6 retailer twists on bitcoin

Published
  • January 05 2018, 10:09am EST

Most retailers still don't want to accept bitcoin, but that doesn't mean they want to be left out of the cryptocurrency craze.

A few have developed their own coins — crypto and otherwise — to enjoy the perks of managing their own digital currency. Others are looking for ways to make bitcoin and its alternatives more palatable for mainstream commerce.

This listicle is compiled from reporting by PaymentsSource staff writers. Click the links in each item to read more.

Burger King's Russian recipe for crypto

Some virtual currencies are getting narrower focuses on individual categories, and Burger King has applied the concept to Russian fast food.

The chain's WhopperCoin has debuted in Russia back in August, according to Waves, the distributed ledger network that is powering WhopperCoin.

With each purchase of a Whopper, customers receive WhopperCoin tokens through a digital wallet. These reward tokens can eventually be used to purchase Whoppers once the customer has collected enough coins. The tokens can also be transferred and traded online, so customers can sell them to new buyers.

"Now Whopper is not only [a] burger that people in 90 countries love. It's an investment tool as well," said Ivan Shestov, head of external communications at Burger King in Russia, quoted in the Waves release. "According to forecasts, cryptocurrency will increase exponentially in value. Eating Whoppers now is a strategy for financial prosperity tomorrow."

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Amazon's homegrown currency for digital sales

Amazon.com's virtual currency Amazon Coins launched in mid-2014, but it was limited to digital app purchases.

The virtual currency, which works more like a virtual gift card, can be used to purchase games, apps and in-app virtual goods on the Kindle Fire tablet and within Amazon's app store.

Amazon gave every Kindle Fire tablet owner in the U.S. $5 worth of Amazon Coins upon the currency's launch, and has maintained the currency as a tool for purchasing apps and in-app content on Amazon platforms.

Though Amazon sells everything from magazines to milk, it accepts Amazon Coins only for digital content.

Facebook's failed attempt to unify payments across the globe

Facebook Credits were initially a way for users of the social media website to buy pixel art — think digital birthday cakes they could post on friends' Facebook pages. But in 2010 the company began pushing Credits as a currency for online games.

The strategy had a noble goal in mind: Rather than force app developers to price in-app content in different regional currencies, Facebook would handle the conversion itself and allow developers to price everything in Facebook Credits.

Facebook had matured as a gaming platform, particularly in its role as host to Zynga Game Network Inc.'s smash-hit gardening simulator Farmville, and Facebook's digital wallet system matured along with it. Though Farmville initially did not incorporate Facebook Credits, that changed in May of 201-. A few months earlier, Facebook added PayPal Inc.'s system as a funding mechanism for Facebook Credits.

Users paid 10 cents for each Credit, and then can "spend" the Credits online. This model is reminiscent of earlier virtual currencies such as Beenz and Flooz that, back in the dot-com heyday, tried to establish themselves as the monetary system of the Internet. Both eventually failed as consumers realized that purchasing these faux currencies was largely unnecessary, since they could use credit cards for most online purchases.

Facebook Credits faced a similar fate; by 2012 the company announced plans to move away from its virtual currency in favor of the real-money system it sought to replace.

A digital dental plan

A Netherlands-based startup called Dentacoin is setting up a blockchain-based system enabling patients to pay for dental care with its Ethereum-based tokens guaranteeing lifelong, fully covered dental care.

One dental clinic in Switzerland and another in London began accepting payments for dental services with Dentacoin tokens back in August. These coins link to a program supporting customer loyalty and reviews via a mobile app.

The concept relies on establishing a cooperative community of dentists and patients with transparency in services provided and received.

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What do iced tea and chicken wings have to do with blockchain?

The mere mention of blockchain and bitcoin has had a market impact recently, with the Long Island Iced Tea Company enjoying a tripling in its stock price in December after changing its brand to Long Blockchain (a move it cemented in January by changing its ticker to LBCC from LTEA).

There seems to be at least some substance to the change; the company announced that it would shift its corporate focus to "the exploration and investment in opportunities … of blockchain technology." And Long Blockchain isn't even the first soft drink company to see this effect — also last month, a fruit juice company called Future FinTech (formerly SkyPeople Fruit Juice) saw a 200% gain on rumors that it would get involved in blockchain and bitcoin.

And this month Chanticleer Holdings, which is a Hooters franchisee and minority investor, saw a 50% stock price boost after the company announced it's moving its rewards program to a blockchain, reports Ars Technica, which adds each meal at a Chanticleer Holdings brand will add currency that can be used for future meals or traded with other consumers.

Cryptocurrency designed for multiple merchants

As bitcoin's market swings steal the headlines, there are some people in the cryptocurrency industry who are trying to push the market back toward its original intent as a decentralized means of payment.

One startup, Metal, is pushing the idea hard, enough to offer what amounts to cash back for making alternative payments.

"The incentives aren't there to pay for something in an alternative currency right now," said Marshall Hayner, CEO and co-founder of Metal. "So our idea is to put a small amount of currency into a large number of hands."

The San Francisco-based Metal positions itself as a social P-to-P company, similar to Venmo. To encourage use, Metal rewards both the payer and payee 5% on every purchase. So a person who sends $100 through Metal would get the equivalent of $5 back in Metal's virtual currency, and the recipient would get $100 plus the equivalent of $5. "The idea is you get paid to make a payment," Hayner said.

Metal launched its software in October and plans to launch Metal Pay for consumers in February, followed by a merchant portal in third quarter of 2018. Metal plans to earn revenue through merchant processing fees—it expects to have different packages for merchants to choose from—and through revenue it can generate by accruing anonymous data from transactions that can be marketed to merchants and other companies.

The startup is attacking what it sees as a concentration of virtual currencies that hinders broader merchant acceptance. About 95% of bitcoin is owned by 4% of the market and the number of cryptocurrency users, while growing, is still relatively low compared to traditional money.

Bitcoin's Black Friday

Before bitcoin was a household name, its most devoted fans wanted to see it become an ordinary means of making payments. To encourage mainstream use, they copied a tried-and-true retail strategy.

At least 25 retailers that accept the virtual tender banded together in 2012 for a shopping event they dubbed Bitcoin Friday.

Besides discounts on goods and services, merchants also used the holiday to educate consumers on how to obtain the virtual currency and use it for transactions.

The deals advertised for 2012's Bitcoin Friday included $10 off the purchase of an ounce of gold at Coinabul; lower fees at the digital currency exchange Mt. Gox; and a 23% discount and free shots of Pampero Rum at Room 77, a restaurant in Berlin. Of those companies, only Room 77 appears to still be in operation today.