Mon April 7, 2014
Bitcoin Accepted Here: Vermont Businesses Adopting Cryptocurrency
Sitting under harsh fluorescent lights in a windowless room, Geoff Golder and Doug Smith are talking about money. The hum of a server fills the empty space around them, the shelves along the walls room are stocked with spare computer components and an impressive stockpile of vintage Super Nintendo games. The smell of solder hangs in the air.
But Golder and Smith aren’t there for vintage games, or anything that physically exists, for that matter. They’re at Laboratory B, a makerspace in Burlington, to talk about cryptocurrency. Bitcoin, the most well-known cryptocurrency, has made headlines for its dramatic swings in value and innovative economic model. It also has a growing foothold among local enthusiasts and Burlington’s business community.
Golder says this is an exciting time for Bitcoin.
“Three years ago, it was all theoretical,” he says. “It was like ‘Oh you could do this, you could do this, but you can’t do it until there’s exchanges everywhere.’ But now there are exchanges almost everywhere, and because of that, these ideas that were just theoretical are now coming into practice.”
Case in point: Blu-Bin, Burlington’s first and only 3D printing shop. The company recently set itself up to accept payments in Bitcoin. Blu-Bin follows Folino’s, a pizza shop in Shelburne, where an enthusiast employee has set up the business to take Bitcoin payments.
Dan Riley, the founder of Blu-Bin, speaking over the whine of the shops 3D printers, said that for his company, Bitcoin isn’t all that different from their normal transactions.
“Most of our purchases are through Square or with a credit card – it’s just bits, it’s just digits somewhere being transferred to us in a currency, so with Bitcoin it seemed kind of natural,” he said. “People are out there, they’re enthusiastic about trying this new technology, and that’s one of the things we do. We bring new technology to lots of people, so we thought it was a natural fit.”
Introduced in 2009, Bitcoin is the trendsetter for other popular cryptocurrencies such as dogecoin and litecoin. The currency derives its security and validity not from an agency like the U.S. Treasury but from math. Each transaction conducted becomes part of a “block chain,” essentially a long sequence of encrypted math problems that are solved – thus validating the transaction – by the collective computing power of the computers of hundreds of thousands of enthusiasts. The blockchain then generates a small, newly “minted” reward (more bitcoin) for the users whose computers performed the validation. Protections against rapid inflation and abuse are hard-coded into the currency itself.
But for most users of the currency, Golder hopes it will simply be enough to know that it’s safe and easy to use. He and Smith equate the broad adoption to that of electronic mail.
“I don’t see any way that cryptocurrency will not have S-curve adoption in the same way electricity and email and refrigeration [did],” Golder said. “All are just such good ideas and so useful that it’s inevitable.”
And just like email and refrigeration, he thinks it’s possible for people to trust and use something without fully understanding what’s happening behind the scenes.
“I think when people don’t have to understand Bitcoin and can use it safely, that’s the magic,” Golder says. “That’s when adoption will break out of the enthusiast crowd and into the general world.”
The concept isn’t hard to understand, Golder says, when you strip away the confusion generated by cryptocurrency as a concept. Bitcoins are just property.
“It’s exactly the same as if you bought gold coins and then sold gold coins, or if you bought gold coins and then traded gold coins for a car or something,” he says.
Most businesses don’t take gold coins as payment though, so why should they start accepting Bitcoin?
Seth O’Brien works in IT at the University of Vermont and has been involved in Bitcoin for years. A bumper sticker on his car reads “Bitcoins accepted here.” He says the process of buying Bitcoins on an exchange and the lack of widespread information security practices are barriers to wide adoption, but neither is insurmountable. The ease of paying with Bitcoin is too attractive, in O’Brien’s mind, not to pursue.
“I think it’s easier to pull out a phone and pay for it there than to have to use a credit card and then deal with statements at the end of the month and budgeting and everything,” he says. “It’s easier to keep everything in one place. Ideally, I would like to pay for everything in Bitcoin if I could.”
For businesses, accepting Bitcoin is cheaper than taking credit cards. There is virtually no fee for the transaction itself, and a service that immediately converts Bitcoins to cash (which makes it easier to pay taxes on the income later, among other things) only charges a 1 percent fee.
At Blu-Bin, Daniel Riley says the company has already made its first Bitcoin sale. And O'Brien says there's more where that came from.
“All the Bitcoin enthusiasts are going to go there to spend Bitcoin just because they accept them even if they wouldn’t be buying [otherwise],” O’Brien says. “I know I plan on going down to Blu-Bin and getting something printed just to see how it works and support them with Bitcoin.”