Bitcoins have experienced a meteoric rise in popularity in the past year. One Bitcoin was valued at $13 USD in January 2013 and today a Bitcoin is trading at about $822 USD, making it among the top trends to watch for in 2014 and beyond. If you haven’t heard of Bitcoins, basically, a Bitcoin is a digital currency; an online equivalent of cash that can be sent directly to anyone. If you need to know more, here is a link to a blog post that introduces Bitcoins.
For those of you who are wondering if and how Canadian companies are using Bitcoins, here are 3 instances of Canadian companies putting Bitcoins to use:
#1: Accept Bitcoins as a form of payment
Remedy Café in Edmonton has been accepting Bitcoins as payment for everything from bagels to chai lattes since July . The owner, Zee Zaida, pays the GST on the purchase up-front, then allows the customer to transfer Bitcoins from their smartphone to the café’s iPad. Because of the fluctuating prices of Bitcoins, Zaida actually made $14,000 from three months of purchases the last time he cashed out his Bitcoins. Zaida said his customers are happy and he’s happy using Bitcoins. One downside he mentioned is that Bitcoin transactions require an internet connection and the café’s internet connection can be unreliable at times. Starting next month, the café chain’s Jasper location will have the city’s first Bitcoin ATM.
Other Canadian coffee shops are picking up on the trend as well. Sweet Tooth Café in Vancouver has been experimenting with Bitcoins for about a year and a half. The café’s owner, Ganji Malerba, says she accepts Bitcoins as payment because of the low transaction fees. Wayne Taylor, the owner of the Blenz franchise also in Vancouver, says that the security of a Bitcoin transaction is another reason he accepts Bitcoins.
#2: Use Bitcoins to generate publicity
In November 2013, a Global News article indicated that a Toronto advertising agency, hqvb, would accept Bitcoins as tender, becoming one of the first Canadian businesses to do so. The article went on to note that hqvb has yet to do a transaction with a client in Bitcoins, however, the announcement did garner national publicity for the ad agency.
#3: Use Bitcoins to counteract fluctuations in commodity prices
Vancouver-based Alix Resources Corp. made news in Yahoo.com’s finance section in November, stating its intention to pay a contractor in Bitcoins. Alix Resources Corp. saw Bitcoins as a way to conserve cash amid a steep drop in commodity prices in the junior mining sector.
The Bottom-line: Should you care about Bitcoins?
Part of the value of Bitcoins in Canada resides in the number of people accepting them and using them as a form of payment. Although Bitcoins are a hot trend right now, it appears there aren’t many Canadian companies that are accepting or paying in Bitcoins. This may change, but as of right now the universal utility of the currency is limited.
Bitcoins’ dramatic price fluctuations make it difficult to do business in Bitcoins as well. For example, the value of a Bitcoin fluctuated between $800 and nearly $900 dollars in the course of 24 hours between this January 12th and 13th. Imagine accepting Bitcoins as payment for something that you sold for $1000 CDN on one day then trying to convert those Bitcoins into Canadian dollars the next day only to find that your Bitcoin’s value has dropped to $800 in a matter of 24 hours. That would be really frustrating. As of right now, the value fluctuations of Bitcoins are being caused by a flood of Bitcoin speculators and day traders. Unless these fluctuations subside it will be very difficult for businesses to accept Bitcoins as a form of payment.
The bottom line is that the concept of digital currency is here to stay whether it’s Bitcoins or some other version of cryptocurrency. Bitcoins do have some glitches at the moment, however business people and marketers should keep an eye on this trend. If more conventional businesses start accepting Bitcoins and the price fluctuations subside, Bitcoins could change the way we all do business.