Bitcoin is to digital currencies what Facebook is to social media – the most well known, but one of many.
For the uninitiated, a digital currency, or ‘cryptocurrency’ is just like real money, only virtual. There is no central bank governing it, and its worth is subject to significant fluctuation. For example, at the time of writing one Bitcoin is currently trading at US$622.20 (AUD$690.80) – though reached highs of US$1124.76 late last year.
The usefulness of Bitcoin for online criminal activity has not gone unnoticed by the authorities, the tax office or indeed the media. As a result, in terms of getting involved with the currency, a certain level of skepticism abounds.
As far as Garry Pasfield, publican of the Old Fitzroy Hotel in Sydney’s Woolloomooloo is concerned, offering Bitcoin as a payment option for beer has been worth its weight in gold.
The Old Fitzroy launched the Bitcoin payment option in September last year, and since then Pasfield says the phone hasn’t stopped ringing.
“The first day that we traded, we traded a third of our turnover in Bitcoin. So that’s an indication of how popular it was. Now we would do a transaction almost every single day. Some days it can be 10 per cent of your trade, other days it could 1 per cent of your trade. But it’s just interesting that we do get people nearly every single day of the week and predominately they’re new trade.”
Using a platform called BitPOS, Pasfield settles the Bitcoin transactions each day, and converts the digital currency into Australian dollars.
“It’s as easy as using an Eftpos machine, and the settlements are easy. Dealing with the digital currency there’s a hell of a lot of fluctuation, and sometimes we win, sometimes we lose. And even if I’m ‘losing’ doing a transaction, I’m not really losing because I know they’re new customers,” Pasfield adds.
Lachlan McKnight, CEO and founder of online law firm LegalVision, is another small business to see value in Bitcoin.
“We were surprised to find that just a week after announcing we were the first law firm in Australia to offer payment by Bitcoin, we had a customer wanting to use the currency” McKnight says.
LegalVision had their first customer pay for legal services using Bitcoin in early February – paying 2.179 (BTC) for the documents, McKnight says both parties were pleased with the ease of the transaction.
Not everyone is convinced however. Adjunct Associate Professor at the University of Canberra, Nigel Phair – who also runs the Centre for Internet Safety – says the matter of the currency’s exchange volatility is a significant factor.
“This week it started off at around $1,000 per coin, it went down to $500, and now it’s back up to $600. If you’re providing goods and services and you’re trying to work out the bare-market price, well some days it could be profitable and other days it may not be,” Phair says. “The only benefit I can really see is as a real-time payment system. But once again you’ve got to go through an exchange process and get your money back in real dollars.”
Phair adds that there’s definitely a novelty factor in offering the payment option. “Look already a number of small businesses are accepting Bitcoin for small transactions, but put it this way, I wouldn’t be predicating my business survivability around it,” he says.