Burgers to Beatles: Bitcoin gains currency offline in the real world
Tuesday 31 December 2013
What do a street-van burger, a wedding bouquet and a Beatles album have in common? They're all on a growing list of products shoppers can buy over the counter using the virtual currency Bitcoin.
From Berlin record store Long Player to the Flower Lab, a florist in Santa Monica, California, more and more retailers are accepting Bitcoins as consumers increasingly buy into the virtual money, pushing up its value. In the past month alone the number of businesses on CoinMap, a website showing physical companies and vendors accepting Bitcoins, has tripled to more than 2,000, including 160 in Britain.
Tom Reaney's Burger Bear recently became London's first street food vendor to accept Bitcoins – one of 26 physical retailers in London. Within three weeks 50 customers had used the currency, paying by making a transfer with their smartphones.
"I wasn't expecting all the fuss when I said I would accept Bitcoins, but a lot of people have jumped on it," Mr Reaney said. "People are desperate to spend their coins on something rather than just online transactions."
Mr Reaney often parks his van near so-called Silicon Roundabout, an area in east London with many tech start-ups. He decided to start accepting Bitcoins after noticing how many customers were users of them.
One of his first virtual currency clients, Ryan Holder, a web developer, said he bought his first Bitcoins in April and has since seen them more than quadruple in value.
"I wanted to start moving a larger and larger proportion of my free cash every month into Bitcoin," Mr Holder said. "That inspired me to search for some food that I could buy because it's all well and good having currency, but if you can't eat with the currency then you're in trouble really, aren't you?"
There are about 12.2 million Bitcoins in circulation, according to Bitcoincharts. While online payments for everything from university tuition fees to Gummi Bears aren't unusual, over-the-counter transactions are just beginning to become popular.
But Bitcoin exists as software and isn't controlled by any government or central bank. The cryptocurrency emerged in 2008, proposed by a programmer or group whose identity is unknown. Bitcoin has also been known to lose or gain more than a quarter of its value in a single day.
"It's a constant gamble unless you cash them in at the right time, but then where's the fun in cashing them in because then you don't have any coins?" says Mr Reaney.
Government and banking restrictions also prevent UK retailers from adopting Bitcoins on a larger scale, according to Chris Skinner, director of the Financial Services Club and head of the research firm Balatro. While there are few limitations on individuals buying and selling, lenders may close the accounts of businesses conducting many transfers with the electronic currency.
"Banks are running scared of money-laundering regulations and Bitcoin is primarily associated in the Government's mind with avoidance of tax and potentially fuelling and funding terrorism and drug-running," Mr Skinner said.
The European Banking Authority is weighing whether to regulate virtual currencies, a decision that could make or break wider-scale use by retailers. The banking regulator warned earlier this month that users risk theft and lack protection from losses if their virtual exchange collapses.
Stephen Early, the owner of the Pembury Tavern, the first London pub to accept Bitcoins for beer, says it's an attractive form of payment for small retailers because, unlike credit cards, it has no transaction fees. "I was fed up with the credit card process so it's been nice to use Bitcoin," Mr Early said. "But I'm not yet confident enough to put all my savings into it, even though if I had done so earlier this year I would now be very rich."
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