Growing number of Michigan retailers accepting bitcoin digital currency

Growing number of Michigan retailers accepting bitcoin digital currency
January 5, 2014


You can buy a three-inch-thick corned beef sandwich at the Bronx Deli in Farmington Hills for $10.59, cash or credit card — and now, 0.01323 bitcoin.

A small, but growing, number of Michigan retailers are accepting bitcoin, a digital currency that is only about five years old.

Unlike coins that jangle in your pocket, bitcoins are virtual and exist only on the Internet. They are not backed by government fiat and their market value fluctuates. On Friday, one bitcoin was valued between $794 and $839, according to the CoinDesk Bitcoin Price Index. Transactions are recorded in an electronic log.

In the United States, bitcoins have been popular among tech enthusiasts and libertarian-minded critics of the Federal Reserve.

Merchants such as the Bronx Deli see the high-tech payment method as a way to stand out, generate a few additional sales and avoid credit card transition fees. They still charge customers sales taxes. Despite some early controversy tied to the currency, they are willing to give it a try.

Bronx Deli co-owner Leonard Mazzola Jr. said he learned about bitcoin from news reports and a friend in the computer industry. Since November, when his Farmington Hills and Pontiac locations started accepting the currency, he said he has done about 30 bitcoin transactions.

Many of those customers, he said, sought his deli so they could spend their bitcoin there.
“I think every single one of them who’s come in had never been here before,” Mazzola said.


Growing acceptance

At least 10 Michigan businesses and organizations accept the currency, including a hardware store in Hazel Park, a think tank in Grand Rapids, a martial arts dojo in Kalamazoo and a private-practice lawyer in Ypsilanti.

Worldwide, more than 2,200 businesses now accept them as payment, according to CoinMap, a website that tracks such businesses.

At Tony’s Ace Hardware in Hazel Park, co-owner Matthew Abramsky was curious to see whether the new currency would attract new business. Since beginning the experiment a few weeks ago, his store has sold a hammer and some trash bags for about $40 worth of bitcoin.

Both transactions involved customers who came in specifically to spend their bitcoin.
“People who are into it are passionate about it and want to use it,” Abramsky said.

'A cloudy past'

Retailers also welcome fee-free bitcoin payments because they avoid the typical 2.5% to 3.5% transaction charges for credit card transactions.

Websites have cropped up that allow people to buy bitcoin using dollars and cash-out bitcoin into dollars. The cashing out part is crucial for businesses, which need regular currency to meet payroll and pay bills.

The nonprofit Acton Institute in Grand Rapids, a religious and free-market think tank, said it began accepting bitcoin last month because credit card transactions are hard to do in some countries. The institute believes bitcoin is shedding the stigma it gained early on as a currency for black market deals and drugs.

“The currency has got somewhat of a cloudy past,” said John Couretas, the institute’s director of communications, acknowledging some of the controversy surrounding bitcoin. “But it seems to be getting traction in legitimate e-commerce circles.”

Justin Altman, a general practice attorney who accepts bitcoin, said he thinks the currency will continue gaining popularity.

A libertarian who ran for Washtenaw County prosecutor, the 32-year-old Ypsilanti lawyer said he has yet to encounter any bitcoin-paying clients. But he likes the idea behind the currency and has high hopes for it as a legitimate form of payment.

“Right now it’s a small market, but I wanted people to know that there is a market,” he said. “You can always see where it came from and where it’s going and you can’t duplicate transactions. So for me, it would be more accountable than someone coming in with an envelope of, say, a $1,000.”

'Always doubters'

Still, bitcoin has its skeptics and critics.

Nobel prize-winning columnist Paul Krugman wrote last week wrote in the New York Times that he is “deeply unconvinced” that bitcoin will work as a currency and former Federal Reserve chairman Alan Greenspan has called it “a bubble.”

On Friday, one bitcoin was valued at about $800, up substantially from a year ago when one coin fetched about $13. In November, it hit a peak of $1,124.76 per coin, but tumbled after China’s central bank decided in December to prohibit that country’s financial institutions from handling bitcoin transactions.

Consumers and speculators who rushed in to bitcoin this fall face a big disappointment should the currency’s exchange value continue to collapse.

Mazzola, the deli owner, said he is willing to accept the volatile exchange rate and understands that his bitcoin customers are paying a different amount every day.
“Doesn’t your 401(k) fluctuate every day? This is no different than that to me,” Mazzola said of currency’s exchange rate.

Many bitcoin users feel that the currency is a real innovation that, like the Internet itself, will inevitably spread.

Bitcoin enthusiast Johnny Pham of Farmington Hills has faith in bitcoin, and he is eager for more opportunities to spend his.

“A lot of people think it’s a Ponzi scheme,” said Pham, 23. “But with anything new, there’s always doubters.”

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl.

Twelve million bitcoins exist and 25 new ones are digitally mined every 10 minutes, although no more than 21 million can ever be created. People also can buy them through a bitcoin exchange and spend them using a computer app

http://www.freep.com/article/20140105/BUSINESS06/301050091/bitcoin-michigan-retailers-coinmap

cool love to see more retailers accepting this currency everyday. heck i think 2 dealers out there are even accepting bitcoin or dinar