Season-ticket holders at all of Scotland’s professional football clubs will be offered £100 in the cryptocurrency Scotcoin to spend at their club, elsewhere, or to hold on to as an investment.
There are 42 clubs in four senior divisions with an estimated combined season ticket holding of 250,000. So, if only one in 10 of them takes up the offer, the sterling value of the offer would be £2.5 million.
Celtic and Rangers, who faced each other yesterday, jointly have around 100,000 season-ticket holders, so a complete take-up would be the sterling equivalent of £10m.
Temple Melville is the chief executive of The Scotcoin Project, a community interest company, which is making the offer. He said: “The message to the dubious, or the suspicious, is that we are not asking for anything but, rather, giving away. And if you don’t wish to participate, then don’t.”
Anyone wanting to take up the offer will have to provide basic identity details, plus proof of owning a season ticket, as well as agreeing to abide by strict anti-money laundering regulations. The benefit for Scotcoin is the publicity, and an increase in distribution of the coin as well as capturing a large database.
The benefit for the clubs is that it’s a financial encouragement for fans to buy a season ticket, a club shirt or other items during a pandemic that is threatening to send many clubs to the wall. Also, if a club is discounting an item then the Scotcoins can make up the difference and give the club the market retail value.
Melville appreciates that trading in cryptocurrencies may be mystifying to clubs and fans. “We’ll see supporters or clubs through it,” he says. “If a club wants us to come in then we’ll set it all up for them.”
Neither supporters nor clubs will be charged.
Melville continued: “All clubs will be sent an email summarising the proposal and a representative will follow up and inform them of the level of supporter uptake and to find out whether the club wishes to take part in the programme.
“The idea is for clubs to take Scotcoins and give a discount, with the coins making up the discount.”
The coins (one Scotcoin is worth 10p at today’s prices) are bought and sold online digitally, similar to an online debit or credit-card transaction. Both parties – buyer and seller – hold the coins in wallets and the trade may, or may not, incur a small transaction fee, usually around 25p.
Banks are not involved and the exchange is done through a blockchain, the mechanics of which may be extremely complex, but the basic idea is simple: to decentralise the storage of data so that it can’t be owned, controlled or manipulated by anyone, be it a bank or an individual.
There is a huge daily trade in cryptocurrencies through specialist exchanges but it’s still the case that you can’t walk into Tesco or a high-street store and pay in digital coinage.
However, Melville cites Switzerland, where 70,000 businesses take the original cryptocurrency, the WIR. “If you buy a sofa in Switzerland,” he says, “then you can buy it in WIR. We’re not at that stage here, but it’s coming.”
The project is also encouraging businesses to accept Scotcoins and other cryptocurrencies. Those who already hold the coins are being offered four for each one as the project expands the number in circulation and migrates to a new blockchain – what Melville’s partner David Low has described as the “rock ’n’ roll version”.
Supporters who want to receive their free Scotcoins can fill in an application form at ScotcoinProject.com. Clubs have not yet been approached. Melville’s partner in Scotcoin, Low, orchestrated the takeover of Celtic in 1994, so it’s a fair bet that “Paradise”, or Celtic Park as it’s also known, will be an early port of call.
Paying cash for an item is cost-free, it’s a private transaction and there are no intermediaries – unlike with credit and bank cards or PayPal. For decades, since the dawn of the digital age, developers had been trying to replicate this simple transaction in cyberspace. The problem is that any sort of digital code, or even an email, photo or video, can be copied and pasted, replicated, and sent to hundreds of millions of people. Do this with money and it immediately loses its scarcity and therefore value.
Programmers and coders struggled with the problem of so-called “double-spending” – using a conduit, a middle man like a bank, at a cost – until the invention of Bitcoin. Enter, in 2008, Satoshi Nakamoto (although this could be a pseudonym). His genius was the invention of a new system of record-keeping – an enormous automated database, which verified transactions. The system of making these digital cash transactions possible is called the blockchain.
You don’t have to know how the blockchain works – I don’t know how an internal combustion engine works, just that it needs fuel – or how the internet works, only that it does.
This database was also public for all to see and is maintained, not by any one individual or corporation, but by computers across the Bitcoin network, in the same way that the internet works. But this time there were no Zuckerbergs to mine it for information and cash streams.
Bitcoin has now become a generic term for a host of cryptocurrencies, like Scotcoin. When it launched it was valueless – although there are stories of pizza restaurant owners who accepted Bitcoins almost as charity at the beginning to feed impoverished students who have since become multi-billionaires – but, despite the fluctuations at close of business on Friday, one Bitcoin is now worth just over $11,000.
In the early frontier days of Bitcoin it became the money of choice for black marketers and drug barons (the US Treasury holds most of the world’s digital coinage, seized from people like Pablo Escobar). Career criminals, at least at the outset, don’t have pools of venture capital, so the anonymous and unregulated Bitcoin was the payment of choice. It left no trace and didn’t carry taxes.
It was inevitable that the authorities would step in, if not to regulate it, then to at least ensure that those trading in it appeared to be observing money-laundering regulations, such as those laid down by the Financial Conduct Authority. A cynic might contrast this strictness with the ease of opening impenetrable bank accounts in Zurich, or the failure to properly regulate taxation in Jersey.
Bitcoin came of age following the 2007/08 financial crash and the bailing out of banks that were “too big to fail”, although it has seen volatility since (like Brexit influence on the pound).
The pandemic has been good for digital coinage. In March, when the world’s economy seemed to be going into freefall, with raging unemployment, furlough schemes and lockdowns, Bitcoin did suffer, dipping to below $5,000, but it rebounded quickly and five months on has outpaced every other major asset, trebling in value (gold, by contrast is up by one-third) and four times faster than the benchmark Dow Jones index.
“Bitcoin is currently realising its reputation as a form of digital gold,” Nigel Green, CEO of finance firm deVere Group said.
“Up until now, gold has been known as the ultimate safe-haven asset, but Bitcoin – which shares its key characteristics of being a store of value and scarcity – could potentially knock gold from its long-held position in the future as the world becomes evermore tech-driven,” he said.