Photo by Emilie Lutostanski
Several businesses in Leander and Cedar Park are now accepting Bitcoin, a digital form of alternative currency.
Bitcoin was invented in 2009 and uses mathematical cryptography—rather than a central authority such as the U.S. Federal Reserve—to control the creation of money and all transactions. The global currency relies on a network of computers running code to process and verify each fund transfer.
During a transaction, Bitcoin is transferred from the customer's digital wallet to the vendor's wallet within a matter of seconds. Specialized software on the vendor's point-of-sales computer generates a QR code, which the customer scans using a smartphone application. Transactions can also be processed as online payments between two computers.
Dr. Max Kerr, co-owner of Vista Ridge Family Dentistry in Cedar Park, said he was interested in using Bitcoin in part because of lower transaction fees. Processing credit card payments usually costs the vendor about 2.5 percent of the sale. Transferring Bitcoins using a payment processing software such as Bitpay costs 1 percent of the total sale.
"It's the freest form of currency," he said. "Over a lifetime of transaction fees, a business has to absorb that or it ends up getting passed along to the customer."
However, Kerr said, one of the biggest benefits is that his dental services are more accessible to customers who may need to use Bitcoin.
"As a dentist, my No. 1 goal is to make people's teeth healthier," he said. "By accepting Bitcoin, we are removing a barrier to care, especially for someone who knows they need a lot of treatment. Maybe their only financial avenue is Bitcoin because they got it when it was relatively cheap."
When first introduced, each Bitcoin was worth pennies. However, the exchange rate in early 2014 floated around $800 per Bitcoin, according to the website www.bitcoinexchangerate.org.
Steven Wilkinson, founder of Austin Bitcoin, has helped Kerr and other local merchants such as La Canasta Meat Market and Hill Country Home Improvements in Leander set up Bitpay, one of several payment systems designed to transfer Bitcoin and exchange it into dollars. Though critics of Bitcoin call it unpredictable and unstable, Wilkinson said the system gives more financial freedom to merchants.
"There is going to be some volatility with something that new, but it's getting to be less of an issue as more people become involved in the network," Wilkinson said. "I saw businesses having smaller and smaller margins of profitability. With Bitcoin, we keep more money local so we don't have to pay a fee to go through a bank."
Danny Sessoms, owner of Hill Country Home Improvements, said he hopes more local merchants will begin using Bitcoin. Sessoms said he specifically seeks out vendors who accept Bitcoin using www.coinmap.com, and in January, he purchased beer at La Canasta Meat Market using the currency.
Bitcoin advocates have scheduled the inaugural Texas Bitcoin Conference for March 5–6 at the Circuit of The Americas in Southeast Austin. More information about the event's speakers, featured exhibitors and hackathon is at www.texasbitcoinconference.com.
