While still very much in its infancy, Bitcoin has experienced massive growth recently with a number of large online businesses such as Reddit, Virgin Galactic and US retailer Overstock.com now accepting it as a legitimate form of payment. Adelaide-based Shiels recently joined the list and its managing director Toby Bensimon said it has been receiving one or two transactions per day through the online currency.
Bitcoin is a form of digital currency that only exists online and is not controlled by any central financial authority. Although this has made the digital currency extremely volatile in its value, it does put the control of the currency completely in the hands of the user. It reportedly allows people to (almost) instantly transfer value to anyone, anywhere on the internet, without the traditional fees, commissions or currency exchange rates.
Shiels has an online store that conducts a large number of transactions every day. While the number of sales with Bitcoin is still very small, Bensimon told Jeweller that the success of it so far, and the opportunities it presents, has him confident its use will increase.
“India and China are big markets that have adopted this digital currency in a massive way,” Bensimon said. “China has a very small percentage of citizens carrying credit cards and now many of them are finding it unnecessary to get one as Bitcoin provides a safe and easy alternative for online purchases.”
Bitcoin breakdown
Users of Bitcoin store the currency in an “online wallet” on their computer or mobile device and then simply transfer to another person or business through a detailed encryption code. Supporters say it is the equivalent of passing cash between two people, with the flexibility of being able to transfer to any person, anywhere in the world.
By doing away with credit card companies, financial institutions, monetary institutions and even email addresses, business can be conducted with countries that have previously been off-limits.
“It opens up the possibility of doing business with countries that were previously a risk to our business. Once risk is removed there remains no reason why the entire world cannot become our market,” Bensimon explained.
“The second the Bitcoin transaction takes place, our bank converts the funds directly into Australian dollars. This means zero risk for the retailer. The same cannot be said for PayPal where credit cards are still involved. As far as I’m concerned, bitcoin is therefore safer than PayPal.”
While Bitcoin may not be for everyone at this stage, many businesses are exploring the new marketing opportunities the digital world offers, and so the interest remains strong.
There have been widespread media reports and concerns about the volatility of its value; however, there are also claims that it provides a system that is cheaper and faster than traditional online payment options and can be used in markets all around the world. It is definitely gaining some momentum; whether that holds or not remains to be seen.