Bitcoin enthusiasts, playing off the holiday tradition of Black Friday sales, held their own Bitcoin Friday last week, leading to a spike in Bitcoin transactions at some — but not all — participating merchants.
Bitcoin, a digital alternative to cash, has had a hard time proving its worth outside a dedicated and tech-savvy niche. The crypto-currency gained prominence after it was featured last year in a New Yorker article depicting the author purchasing a hotel stay with bitcoins. But shortly after the article ran, the hotel’s manager lost interest in Bitcoin. Even three months later, the only Bitcoin transaction the merchant made was the one depicted in that article.
The same cannot be said for BeesBros, a North Logan, Utah-based bee-keeping honey-making family business. It accepted 30 Bitcoin transactions during its Bitcoin Friday sale. Prior to the sale, the business handled one to two Bitcoin orders per week, says Craig Huntzinger, a co-owner with his wife and kids.
About half of BeesBros’ Bitcoin Friday sales came from new customers. But since the company advertises primarily within the Bitcoin community, Huntzinger says these newbies were most likely already Bitcoin users.
Stomp Romp, a guitar store in Manchester, N.H., also participated in Bitcoin Friday but received only one order during the event.
Joshua Harvey, the store’s owner, says he didn’t expect to sell much on Friday because he runs a new store selling to a niche market that doesn’t overlap with the Bitcoin enthusiast crowd.
“That said, we consider Bitcoin Friday a big success,” Harvey says. “Our online traffic doubled on Friday and this was wholly due to the event.”
BeesBros’ sales added about 80 bitcoins to the Huntzinger family’s total. The family uses bitcoins to purchase Bitcoin Magazine and video games.
“The shifting of money from one person or another stimulates the Bitcoin economy and gives it life,” Huntzinger says. “A lot of people participated buying and selling and got a flow of money circulating around.”
Bitcoin is designed to facilitate anonymous and irreversible transactions, making it more like a digital equivalent of cash than an alternative to credit and debit cards. Though Bitcoin sales typically do not involve conventional payment systems, there is an opportunity for banks and other payment companies to participate in the Bitcoin economy by helping exchange the digital currency for cash.
Overall about 74 merchants participated in Bitcoin Friday throughout the day, says Jon Holmquist, head of marketing at Coinabul, which exchanges bitcoins for gold and silver. Holmquist worked with merchants during the event.
“We got a lot of people that sat on their coins before to participate, which was the point of the event,” Holmquist says.
BitPay, an automated payment processing system allowing merchants to accept bitcoins, handled 99 orders on Friday. Grass Hill Alpacas, a farm that uses alpaca wool to make socks, saw its sales volume and revenue exceed combined totals for the past three months during the day-long event. Coinabul saw its own orders rise, selling 508 individuals gold and silver bars and coins.
To get the cryptocurrency in the mainstream, consumers using bitcoins now need to circulate the money and talk up its advantages, Holmquist says.
However, David Kaminsky, an analyst with Mercator Advisory Group, says the currency’s properties don’t endear it to mainstream consumers.
“I don’t see any value in [Bitcoin] unless you’re a drug dealer or a gambler,” Kaminsky says. “It’s a very small group [that uses bitcoins] that most merchants wouldn’t want to be associated with.”
But Holmquist says Bitcoin is already overcoming the bad reputation, with more consumers and merchants in the market accepting the currency for products that are legal to sell.
Harvey, the guitar seller, says, “the bitcoin economy is tiny, but growing at a rapid pace. As more users and vendors adopt the currency it becomes more useful, leading to increased adoption. The ball is in the court of any skeptic to explain how this growth will suddenly peter out.”