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Early Adopters of Bitcoin Happy With Decision

Posted: January 16, 2014, 4:35 p.m. EDT


By Clay Jackson

Dogma Portraits, an online pet portraitist, and Vetco, a New Mexico animal hospital, are as different as pet businesses come. But these disparate businesses have one thing in common: They accept bitcoins.

First issued in 2009, bitcoin is the ballyhooed digital currency that is slowly making inroads in the retail arena. More than  12 million bitcoins were in worldwide circulation as of early January at a fluctuating value of about $800 each. While Vetco and Canada- based Dogma accept credit cards and other conventional forms of payment, they gladly take bitcoins despite questions about the cryptocurrency’s volatility and security.

Cindy Houghton, Vetco’s owner, made news in December when she started accepting bitcoins for veterinary services. BitPay, a bitcoin-processing company, reported that Vetco was the Atlanta company’s first and currently only veterinary customer to accept bitcoin payments.

Vetco marketing director Lauren MacEwen recalled approaching Houghton about becoming a bitcoin business and hearing her boss ask, "I wonder if any of our current clients are using bitcoins?”

Bitcoin
Cliff Blank was managing an art gallery in 2008 when he launched Dogma Portraits after being asked to do a dog-themed art show. Above, one of his works.

"Bitcoiners have pets, too, and there are fiscal advantages as well,” MacEwen told Houghton.

For example, the processing fees are lower. BitPay charges 1 percent of the transaction amount, with lower rates for higher volumes. Credit card companies, by comparison, may charge as much as 5 percent.

The turnaround is also fast. Funds may be deposited into a business’ account within one day.

The pet industry has only begun to dip its toe into the bitcoin pool. Out of its thousands of merchant customers, BitPay has only a handful, besides Vetco and Dogma, that could be described as pet-related.

The bitcoin industry shows no signs of abating anytime soon.

"BitPay currently has more than 16,000 merchants and adding more every day,” reported Stephanie Wargo, BitPay’s vice president of marketing.

The company processed more than $100 million worth of bitcoin transactions in 2013.

Besides a mixed bag of reportage, bitcoin has yet to catch on in the pet and veterinary industries for another reason: It is relatively unknown outside of tech circles.

"We haven’t heard from our members yet about bitcoin,” said Andrew Darmohraj, executive vice president and chief operating officer of the American Pet Products Association in Greenwich, Conn. "It is still such a new process, I think it will take some time before it catches on in the pet industry.”

Bitcoin holds promise, Darmohraj said, but he urged pet retailers to do their homework before signing on.

"In theory, if it saves on transaction fees and simplifies how payments are handled, it will be a good thing,” he said.

As more young adults make bitcoin their currency of choice, businesses that accept it may be able to target certain demographics.

"A typical bitcoin user is male, between the ages of 18 to 45,” Wargo pointed out.

For Cliff Blank, who turns pet photos into portraits, signing up with BitPay so he could begin accepting bitcoin was an easy decision. In fact, his hometown of Vancouver, British Columbia, Canada, claims the world’s first ATM machine designed to accept bitcoin deposits and spit out dollars to anyone who wants to cash in.

"I knew there was a growing interest in bitcoin after learning more about the technology at a meet-up,” Blank said.

Like Houghton, Blank likes the lower transaction fees compared to traditional online payment options.
 
"Bitcoin is borderless, too, so I save on international currency exchange rates,” he said. "It’s offering another option for my customers and tapping into emerging markets, so why not?”

What does the rank-and-file customer think?

Marcy Brody scheduled an appointment at Vetco for her Chihuahua soon after hearing that the Albuquerque clinic was a bitcoin merchant.

"I was ... proud that my vet clinic is taking bitcoin,” Brody said. "Not many local businesses take it yet.”

Brody also saw bitcoins as an investment, noting, "They keep going up in value despite the occasional crash.”

As the digital currency gains in popularity, BitPay’s Wargo predicted that the volatility will lessen as more users jump on board.

"Bitcoin is volatile because it is thinly traded,” she said. "As the market gets more liquidity, this volatility will level out.”

For Vetco’s Houghton, bitcoin transactions are easy. Customers may use a smartphone app to complete a payment.

"The customer simply tells us they want to pay in bitcoin and then they scan the QR code, and that’s it,” she said.

A Bit About Bitcoin
Bitcoins are exchanged using a public transaction log, or blockchain, where a processing company, for example, can track the movement of every bitcoin, such as ensuring a customer has enough bitcoins in his or her digital wallet to make a purchase.
Bitcoin transactions are logged in the form of updates to the blockchain.
Digital wallets can be accessed publicly and privately.
The public key, or bitcoin address, is where payments are sent, while the encrypted private key protects the security of individual wallets.
Wallet security is of increasing concern as reports emerge of users being pilfered by unscrupulous hackers.

Since announcing Vetco’s entrance into the bitcoin world, Houghton has heard from other New Mexico bitcoiners.

"We had three inquiries in the first week and a half, and we are expecting more once it reaches the local news,” Houghton said.

Dogma Portraits has gotten some attention, too.

"I started offering bitcoin payments a couple of months ago, and so far I’ve sold a couple of portraits through bitcoin,” Blank revealed.

In Blank’s worldview, cryptocurrencies like bitcoin represent a new dawn for ecommerce.

"I don’t think it’s too early to start thinking about ways to implement bitcoin,” he said. "The public awareness is only growing. Online shopping was once feared, but look at our attitudes toward it now.”

He is so enamored with alternative currencies that he is considering adding others to his payment options.

"I’m watching Dogecoin, whose creator was obviously inspired by the Shiba Inu breed of dog,” Blank said.
"It’s also a natural fit with my Dogma Portraits brand and maybe the pet industry in general.”

Blank foresees a day when consumers’ digital wallets contain many different ecurrencies.

"The checkout process could just convert everything on the fly, making it seamless for the customer,” he predicted.

Words like "fad” have been used to describe bitcoin and other cryptocurrencies, but Blank, Houghton and MacEwen disagree.
 
"Bitcoiners understand that for the virtual currency to survive they have to commit to it as a community, and they are committed to bitcoin,” MacEwen said.

Added Blank: "I’ve had real referrals because of it. Marketplaces are popping up all over the Web catering to businesses specifically offering bitcoin payments.”

Indeed, Overstock.com, a billion-dollar online business, announced in December that it would begin accepting bitcoin by mid-2014.

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Early Adopters of Bitcoin Happy With Decision

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I love that you are presenting stories such as this. This reinforces my belief that reading your publication helps to keep me ahead of the game.
Marea, Atlanta, GA
Posted: 1/22/2014 6:51:26 PM
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