Sapan Shah started accepting the virtual currency Bitcoin at his Subway franchise in the Philadelphia suburb of Allentown in November. Almost immediately, people began trickling in from out of state just to experience the novelty of buying a sandwich with their digital coins.
Andrew Torba and a friend drove 45 minutes. "During the ride we spoke about the potential Bitcoin had to completely revolutionize global commerce and finance, which only heightened the anticipation to make our first purchase," he wrote in a blog post titled "I Bought Subway with Bitcoin and It Was Awesome."
Shah started getting attention on Reddit, then from local media. Two weeks after he started accepting Bitcoin, he was on CNBC. His story has also been featured by Yahoo, The Washington Post, CNN, and Entrepreneur magazine.
It’s the Bitcoin bump.
"We didn’t really expect this onslaught of publicity."
The virtual currency, which approximates cash on the internet, now powers an economy worth around $7 billion. Much of that value just comes from people buying and selling the currency itself, however; merchants that accept Bitcoin are still relatively rare. That means anyone who does gets a bit of extra attention from virtual currency fans — and the press.
When real estate developer Jack Sommer decided to accept Bitcoin in addition to traditional currencies for his $7.85 million mansion in Las Vegas, he didn’t do much to spread the news: he added "Bitcoin Accepted" to his YouTube ad. The number of views doubled nearly overnight.
Sommer and his wife Laura were astonished: their son had advised them that they would get "more exposure" for the property, but they had no idea it would bring on the news crews. They’ve had a couple inquiries about buying the house in Bitcoin, but more than that, the house has now been featured everywhere from local media all the way up to Fox News. "We didn’t really expect this onslaught of publicity," Laura says.
An anonymous Bitcoin user drove two hours to get to Shah’s Subway. The YouTube video of the experience has more than 10,000 views.
The first wave of Bitcoin acceptance was from people like Shah who are deeply embedded in the Bitcoin scene; the second wave was from people like the Sommers who were converted by a true believer. The third wave, however, is made up of opportunists.
Shortly after The Verge covered the Sommer house, a real estate broker wrote in about a mansion for sale in Paris for $10 million. He had convinced his client to accept Bitcoin and was hoping for similar coverage. "My listing surpasses the previous record listing of Mr. Sommer," he wrote. "I’m sure that this is newsworthy to yourself, for the same reason Mr. Sommer's listing was."
The broker is not unique. There has been a deluge of "firsts" to Bitcoin acceptance: the first car dealership, first winery, first pro sports team. "I was wondering if one of you would like to do a short piece on Sheridans’ acceptance of Bitcoin," a representative recently wrote to The Verge, noting that Sheridans is the first UK law firm to accept payment in Bitcoin.
Some of this adoption is a bit disingenuous
Some of this adoption is a bit disingenuous. The dealership, for example, made the customer convert his bitcoins into dollars before the sale. Merchant adoption is a good thing even if it’s just a marketing gimmick, according to advocates who hope to see Bitcoin become a universal currency. But what happens when accepting Bitcoin becomes common enough that it stops grabbing headlines? Will merchants continue to take it, given that it’s still a niche currency that is less convenient than cash?
There are reasons to accept Bitcoin besides publicity. In the past, Bitcoin’s volatile price made it unappealing to merchants. Now that it is possible to immediately convert Bitcoin into other currencies, that downside has been made obsolete. The US government has also indicated that using Bitcoin for commerce is sanctioned, so the legal ambiguity is gone. Accepting Bitcoin also allows merchants to avoid expensive credit card fees and "chargebacks," refunds merchants are forced to issue in the case of fraud.
What happens when Bitcoin stops grabbing headlines?
Overstock.com recently began accepting Bitcoin; it reportedly did $130,000 worth of sales in the currency in the first day. The company is now considering investing further in Bitcoin, possibly paying vendors and employees in the virtual currency.
Online merchants have it much easier, as in-person Bitcoin transactions are still a bit unwieldy. While there are many Android apps that will do the job, iPhone owners face a challenge since Apple does not allow Bitcoin apps in the App Store. The technologically innovative Bitcoin developer community is hard at work overcoming these hurdles. Whether the virtual currency can hold the world’s attention is another matter.