There’s no virtual bandwagon to jump on just yet, but early adopters are beginning to accept digital alternative currency as payment in Maryland. And the list of those who are doing likewise appears to be growing.
Various forms of virtual currency exist, including Dogecoin and Litecoin, but the open source, software-based online payment system known as Bitcoin is the one that has established itself as the mainstream favorite among users.
Not surprisingly, many of Maryland’s cryptocurrency disciples are businesses that populate the data, communications and technology fields. However, a quick perusal of the www.coinmap.org web site, which publishes the locations of venues that accept Bitcoin, reveals that even some of the most basic retail operations, service providers and food and beverage establishments are giving it a go.
Aggregating data available online through Coinmap and Bitpages, there were no fewer than 28 businesses within the state accepting Bitcoin in December, to include bookstores, restaurants, automotive service centers, clothing and jewelry retailers, and photographers. The vast majority could be found in Baltimore and elsewhere within the Baltimore-Washington Corridor.
“The biggest [advantage] for consumers is consumer protection,” said Brent Hoffman, COO of Baltimore-based Bitsie, a business focused on promoting Bitcoin’s adoption by more retailers. “Target gets hacked, and [hackers] take all your credit card information; that would never happen with Bitcoin.”
In a nutshell, Bitcoins are nothing more than ones and zeroes that exist in an online register, basically a shared public ledger that records transactions, which remain anonymous and carry no personally identifiable information.
A computer process based on solving complicated mathematical problems, called mining, is used to verify Bitcoin transactions and increase transaction security. The reward for solving these problems is a transaction fee for the miner and the release of newly created Bitcoins. Even so, the easiest way to acquire Bitcoins is to simply purchase them from a Bitcoin exchange.
The total number of Bitcoins was arbitrarily set at 21 million, with more than 13.5 million having been created to date. Once coin generation ends — currently estimated to be sometime around the year 2140 — transaction fees alone are expected to sustain the Bitcoin network.
According to Bitsie CEO Joshua Riddle, Bitcoin has been ruled a property by the Internal Revenue Service. “If you buy it and wait a year, you’re obviously going to have to pay taxes on capital gains, if there are any.”
As of Dec. 21 the exchange rate was $321.21 for one Bitcoin. The rate peaked at $1,240 one year ago, but also dropped to as low as $13 in early 2013. Value fluctuates widely, in part because demand fluctuates just as widely, and will likely continue to do so until more widespread acceptance begins imparting some stability.
Savant Garde Retailer
One needs look no further than The Mall in Columbia or Arundel Mills to find a retailer that accepts Bitcoin. North Carolina-based Reeds Jewelers is one of the principal advocates of the cryptocurrency’s acceptance.
“The jewelry industry has always been antiquated when it comes to technology,” said Mitch Cahn, director of marketing and business development for Reeds. “But we differentiated ourselves by being one of the first jewelers to have an online retail site through our tie-in with Amazon, and we’ve been fairly aggressive with Bitcoin now, as well.”
Reeds partnered with Coinbase, a San Francisco-based Bitcoin wallet and exchange service platform that enables purchases using Bitcoin, and rolled out the technology to begin accepting Bitcoin in all of its stores and online in June 2014.
“The only challenge was educating our staff to begin using it,” Cahn said. “We were convinced that it would take some time before we registered a Bitcoin sale, and were very surprised to see that first sale take place in Atlanta on the same day we launched the service.”
Since, Reeds’ Bitcoin-based sales have arrived with steady frequency. Although he won’t say just how frequent, “It’s steady enough that we notice it and comment on it at staff meetings, and those sales have remained strong through the holidays,” Cahn said.
Reeds does not hold on to its Bitcoins, but cashes them out immediately to avoid potential monetary loss through fluctuating exchange rates.
“We wouldn’t have gone forward if we considered it a huge risk, and we’re glad we did it,” Cahn said. “It’s another way we can accommodate our customers who want to use it. We see a future in it as the concept of [virtual currency] evolves.”
Pouncing on Sales
Bitcoin purchases can be made from other major retailers in a roundabout way by taking a picture of the desired item in certain circular advertising fliers using the Pounce smartphone application, which results in an order for delivery being placed on that retailer’s web site.
Avital Yachin, founder and former CEO of Tel Aviv-based Pounce and CPO at virtual search company Slyce of Toronto, said the app supports Coinbase wallets.
In this case, “Coinbase charges the user with Bitcoins, then converts them to dollars … to complete the order with the retailer,” he said.
Retailers supported by the application include Lord & Taylor, Hudson’s Bay, Macy’s, Ace Hardware, Target, Toys ‘R’ Us, Babies ‘R’ Us, Staples and Best Buy.
“The app can also be used in stores,” Yachin said, with the transaction taking place through the retailer’s web site, not through the point of sale (POS) system. “We have plans to enable additional shipping methods, such as store pickup; however we don’t plan to integrate into the stores’ POS systems anytime soon.”
A sampling of the early Bitcoin adopters in Maryland listed on Coinmap suggests its potential: Bonanza Coins and Professional Car Repairs, both of Silver Spring, accept it, as do Kochfoto Photography in Bethesda, Mark Lovett Web Design in Gaithersburg, Mama Rosa Rotisserie & Grill in Middle River, Atomic Books and Bad Decisions bar, both in Baltimore, and Bungalow Seven, a boutique in Ocean City.
In Laurel, the Law Offices of Bascietto & Bregman have also decided to accept Bitcoin as payment for their services, which cover criminal defense, DUI, tax law, personal injury, professional license defense and other areas.
“In short, we accept Bitcoin because it allows for anonymity, and that may be important for some of our clients, for some of their legal matters,” Attorney Brian Bregman said.
“There’s a lot of evidence that interest in Bitcoin is increasing, and it’s gaining wider acceptance,” said Bitsie CEO Joshua Riddle, citing Microsoft’s Dec. 11 announcement that it would begin allowing customers to trade in Bitcoins to fund accounts used to purchase content in the Windows Store, or in stores that house Xbox Games, Xbox Music or Xbox Video.
“The use of digital currencies such as Bitcoin, while not yet mainstream, is growing beyond the early enthusiasts,” said Microsoft Corporate Vice President of Universal Store Eric Lockard in the announcement. “We expect this growth to continue, and allowing people to use Bitcoin to purchase our products and services now allows us to be at the front edge of that trend.”
As big as that news is within the Bitcoin community, it still doesn’t constitute a tipping point in Riddle’s eyes.
“There’s still a lot to do before we see the wide acceptance that makes it commonplace,” he said.