Bitcoin shows staying power as retailers chase
digital sparkle
Bitcoin is catching on at US online
merchants including Overstock.com and Expedia, as customer’s use the digital
currency that just a few years ago was virtually unknown but is now showing
some staying power.
Though sales paid for in bitcoin so
far at vendors interviewed for this article have been a fraction of 1pc, they
expect that the online currency will one day be as ubiquitous as the internet.
"Bitcoin isn't going anywhere.
It's here to stay," said Michael Gulmann, vice president of global
products at Expedia, the largest online travel agent.
"We want to be there from the beginning." Expedia started accepting
bitcoin payments for hotel bookings on July 11.
Until recently a niche alternative
currency touted by a fervent group of followers, bitcoin has evolved into a
software-based payment online system. Bitcoins are stored in a wallet with a
unique identification number and companies like Coinbase and Blockchain hold
the currency for the user.
When buying an item from a
merchant's website, a customer simply clicks on the bitcoin option and a pop-in
window appears where he can type in his wallet ID number.
Still, broad-based adoption of
bitcoin is at least five years away because most consumers prefer credit cards,
analysts said.
"Bitcoin is a new way of making
payments, but it's not solving a problem that's broken," said George Peabody, payments consultant at Glenbrook
Partners in Menlo Park, California. "Retail payments aren't
broken."
There are also worries about
bitcoin's volatility. Its price in US dollars changes every day. That risk is
borne by the consumer and the bitcoin payment processor, such as Coinbase or
Bitpay, not the retailer.
"We don't have to deal with the
actual holding of the bitcoin - it's the payment processor that takes the
currency risk for us," said Bernie Han, chief operating officer at Dish Network in the US. "That's what makes
it appealing for us and I guess for other merchants as well."
Dish, with about $14bn (€10.6bn) in
annual sales, started accepting bitcoins in mid-August. Payment processors do
some form of hedging though, said Gil Luria, a financial technology analyst at
Wedbush Securities. These entities would, for instance, sell bitcoins in the
market to offset the ones they have processed and in their books, so they're
not left with much exposure, Mr Luria said.
The only risk for the retailer is if
the counterparty, or payment processor, doesn't fulfill its obligation.
"Coinbase and Bitpay are now
well-funded and they have put a lot of resources behind security," Mr
Luria said. "You can consider them as secure counterparties, as opposed to
a year ago, when they were very small." (Reuters)
Irish Independent
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