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In a first transaction of its kind in Singapore, the commercial development manager David Lau used cryptocurrency to pay half the cost of a new car.
The 27-year-old bought a Honda Vezel for $ 84,000, using $ 10,000 of ethereum – a cryptocurrency in which he invested for about two years – to pay the crossover car deposit.
He will pay an additional $ 32,000 in the next three weeks and will finance the remaining $ 42,000 with a bank loan.
Cryptocurrency is a digital currency that operates independently of a central bank. Its value is determined largely by the demand driven by speculation, making it volatile and unpredictable.
Speaking yesterday with The New Paper, Mr. Lau said he had about $ 50,000 of cryptocurrency.
He started with $ 500 in 2017 and invested more over time.
"I was riding the hype and I saw it grow," he said.
"I'm buying this car for my father, and it's a good way to let these resources go."
Mr. Lau purchased the car from MHG Cars, a dealership that started operations on December 18th.
The director of the company Lydia Ang, 35, said that she is the only concessionaire in Singapore to accept cryptocurrency payments. He said: "It could be a niche market now, but I think this will be an important thing in the future."
Ms Ang added that the use of cryptocurrency reduces transaction fees. The costs for credit card transactions are about 3%, while the transaction fee for the cryptocurrency is about 1%.
He said: "This reduces the cost for us and offers customers more payment options".
MHG Cars has partnered with Bizkey, a blockchain-based payment solution that acts as an intermediary, collects cryptocurrency from consumers and distributes money to partners.
Bizkey, which has interests in countries like China, trades in cryptocurrency.
While the lau's use of cryptocurrency in the transaction with MHG Cars is not currently regulated by the authorities, the bill on payment services, which should be mentioned again in Parliament this year, could lead to the impressive monetary authority of Singapore (MAS) requirements for intermediaries that purchase, sell or exchange payment type digital tokens for other payment tokens or fiat currency, and vice versa.
MAS has already issued several cryptocurrency advice, including joint advice with the Department of Commercial Affairs, warning the public to act with extreme caution when making such transactions.
The authorities said that cryptocurrencies are "very high risk" investments that can cause investors to lose all their capital.
Chia Hock Lai, president of the Token Economy Association and president of the Singapore Fintech Association, said he was surprised to hear Mr. Lau buy.
"Transactions using cryptocurrency outside of investments are not common here, especially for such large amounts," he said. "Sometimes it is used for purchases in cafes or restaurants, but even in Singapore it is rare".
There are less than a hundred merchants who accept cryptocurrency as payment.
Chia added that the risk of volatility must be taken into account when consumers and traders use cryptocurrency.
He said: "I think these transactions are more than a single event and I do not expect it to become something common".
For Mr. Lau, buying the car was a matter of cash. He said he wanted to use his ethereum because of the state of the cryptocurrency market now.
"At the moment it is not so bullish, so I want to invest my money in other investments," he said.
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