Bitcoin: it’s the word that’s been on everyone’s lips for the past year or two. Whether it’s a bitcoin bank being hacked and closing down or it’s a new big business accepting payment in bitcoins for the first time, the bitcoin is certainly newsworthy. But what exactly is it?
Well, to put it simply, it’s a digital currency that allows the trading of money over the internet, without the use of a middle man such as PayPal – this means that there are little to no fees for transferring money or processing payments.
Fully explaining how Bitcoin works is a fairly hefty undertaking for both reader and writer! So, we’ll summarise it briefly instead: bitcoin itself is incredibly secure, as its security is based on cryptography, and though there is no physical aspect to it, you need a bitcoin “address” to access it – half of this address is public (so people can send you money) but the other half is private, acting like a password that only you know.
Though many people are attracted to it because they believe it is anonymous, it’s actually much less anonymous than paying by cash – though it doesn’t have to be linked to a real name, there will always be a record of each transaction made, meaning it can be traced.
Introduced in 2009 and allegedly created by Satoshi Nakamoto, the alias for the individual (or, more likely, the group) who created Bitcoin, it has since become staggeringly popular. The value fluctuates much more rapidly than a centralised currency like the US dollar, but there are restrictions in place so that it can remain “inflation proof”, making it a very attractive prospect.
Recently, ATMs accepting bitcoin transactions have started popping up, mostly in North America, and a number of large businesses and firms have started allowing bitcoin payments, including expedia, Reddit, dating site OkCupid, and even Virgin Galactic!
In fact, more than 20,000 merchants are now using Coinbase to accept bitcoin payments, meaning that no matter where in the world you’re travelling to, you’re sure to find somewhere to spend you bitcoins! In the Kreuzberg neighbourhood in Berlin, which boasts the highest density of bitcoin-accepting merchants in the world, you can do everything from buying LPs to paying for a slice of cherry cake using the digital currency, and you can even hire a private jet to take you there if you’ve got the bitcoins – just visit PrivateFly!
The fact that you no longer need to exchange currency in each new nation you visit will make things a lot easier, not to mention save you a bit of cash by avoiding all those bureau de change charges. It’s even accepted in such far-flung locations as the tiny town of Lanquin, deep in the rainforests of Guatemala!
As with all things, the best way to understand something is to see it being used in practice, which is why we reached out to a selection of travel bloggers to see if they had encountered bitcoin on their journeys and a number of businesses who are using bitcoin now. Most exciting of which was the Bitcoin Boulevard project.
To the travel bloggers, we posed three basic questions that sought to find out if they had used Bitcoin whilst traveling, are they seeing an increase of businesses that accept bitcoin around the globe and what are their thoughts on the future prospects of digital currency?
Chris Richardson, The Aussie Nomad
“While I’m aware of the Bitcoin explosion, in day-to-day life I can’t say I’ve had any personal experience with it. In all my travels (around Europe mainly), I’ve never seen bitcoin available as an option for payment in anything I’ve done and think for travel it might be a long time coming, unless airlines and the like look at taking it as a form of currency.
Any form of currency to avoid the excess fees and charges people currently face on a day-to-day basis would be very welcome in my mind. Cutting out the fees because my money is in Australian dollars and I want to withdraw it from a cash machine in London in pounds would be a major win for travel.”
Victoria Brewood, Pommie Travels
“I have never heard of bitcoin unfortunately, so no, I haven’t attempted to use bitcoin while travelling. I might consider it if I knew what it was! I haven’t yet come across any businesses accepting bitcoin either. I don’t like carrying cash particularly and I enjoy being able to use my card wherever possible.
I would imagine, if everyone used digital currency, it would make it much easier to travel the globe as I wouldn’t have to worry about carrying cash or the high fees for overseas payments etc.”
Ayngelina Brogan, Bacon is Magic
“I’ve never used bitcoin and I wouldn’t consider using it unless locals also used it. I know some foreign businesses are using it in Ecuador, but it doesn’t contribute to the local economy so locals don’t use it and I could only ever purchase from foreigners – that’s not an interest for me.”
Max Hartshorne, Go Nomad
“I have never had the opportunity to try or use bitcoin in my life – travelling or not. I try to travel at least once a month and have done for the past 12 years. I’ve never come across or heard anyone mention bitcoin while travelling; however, I do think that it [Bitcoin] has potential because changing currency is a pain!
Again though, I’m not sure how it works, and since I have never heard of anyone accepting bitcoin, it may be a pretty long learning curve before people are comfortable replacing Euros, Pesos and Dollars with a currency that is digital.”
We then reached out to businesses we knew had adopted Bitcoin to ascertain why they made the move into digital currency and what benefits they had seen as a result – be that from an economic or publicity perspective.
Michael Penfield, FanDistro
“We started accepting bitcoin for three reasons: low transaction costs, wide geographic reach, independence. Music industry transactions tend to be small and traditionally, transaction fees eat a lot of profit – not so with bitcoin. Our artists can accept payment from fans in virtually any corner of the world and Bitcoin’s lack of central management appeals to the independent streak found in many artists.
We have started to see music sales in bitcoin and have had artists request to hold account balances in bitcoin rather than dollars. We have seen an increase in artists creating projects at FanDistro and believe that at least some of that growth is attributable to our bitcoin capabilities.”
FanDistro is a service that allows artists to reward their fan for introducing their music to others, harnessing the power of word of mouth.
Sam Rice, Men’s Room Liverpool
“We recently began our Bitcoin journey when I became intrigued by a client who is an avid bitcoin user and promoter. It seemed like a good bit of free publicity if we hit it right and so we decided to start accepting it. As of yet, we haven’t really had time to press the subject with advertising etc. and we’re still very new to the bitcoin world. We’re trying to get as much information and help with it as possible – I find it very interesting and its individuality is everything we stand for in our salon.
As of yet, we haven’t seen any benefits as we haven’t had much time to promote it properly, but with a little guidance, hopefully we will become a mainstream user within our area.”
Men’s Room is a Barbour in Liverpool City Centre.
Bitcoin Boulevard is a project that opened its doors on the 20th of March in the Hague, Holland. Focusing on an area of the Hague called “World Canal”, it encouraged a range of entrepreneurs to incorporate bitcoin into their business model.
Bitcoin Boulevard
“There are three creators of the Bitcoin Boulevard concept and we run this project next to our normal jobs.
For the moment, I see only a lot of problems for merchants that deal with bitcoin transactions. The advantages of bitcoin: no transaction fees, fast transfers etc. are only valid in a bitcoin-only environment. But we are currently in a hybrid situation of Euro and Bitcoin.
The merchants were ready to participate in the pilot, because they also want to have some practical experience with bitcoin transactions. The goal is in fact to explore all the problems, like:
- How do you instruct your personnel?
- When do you convert bitcoin to euro?
- How to cope with an open public ledger
- What change rate do you take?
- Is the actual transaction between merchant and customer time consuming
- How do you register your turnover in bitcoins?
- How does the tax cope with it?
While doing so, the merchants are aware of the fact that it will generate free publicity for the whole street. They deserve this attention because they are pioneers in this new disruptive technology.”
Whether Bitcoin is here to stay or not is debatable. What isn’t debatable is that the conception of digital currency has dramatically shifted our ideas on economy, which is why it may be a better idea to look at the influences Bitcoin has on future iterations of digital currency rather than Bitcoin itself. It is surely there where we will see the most dramatic effects and progression.
(Feature image Courtesy of Phil Nihuis for Le Monde Magazine.)
