cousin of corporate dollar-cost averaging.
Monopoly. (Photo by @bitcoms)
No matter where we went and no matter what payment solution we used, the Lightning Network was always rock-solid reliable. Every transaction worked the first time without a hitch, and almost instantly, at least as fast and as user-friendly as the usual bank-and-pay traditional financial methods us Brits tend to use when paying with fiat.
Why Are the Manx Embracing Bitcoin?
After a takeaway lunch from Timeout, it was clear that being a bitcoin tourist on this British island is a piece of cake. Little wonder: With dozens of merchants already accepting bets and a population of just 86,000, the island is far more hospitable to Bitcoiners than the mainland. But why is this?
Some Britons assume that the Isle of Man’s tax regime, which is more generous than in most of the UK, makes it easier or more attractive to accept Bitcoin. But this doesn’t really stand up to scrutiny – for example, merchants on the island still have to charge and account for VAT on transactions just as they do on the UK mainland. Others think it must be a downfall of a local government scheme, but it is not: while the Manx authorities are generally positive about technology and innovation, and may well see Bitcoin as part of it, there is no specific initiative in place. Others suggest it has something to do with laxer local banking regulations, which must be more receptive to bitcoin businesses. But this doesn’t hold water either: while most merchants we spoke to use local Bitcoin exchange Coincorner and its innovative Bolt tap-and-pay Lightning card, this doesn’t appear to be significantly different from mainland merchants using the same Coincorner services.
Based on our conversations, the biggest driver of Bitcoin adoption has been the open entrepreneurial spirit of Manx merchants and their willingness to shape their own financial future. A decent concentration of local Bitcoiners can help. Additionally, the continued enthusiasm and hard work of the Coincorner team to educate and bring on board local merchants has clearly played an important role. But the result is now a grass roots, bottom up Bitcoin community, boots from nothing. As such, what the Manx build here looks authentic and durable. Sure, it’s early days and there are some gaps – an orange B in a grocer’s window or on the side of a bus would be a welcome addition. But the fact is that Bitcoin is now firmly established as a working medium of exchange in a vibrant part of the world’s sixth largest economy.
What could this mean for the rest of the UK?
The Isle of Man may look traditional, but mainland Britain is more stuck in the monetary past. (Photo by @bitcoms)
The Manx Bitcoin community may be small, but the island is already one of the leading places in Europe to trade satoshis. And there are no legal or practical obstacles to similar levels of penetration on the UK mainland. In fact, Bitcoin companies like Coincorner and organizations like Bridge2Bitcoin are already working towards just that, putting in the hard yards on the ground to build mainland retail adoption. Just like in the Isle of Man, the same compelling case for merchants across the UK – the opportunity for additional Bitcoiner business; lower transaction fees compared to TradFi payment cards; and instant final settlement, not days or weeks later as with most TradFi providers.
But it’s not just merchants who can benefit from adopting Bitcoin. With the value of sterling falling faster than at any time in the last half century, every Briton should consider the benefits of spending hard money that inflation won’t steal.
When the Queen’s portrait first appeared on decimalized pound notes in the early 1970s, a pint of beer cost 13 pence. In January 2016, when Lightning Labs was founded to develop Bitcoin’s instant payment network, a pint had risen to £3.48, or about one-hundredth of a Bitcoin. Just six years of mostly so-called low inflation later, that pint is already a fifth more expensive in pounds but fifty times cheaper in satoshis.
There are no guarantees, but looking at the pound’s woeful past and current performance, the pound in your pocket looks like a poor bet. Over time, banking on Bitcoin – at least to some extent – is a much more promising proposition. For both UK merchants and their customers, introducing Bitcoin to everyday transactions will do wonders for such a transition.
The Isle of Man is already showing the rest of the UK the way to such an economic future. Can UK mainlanders keep up with the times too, or will they remain stuck in the monetary past?
This is a guest post by Bitcoms. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
