Credit: Jack Torcello on Flickr
As the world’s most controversial currency opens its first ATM in London, Katie Marston asks if Bitcoin is the answer to small business prayers
Sitting in a co-operative working space minutes from Spitalfields market, Justina Cruickshank is every inch the Silicon Roundabout entrepreneur. She has been running her pop-up beer bar since 2012, but only saw the benefits of Bitcoin at the beginning of February 2014. In many eyes, that makes her a pioneer.
She admits that marketing for the Craft Beer Social Club has not been hurt by the added publicity, but says the advantages of taking Bitcoin over sterling run deep.
“Every Bitcoin payment that I’ve taken I’ve saved money because of the processing fees,” she told The Hackney Post.
It’s a statement made without a hint of hesitation. She speculates that 8 per cent of revenue now goes through the virtual currency. It is estimated that around 2.5 million people around the world own some amount of Bitcoin.
“Why didn’t I do this before?” she asks. Unlike credit cards, which charge people to claim money back if someone uses a stolen card or says they didn’t receive a service or product, there is no cost to do this with Bitcoin. With credit cards, Cruickshank says: “even if it is a fraud case the merchant ends up paying the money back. It’s just taken. If you’re a small business and suddenly a thousand pounds is taken out of your account that’s a lot of money.”
The benefits do not end there. “It’s ridiculously easy – it took two seconds to apply to get a payment processor. The processing costs are pretty much nil.”
“If you take Bitcoin payment through a wallet you don’t pay any fees. If you use a processor you pay either one per cent or a monthly fee, which if you’re doing a lot amounts to virtually nothing. With a credit card it can amount to three or four per cent.” Payment processors guarantee the ‘real world’ value of Bitcoin at the moment it’s received – digital wallets store the Bitcoins, which then fluctuate in value. Transactions are made by scanning Quick Response bar codes on smartphones.
“It brings up so many different issues – social, socio-political, economic,” says Ms Cruickshank. “You end up talking about the value of currencies in terms of what they are, what money is and why do we do things the way we do. When it comes to money we just accept it.”
But Bitcoin’s recent headlines have provided a much more sceptical view. From virtual heists to plummeting currency valuations, type “Bitcoin” into Google and the first suggested search is for “crash” – not a good sign for any currency. Then type “Bitcoin crash” and you have several dates to choose from – 2011, 2013, 2014 or, more ominously, “coming”.
A few weeks ago, hackers got into Bitcoin accounts and stole hundreds of thousands of pounds worth of the currency.
Newsweek ran its first issue of its relaunched print edition with the front page claiming to have found the creator of the currency, Mr Satoshi Nakamoto. He recently made a statement denying the claims, but Newsweek stand by their report. Just this week, Bitcoin has launched another ATM in Boston, USA.
Other cities host events such as Amsterdam’s Bitcoin Boulevard, when traders on one stretch will all accept Bitcoin. Will London ever see general acceptance of the currency? Ms Cruickshank is unsure, but says that the more people who use it, the more stable it will become.
There are some issues to work out. The owner of CoinPunk, a Bitcoin wallet that managed to work around Apple’s Bitcoin wallet ban, tried to buy a drink using the currency last month, camera team in tow. “They’d been bigging him up,” she explains, “then he came to pay but couldn’t.”
It’s a virtual currency which is still affected by very real-life issues.
@KatieVMarston