SCOTCOIN – Scotland’s own ethical digital currency – is preparing for its public listing next year, becoming part of a global cryptocurrency network worth in the region of $3 trillion.

Cryptocurrencies have been around from the late noughties – with the first transaction using Bitcoin in 2010 when a Florida man used it to buy two takeaway pizzas – and Scotcoin itself was established in 2013.

Although their use is becoming more widespread, levels of understanding can vary dramatically.

In its simplest form, a cryptocurrency, known as crypto, is a way to buy goods and services, or trade for a profit. Its name comes from cryptography, which scrambles the contents of a file, which can then only be read by people with the knowledge to decrypt or unscramble them.

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This process is a vital part of blockchain technology – a digital ledger of transactions duplicated and distributed across the network that is on the chain – a decentralised, open source system managed by multiple parties using what is known as Distributed Ledger Technology (DLT).

Scotcoin director Temple Melville said there are many ways the crypto can be used: “If you decide to try selling something for £100, and you say, ‘I’ll do a discount and sell it for £80’, you’ve lost £20 and you’re not going to get that back. If instead you say, ‘I’ll take £20 worth of Scotcoin plus £80 of cash’, you haven’t lost £20, you’ve got £20 of Scotcoin, and you know you’ve got something tangible in exchange, which is always good.”

Scotcoin is already being used in the Arlington Bar in Glasgow and the Scottish Design Exchange (SDX), and one of the advantages of buying Stone of Destiny lager in the bar, or arts and crafts materials at SDX, with crypto is there are no transaction fees.

Melville said that was one attraction of Scotcoin, a community interest company (CIC), along with its ethical stance, which has seen it use the currency to buy clothes which were to be incinerated, delivering them to a charity instead.

“There’s all kinds of people who need help in Scotland, there’s no question about that,” he said.

“And we’re open to work with anybody. There are always people who are looking to, for lack of a better expression, dispose of over-produced goods and so on.”

Melville said Scotcoin had been on quite a long journey and now had around 4000 users, but added that the virtual currencies would not take over from cash: “They’re going to be complimentary. There’s always going to be dollars, there’s always going to be pounds, but at the same time, there is always going to be some form of cryptocurrency, and I think that’s a huge sea change.”

With COP26 in Glasgow raising awareness of environmental issues, there have been concerns about the amount of electricity used by the countless computers that mine for Bitcoin.

China was the biggest polluter from these activities, but many such operations have now moved to the US where, said Melville, more than 70% of the Bitcoin mining is powered by renewables.

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He said the Etherium platform, which Scotcoin uses, is also focusing on a green future. “So that focus is changing slightly,” he added.

“Etherium is still what’s called Proof of Work, which is what Bitcoin is, but it’s slowly but surely changing itself into what’s called Proof of Stake, which doesn’t require the same energy consumption.

“I don’t know whether this was a throwaway line, but … in a few years’ time, this entire blockchain network will be run on the amount of electricity that half a dozen tumble dryers takes. So that’s one of the reasons why we went with Etherium – what they call the main net.

“We’ve been working on this for some years, and that was one of the decisions we took because we knew this was coming – that it would be a good thing to be involved with a more eco-friendly set-up.”