Speculative surge in bitcoin boosts Christchurch firm

Monday, 8 January 2018

In the trading room of electronic currency trader Cryptopia with co-founder Adam Clark ,left, developer Tom Blomfield, and Adam Lyness business development manager.

Christchurch computer currency trading firm Cryptopia is riding the wave of bitcoin mania and has become one of the most widely used cryptocurrency exchanges.

Business development manager Adam Lyness reels off a list of impressive statistics: 'Our trading volume is now $280 million day . . . we're making a million dollars a day . . . yesterday we had to close off new registrations after they hit 100,000.'

The offices of currency trader Cryptopia in Christchurch.

Cryptopia, which is ranked 20th out of 170 trading exchanges around the world, is based in unassuming offices in Christchurch's Montreal St, although it is likely to be moving to bigger premises.

There are about 25 people manning the screens during the day with a full staff of 50-odd to keep on top of different shifts and ancillary work.

* Investing in bitcoin is indefensible

* What is bitcoin, and what can you use it for?**

Co-founder Dave Sanders said the headline figures were impressive, but they were at a peak period of activity, and the income figure did not include the considerable costs involved. There was also the challenge of converting cryptocurrency into usable dollars in New Zealand.

But this did not detract from the business growth of the company and the employment it had created.

Lyness said Cryptopia's daily internet traffic was exceeding that of Trade Me and main news outlets

The staff are not the type who wear a tie and jacket to the office, but casual dress belies the amounts of money at stake.

Most traders were from the US and Australia as well as many countries with less efficient banking systems, and where it was often difficult to even open a bank account.

Lyness said the $280m trading volume would equate to that value if it was converted back to traditional currency.

'It's not just fluffy money. It's another way of transferring value electronically.'

One bitcoin is currently trading at a value of NZ$22,547, which compares with about $1200 just a year ago.

Co-founder Adam Clark acknowledged the surge in value was due to the huge influx in speculators, which was continuing – this week at least.

'People are starting to realise it's not going away.'

Lyness said cryptocurrencies like bitcoin were viewed largely as a value repository – like gold, albeit the metal has other practical and industrial uses too.

Cryptopia gleans its income from a trading fee equivalent to 40c in each $100 transaction.

Managing rapid expansion is the big challenge for Cryptopia, which uses the services of business coach Alan Booth.

He is an early adopter of technological change and will readily show the small scar on his arm where a microchip had been implanted containing his identification details.

'In the wider context it's not just about bitcoin or the blockchain technology that drives it. It's about the evolution of financial technology, just as we've developed promissory notes, eftpos, credit cards and direct banking,' Booth said.

Most of the 600 or so cryptocurrencies listed on coinmarketcap.com appear to have enjoyed a similar value rise like bitcoin, although bitcoin is the most well traded by a big margin.

Advocates for cryptocurrencies believe that over time it will be used more for ordinary retailing and business transactions as people realise its advantages and low fees.

Lyness said it had potential for complex transactions requiring ratification from third parties.

It could be used in peer to peer insurance schemes, and trading startup company shares.

Regulations required traders to provide identity when converting the currencies back to cash as part of anti-money laundering measures.

In the immediate term Cryptopia is in the market for more systems analysts as it gears up to cope with its unexpected growth.