Digital Currency Outfit Bitcoin-Central Makes Milestone Towards Becoming Like a Bank

Contrary to reporting this week (BBC), Bitcoin-Central did not gain the ability to act like an actual bank—but what they’ve gained is no less fundamental a milestone for a Bitcoin outfit.

By partnering with Aqoba, which is a payment services provider capable of dealing with insured accounts, Bitcoin-Central has gained the ability to offer Euro-based accounts to people who want to trade in Bitcoin exchange and helps protect their funds in the case of a collapse.

Essentially: Paymium, the company behind Bitcoin-Central has partnered with Aqoba, which is a registered PSP–this enabling Bitcoin-Central to hold money in payment accounts (which differ from bank accounts.) Although, it should be noted that this also means that Bitcoin-Central can associate accounts with debit-cards.

As an exchange, Bitcoin-Central has a lot of reasons to want to allow people to store currency in accounts alongside their Bitcoin wallets. This greatly increases the liquidity of exchange capability and reduces the number of fees needed to transfer currency between holdings and thus allows Bitcoin-Central to let customers hang onto more money each time they make an exchange.

It’s important to note that the protection for balances only extends to Euros held by Paymium (through Aqoba) but not Bitcoin balances. This is because Bitcoin isn’t a recognized federal currency under the law and therefore it’s a commodity and not a currency; as a result, the protection only extends to the Euro-accounts. For this milestone, it need not extend to the Bitcoin accounts, simply having safe-haven currency accounts is more than enough to make a notable splash.

This capability is a significant step for an exchange and the BBC article quotes Vitalik Buterin, technical editor of Bitcoin magazine.

“The more we see governments and banks being willing to deal with Bitcoin, the more comfortable a lot of organisations are going to be making the step forward themselves,” he said.

Bitcoin still growing up, but this is a giant leap towards broader acceptance

Over the past year, the Bitcoin economy has been growing into numerous sectors. We’ve seen the rise and fall of exchanges, we’ve seen growing pains, crashes, and even several heists—an instability that doesn’t look good to potential retailers and investors. The financial industry itself thrives on reputation and stability and outfits such as banks, credit card companies, and the like hold customers because they believe they can trust the mechanisms that exchange their money.

By partnering with Aqoba, Bitcoin-Central have put themselves much closer to showing the sort of stability that retailers and services providers want. In fact, with insured money-accounts they can act a lot more like Paypal does and enable people to accept and exchange Bitcoins rapidly with less concerned about fluctuating prices or current valuation; furthermore their earnings will be protected while they wait to withdraw them.

If we see more exchanges similar to Bitcoin-Central take this step–combined with the APIs and financial services that court retailers and service providers—it’s very likely that more groups will start accepting Bitcoin as a form of payment and that will no doubt be a watershed event for the cryptocurrency.

About Kyt Dotson

Technology and civilization walk hand in hand and civilization is nothing without the skin of society, brushing up against itself, speaking strange nothings across dimly lit avenues and computer screens. If we're going to understand ourselves in this digital era, it will be through watching the adoption of technology by people to express themselves as people. I am an anthropologist and an author of science fiction and fantasy--and with my technology, I hope to open up new and exciting worlds that will not just enlighten the humanity of my friends and fans but also educate and enhance the expression of their own personhood. Find more of my work on Google+; send tips to @kytsune.