Despite warnings against the bitcoin virtual currency from financial regulators worldwide including the Bank of Thailand, some entrepreneurs, investors and users are prepared to take risks and jump on this new money-spinning bandwagon.
Central banks still remain wary of bitcoin, mainly because they cannot regulate it.
Steve Beauregard, chief executive of GoCoin Pte, a Singapore-based international payment enabling merchants to accept bitcoin and litecoin payments, said at the Asian Financial Service Congress 2014 the adoption of digital currency is gaining ground and it is the future of money in the global economy because existing currency systems have led to financial uncertainties such as US dollar volatility and hyperinflation.
Moreover, existing conventional online payment systems charge higher transaction fees compared with digital currencies including bitcoin.
Some 12 million bitcoins are believed to be in circulation, and every 10 minutes it can generate 25 bitcoins. The system is designed to generate under 21 million bitcoins, which explains why their value continues to increase.
The adoption of bitcoins would enable merchants to increase their business opportunities and reduce financial transaction fees from the current banking system.
For instance, the website tigerdaily.com received US$500,000 worth of orders in its first week after receiving bitcoins. Another online merchant, Millennus, which uses bitcoins in 5% of all orders, has not experienced any fraudulent trade, compared with 2.7% fraudulent trade conducted via existing online payment systems.
Mr Beauregard suggests the Bank of Thailand and other policymakers embrace this technological phenomenon through issuing licences for those involved with bitcoin as financial service providers.
Regulators can govern these service providers via existing policy mandates, particularly Anti-Money Laundering and Know Your Customer policies, which have become increasingly important on a global scale in order to prevent identity theft, financial fraud, money laundering and terrorist financing.
David Barnes, managing director of Bitcoin Co, a local virtual currency exchange in Bangkok, said the bitcoin market in Thailand remains miniscule, but there has been a slight increase in local people asking about using bitcoins to purchase computer games or web-hosting services, instead of using the virtual currency purely as a form of investment.
"Bitcoin has huge potential to revolutionise the financial industry and I think everyone should have a small portion of their portfolio held in bitcoins," said Mr Barnes.
But he admitted bitcoin is still exposed to a very high-risk investment grade and users should only invest money in bitcoin that they can afford to lose.
"The fact that bitcoin has frustrated regulatory policymakers is not important. Horse sellers were pretty unhappy about cars," said Daniel Garniron, a freelance stock trader who bought bitcoins back when their value was $20 for a single virtual coin and kept them until they reached $100.
This kind of technology actually makes things simpler, cheaper and more effective than the current banking system.
Using bitcoin is not as complicated as one might think. It can be rather easy and convenient, enabling users to make financial transactions in one minute compared to the traditional banking system that can take weeks plus hours of paperwork, not to mention huge transfer fees depending on the regulatory environment.
Despite its high volatility, the bitcoin is one of the less risky reserves of value that users can hold because its future adoption is obvious. Gold is highly manipulated as the Comex is working with fractional reserves, meaning there will be a crash if there is a bank run.
As a stock trader, Mr Garniron said he invests what he can afford to lose in bitcoin not only because it is safer, but also because people often make mistakes when they let their emotions affect their investment decisions.
Since virtual money is very difficult for authorities to control, its influence remains very small. "Policymakers should not try to fight against it, but embrace this innovative technology because bitcoin will bring prosperity to every country that is open enough to accept it, as it facilitates business and trade," said Mr Garniron.
Don Sambandaraksa, a technology writer who started mining bitcoins more as a hobby than to gain from an investment, said the idea of creating a virtual currency as a completely decentralised, peer-to-peer crypto-currency is gaining momentum among the technology community.
Before the financial crisis in Cyprus, a single bitcoin was worth around $40. In response to the collapse of Cypriot banks, the government had to impose stringent capital control measures on money being transferred out of Cyprus. Limits on ATM withdrawals were put in place and deposits above 100,000 euros were frozen.
Within a couple of weeks, the price of bitcoin doubled and this underlined its value in providing currency freedom in a world that is far from achieving a fully liberated status, said Mr Don.
The situation in Cyprus proved that even within a single-currency area, governments can still seize your bank deposits if they need to and impose restrictions on how that money can be transferred.
"This case inspired me. It has been a game of keeping up with new technology, new coins, new mining equipment and watching out for any financial crisis," he said. "Every time there's a financial crisis somewhere, whenever a central bank is running out of money, the price of bitcoin always shoots up or goes down."
He also acknowledges the bitcoin is much more volatile and risky currency. People normally complain if stocks go down 2% in a day, but a daily 20% fluctuation is common in the bitcoin world.
For other alternative new digital currency coins, users can easily double or halve their investments in a few days. This comes as a huge risk but is also an opportunity.
Mr Don said financial regulators would not embrace bitcoin as it is a threat to banks and credit card companies since bitcoin payments are almost free, borderless, instant and irreversible.
Bitcoin makes currency control impossible due to its decentralised, cryptographic mechanisms and this is precisely why all central banks, especially the Bank of Thailand, struggle so much as the baht currency is not freely convertible.
Other experiments with new coins such as Protoshares and Memory Coin have shown that it is possible for a coin to replace conventional means of trading in a stock market. This means that a centralised stock exchange is not needed as accounting and dividend disbursement is taken care of by the decentralised coin network itself.
He said bitcoin will change the world for the better and redistribute power away from bankers and toward the people. It is democracy in action as any change needs to be agreed on by more than 50% of its miners for the change to be accepted into the system.
"Bitcoin is the ultimate realisation of the self-sufficient economic principle. Its deflationary model — based on gold — means that saving is rewarded again whereas interest savings do not even cover inflation," said Mr Don.
A society using bitcoin would not be able to keep printing money and further increasing sovereign debt, and it would have to balance its accounting books, he added. This would make populist debt-fuelled political promises impossible.
Even the practice of war could only be justified if every citizen decides to fund it in advance, rather than through the traditional route of central government debt, said Mr Don.