London: 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
retailers are accepting Bitcoin as consumers
increasingly buy into the money, pushing up its
value. In the past month, the number of businesses
on CoinMap, a website showing physical companies and
vendors accepting Bitcoin, has tripled to more than
2,000.
“People come to us from all over the world because
we accept Bitcoin,”
Vesna Sic, co-owner of the Lekkerurlaub
guest house in Berlin, said by phone. We had one man
from Texas who has nowhere at home where he can
spend his Bitcoins, so he came to Berlin for a week
to spend them.
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. Now the virtual currency can buy
olive oil in Spain or vodka shots in Moscow as
consumers seek ways to spend the digital money.
“Our news inbox has gone crazy over the last couple
of months with more and more vendors saying they are
accepting Bitcoins,” said
Jeremy Bonney, a project manager at
CoinDesk, a website that tracks the progress of the
virtual currency.
Cryptocurrency
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. While a handful of
companies have minted physical Bitcoins with a code
that can be scanned to link them to the digital
version, they’re rarely used for everyday purchases
since they’re worth hundreds of dollars apiece. On
27 December, a Bitcoin fetched $742, according to
the CoinDesk Bitcoin price index.
There are 26 physical retailers in London that
accept Bitcoin and about 160 in Britain, according
to CoinMap. “Government and banking restrictions
prevent UK retailers from adopting Bitcoins on a
larger scale,” said
Chris Skinner, director of the Financial
Services Club and head of
Balatro Ltd, a research firm in London.
While there are few limitations on individuals
buying and selling, lenders may close the accounts
of businesses conducting many transfers with the
electronic currency.
Drug running
“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,” 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 13 December that users
risk theft and lack protection from losses if their
virtual exchange collapses.
Bitcoin’s value has been known to lose or gain more
than a quarter of its value in a single day. A
decision by China’s central bank to bar financial
institutions from handling transactions of the
currency earlier this month sent the value tumbling.
Today the exchange rate is a third of what it was
last week, London street vendor
Tom Reaney said on 11 December. 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?
Burger bear
Late last month, Reaney’s Burger Bear became
London’s first street food vendor to accept Bitcoin.
Within three weeks about 50 customers had used the
currency, paying him by making a transfer with their
smartphones.
“I wasn’t expecting all the fuss when I said I would
accept Bitcoin, but a lot of people have jumped on
it,” Reaney said. “People are desperate to spend
their coins on something rather than just online
transactions.”
Reaney often parks his van near the so-called
Silicon Roundabout, an area of East London with many
tech startups. He decided to start accepting Bitcoin
after noticing that customers were users.
“One of his first virtual-currency clients,” Web
developer
Ryan Holder, said he bought his first
Bitcoins in April and has since seen them more than
quadruple in value.
Food search
“I wanted to start moving a larger and larger
proportion of my free cash every month into
Bitcoin,” Holder said. “That was what 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?”
Holder bought many Christmas presents at online
Bitcoin stores this year, including a
remote-controlled quadcopter for his son.
Stephen Early, the owner of the Pembury
Tavern, the first London pub to accept Bitcoin for
beer, says it’s an attractive form of payment for
small retailers because, unlike credit cards, it has
no transaction fees and payments can be processed in
less than a minute.
“I was fed up with the credit card process so it’s
been nice to use Bitcoin,” 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.” Bloomberg