Christchurch company launches new digital currency
Christchurch company Cryptopia has launched a new computer-based currency called NZed, similar to Bitcoin but pegged to the value of the New Zealand dollar.
Cryptopia business development manager Adam Lyness said the idea arose from the Techweek blockchain conference.
It adds to the many alternative currencies traded on Cryptopia's currency exchange.
Real companies are using the computer currencies including Pyramid Valley Wines in North Canterbury.
Co-owner of Pyyramid Wines, Claudia Weersing, began accepting Bitcoin from wine purchasers three years ago, mainly from her client base.
She said it was one of the most fascinating things she had been involved in and it was now possible to book a helicopter trip in Queenstown or an airline flight though some agencies using them.
"They're not a real coin, they're a computer encryption you buy and load onto an electronic wallet on your cellphone and you can use it to buy things like any currency."
Weersing said there were huge benefits when doing business overseas. For example, conducting a sale with some east European countries could attract massive fees though traditional banking but just a few cents using digital or cryptocurrencies.
There were mechanisms to ensure her company was protected from the volatility of Bitcoin so that a $40m bottle of wine would always return that value.
She said there were some similarities with trading in gold or silver.
Meanwhile, Cryptopia's Lyness said the benefits of trading in Bitcoin or other cryptocurrencies was the anonymity, security and minimal transaction fees compared with banks and visa card charges.
"They may afford opportunities for money launderers but they also allow people in impoverished areas where there are authoritarian regimes to trade."
Cryptopia is based in central Christchurch and was founded by Adam Clark and Rob Dawson about two and a half years ago.
They have built up a community of 65,000 users and trades of up to $1 million in the value of cryptocurrency daily. They make money by charging a small fee for each trade.
Like many new fledgling business sectors, trading in the alternative computer-based currencies is highly speculative - for example a Bitcoin is currently worth $2630 New Zealand dollars or twice as much two years ago.
That was why Cryptopia had pegged the value of the NZed to traditional New Zealand currency, he said.
Digital currencies also appeal to many people because they not controlled by individual governments, he said.
They are traded on blockchain technology which involves many interlinked computers, keeping a history of transactions and therefore arguably less prone to errors and falsification than traditional centralised databases.
There were more than 400 cryptocurrencies, Lyness said.
Within a few hours of creating NZed it had attracted purchase orders worth $40,000, he said.
Cryptopia chief executive Dawson said total tokens available are limited to $100,000, an amount Cryptopia can back from retained funds.
"While that's not enough liquidity to allow widespread adoption, it gets the ball rolling with a challenge to government, and to broader industry that blockchain technologies and cryptocurrencies are here to stay.
"Right now, we can only accept cash deposits for tokens from overseas clients, although pending regulatory confirmation we expect to be able to offer the full service to kiwis shortly."
"Historically, New Zealand has led the world in financial innovation, for instance with the world first introduction of EftPos in the 1990's," he said.
Speakers at the recent Techweek blockchain conference included Vitalik Buterin who has created the Ethereum cryptocurrency.