Man pays for half of $84,000 car with cryptocurrency ethereum
Singaporean pays for half of $84,000 Honda Vezel with cryptocurrency that he has been investing in
In a first-of-its kind transaction in Singapore yesterday, business development manager David Lau used cryptocurrency to pay for half of the cost of a new car.
The 27-year-old bought a Honda Vezel for $84,000, using $10,000 worth of ethereum - a cryptocurrency he has been investing in for about two years - to pay the deposit for the crossover car.
He will be paying another $32,000 worth of ethereum in the next three weeks, and financing 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 speculation-driven demand, making it volatile and unpredictable.
Speaking to The New Paper yesterday, Mr Lau said he has about $50,000 worth of cryptocurrency.
He started with $500 in 2017, and invested more over time.
"I was riding on the hype and saw it grow," he said.
"I'm buying this car for my father, and it's a good way to let go of these assets."
Mr Lau bought the car from MHG Cars, a dealership that started operations on Dec 18.
Company director Lydia Ang, 35, said it is the only dealership in Singapore to accept cryptocurrency payments. She said: "It might be a niche market now, but I believe this is going to be a major thing in the future."
Ms Ang added that using cryptocurrency cuts down on transaction fees. Credit card transaction fees are about 3 per cent, while the transaction fee for cryptocurrency is about 1 per cent.
She said: "This lowers the cost for us and provides customers more options for payment."
MHG Cars has partnered with Bizkey, a blockchain-based payment solution that acts as a middle-man, collecting cryptocurrency from consumers and dispensing cash to partners.
Bizkey, which has interests in countries including China, trades in cryptocurrency.
While Mr Lau's use of cryptocurrency in the transaction with MHG Cars is currently not regulated by the authorities, the proposed Payment Services Bill, which is expected to be mentioned again in Parliament this year, could lead to the Monetary Authority of Singapore (MAS) imposing requirements on intermediaries that buy, sell or exchange payment-type digital tokens for other payment tokens or fiat currency, and vice versa.
MAS has previously issued several advisories on cryptocurrency, including a joint advisory with the Commercial Affairs Department, warning the public to act with extreme caution when engaging in such transactions.
The authority said cryptocurrencies are "very high risk" investments that can cause investors to lose all their capital.
Mr Chia Hock Lai, chairman of the Token Economy Association and president of the Singapore Fintech Association, said he was surprised to hear about Mr Lau's purchase.
"Transactions using cryptocurrency outside of investment are not common here, especially for such large amounts," he said. "It's sometimes used for purchases at cafes or eateries, but even then it's uncommon in Singapore."
There are less than a hundred merchants here who accept cryptocurrency as payment.
Mr Chia added that the volatility risk has to be taken into account when consumers and merchants use cryptocurrency.
He said: "I think such transactions are more of a one-off event and I don't expect it to become something commonplace."
For Mr Lau, buying the car was a matter of cashing out. He said he wanted to use his ethereum due to the state of the cryptocurrency market now.
"It's currently not so bullish, so I want to put my money into other investments," he said.