The organizers of a large-scale project to make bitcoin available over the counter at thousands of Taiwanese convenience stores have spoken about the efforts it took to bring their plan to fruition.
The main hurdles were overcoming lack of knowledge about bitcoin and local regulatory fears among mainstream businesses, according to local exchange BitoEX.
Despite these, the company still managed to launch a fully operational bitcoin-purchasing service in October, with a rollout to 2,980 Family Mart stores. It then expanded to over 5,000 stores in total, with the addition of the OK MART and Hi-Life chains.
BitoEX anticipates the total number of stores could reach 12,000 by March this year, and told CoinDesk about plans to extend the service to other countries in Asia.
The company says it is funded by its founders’ own capital, along with input from angel investors, with a total of $2.5m raised so far.
Cautious approach
CEO Titan Cheng said his company had been through “quite a hard time” in its negotiations with its new partners, particularly concerning local regulation.
The firm began negotiations with Family Mart representatives shortly after it launched in May 2014.
“We spent at least three months discussing the regulation and taxation problems with them. After determining compliance with the laws and regulation in Taiwan, we formally signed contracts and started the cooperation.”
Although customers can pay for and receive bitcoins over the counter within a minute, under the deal, convenience stores will only return the fiat funds to BitoEX a week later.
“The more convenience stores in cooperation, the more working capital we need to prepare in order to cope with the huge number of transactions.”
This meant that BitoEX needed to partner with larger bitcoin exchanges in other countries for liquidity. Supplying the required quantities of bitcoins to Taiwan are international exchange OKCoin, and Hong Kong-based KBBEX.
How the service works
Using existing multi-service touchscreen kiosks located in the convenience stores, customers enter the amount of bitcoin they wish to buy in Taiwanese dollars (plus a roughly $0.75 service fee) and their mobile phone number.
The kiosks print a receipt for customers to take to the counter and pay with cash, while an SMS message is sent to the mobile number with a link to BitoEX’s website. Upon visiting the site, customers can specify a bitcoin address to receive the funds.
The system presupposes a degree of bitcoin knowledge and existing address to use, though is no more complex than receiving coins from a bitcoin ATM – and much less so than ATMs requiring ID-verified accounts.
Customer Jason Gatewood made the video below to demonstrate the bitcoin buying process:
Bitcoin in Taiwan
Despite the size of its population (23.4 million) and its GDP (20th in the world) Taiwan hasn’t appeared often on the bitcoin radar – at least, not in the retail sense.
Digital entertainment company Wayi announced in December 2013 it would become a bitcoin exchange and accept bitcoins at its online mall, though a year on there appears little if any mention of bitcoin on its main site.
In January, Taiwan’s Financial Supervisory Commission (FSC) threw a roadblock in front of bitcoin’s advance when it prevented one of the earliest rollouts of Robocoin bitcoin ATMs.
At the time, the FSC cited bitcoin’s lack of status as a legal currency to justify its action.
By May, however, there was at least one Lamassu one-way machine operating in Taipei.
“Taiwan is a country that attaches great importance to the interests of consumers,” Cheng said.
While there are still not many businesses accepting bitcoin in Taiwan so far – with most users seeing it as an investment – BitoEX plans to promote the use of digital currency by opening up its API and holding a hackathon to develop new use cases.
Liquidity partners
KBBEX CEO Patrick Lam said it had initially been a “great surprise” to hear that BitoEX had been successful in penetrating the convenience store space.
Realizing the two companies had a common goal to promote bitcoin development, he communicated with Cheng and negotiated the two companies’ cooperation.
KBBEX began trading bitcoins over-the-counter about a year and a half ago, and launched its main exchange platform in December after receiving $1.5m from a private equity fund a few months earlier.
The exchange serves clients primarily in Taiwan, Hong Kong and Macau, plus other Asian countries. English and Simplified Chinese versions of its site will launch this month, and services will extend to mainland China in the first quarter of the year.
OKCoin, the more established exchange, is one of the world’s busiest in both USD and CNY (yuan) volumes. Its Chinese operation, OKCoin.cn, is headquartered in Beijing and its international arm, OKCoin.com, is registered in Singapore.
The company now operates a multitude of bitcoin exchange services for amateurs and professionals, including margin trading, futures, mobile apps and now P2P lending to earn interest. Notably, it passed a cryptographic audit of its bitcoin reserves last August.
Taiwan street image via Shutterstock