As Bitcoin faces global setbacks and its value responds accordingly, several companies, from Steam to Microsoft, have stopped accepting the currency. But some have held on through it all — the crashes, the rises and falls.
I spoke with executives at companies who continue to allow Bitcoin payments, even as the storm grows rougher, to figure out why they still accept the cryptocurrency. They all sell different products, but there’s one thing they have in common: They don’t do very much business in Bitcoin.
The luxury watch dealer
Danny Govberg, CEO of WatchBox, which claims to be the world’s leading e-commerce platform for pre-owned luxury watches, says that when it comes to cryptocurrency, “I just have a hunch that it’s not going away.” WatchBox has accepted Bitcoin payments since 2014.
“If I’m wrong, okay, so I got educated in an entire structure of cryptocurrency and blockchain,” says Govberg. “If I’m right, then I got educated early on, and was able to adopt it early on.”
For luxury-good companies, Bitcoin transactions are a tool in the toolbox for easing expensive international sales. “When they [international customers] wire us the money and our bank has to convert the money into different currencies, it’s not easy,” Govberg says. “If somebody in the future is in Germany and they want to pay in Bitcoin, they’ll be able to transact that business within a matter of seconds. It’ll come with the blockchain warranty and our bill of sale, everything that customer’s looking for.”
Products on WatchBox can range from a few hundred dollars to over $150,000. Among those sales, Govberg says Bitcoin transactions are “infrequent.”
The tech company
Richard Kirkendall, CEO of domain-name registrar Namecheap, says Bitcoin payments are becoming a necessity for companies that sell products exclusively online. “I believe the core of our customers are very tech-centric, and believe in the ideals of Internet freedom,” Kirkendall says.
Namecheap was one of the earliest adopters of Bitcoin payments. This month is the five-year anniversary of its adoption. “It serves to drive new business by those who would prefer to use this type of currency,” Kirkendall says.
That’s not a huge demographic — only three percent of Namecheap’s transactions are done in Bitcoin — but Kirkendall is sure that it’s growing.
“I believe Bitcoin will be seen more and more as a legitimate method of payment,” he adds, “especially once the technology to bring transaction costs down is implemented in the near future.”
The furniture retailer
Jonathan Johnson, president of Medici Ventures, a blockchain-focused subsidiary of Overstock.com, also believes that the transition to Bitcoin payments is a natural one for an internet-based company. Overstock was the first major online retailer to accept Bitcoin payments in January 2014.
“When we first started accepting Bitcoin, enthusiasts came out in droves,” he said. The novelty gave Overstock quite a bit of Bitcoin revenue: around a quarter of a million dollars in the first three weeks.
Demand for Bitcoin transactions declined sharply after that point, and only makes up about .2% of Overstock’s sales currently. That said, the percentage has been growing since Bitcoin began aggressively appreciating last year.
The average order size of a Bitcoin transaction is more than twice the average order size of other Overstock customers, Johnson said. He believes in Bitcoin as an extension of Overstock’s mission to “let people spend the way they want to spend.”
He’s such a believer, in fact, that he takes part of his salary in Bitcoin. “My bonus was worth a little bit less when I got it, and I think over time it’ll be worth more,” he assured me.
Ettori Rossetti, senior director of marketing and digital innovation at Save the Children, believes that accepting Bitcoin means more younger, tech-savvy people will donate, where they otherwise might not be considering charity. “If we’re in the game in many ways, we make more money and save more kids,” he says.
The international NGO is a cause of choice among gamers and YouTube influencers who, according to Rossetti, overwhelmingly prefer to donate in Bitcoin.
Save the Children entered the Bitcoin market in late 2013, when the currency’s value was in the hundreds of dollars. Since then, it has received “tens of thousands” of dollars in Bitcoin contributions. This isn’t much compared to the organization’s annual revenues of $600 to $700 million dollars, but according to Rossetti, it only takes about ten dollars to reach a child in a natural disaster.
Is Bitcoin a bubble? Rossetti doesn’t care — it’s what the people want. “I’m not in the business of calling winners or losers,” he says. “Whether it’s a bubble or not, I’m not gonna play favorites.”
Research seems to agree that over time, it’s gotten easier to spend Bitcoin. Consumers spent an average of $190.2 million in Bitcoin in 2017, compared to $9.8 million per month in 2013. And after Square started accepting Bitcoin, a study found 60% of its U.S. merchants willing accept Bitcoin payments. A Bloomberg analyst called this “surprising, especially amid Bitcoin’s elevated volatility.”
However, a report from Morgan Stanley last year revealed that Bitcoin acceptance is at an all-time low, and getting lower. “Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that bitcoin is more asset than currency,” one of the analysts wrote.
It seems that the businesses that still accept Bitcoin, even its earliest adopters, are those who are playing the long game. When Bitcoin makes up a small percentage of profits, rather than an integral aspect of a business model, its value is clear as a symbolic gesture to young, techy customers, and as a foot in the door in case cryptocurrency blows up. Meanwhile, high transaction fees are infrequent enough not to be prohibitive, and the hit to profits from depreciation is relatively small.
When Bitcoin becomes more than that, it’s a problem.
The ones who left
Leading online payment company Stripe stopped accepting Bitcoin payments in late January. The company attributed its decision to the volatility in Bitcoin’s price. “Transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies,” Tom Karlo wrote in a blog post. “For a regular Bitcoin transaction, a fee of tens of U.S. dollars is common, making Bitcoin transactions about as expensive as bank wires,” he added.
Steam halted Bitcoin transactions for similar reasons in December, citing difficulty calculating transaction costs in addition to the currency’s overall volatility. Valve engineer Kurtis Chinn wrote in a blog post that because the value of Bitcoin is only guaranteed for a certain period of time, the amount of Bitcoin needed to purchase a game could change before Steam was able to update the game’s price, potentially losing the company money.
Steam and Stripe has not released how many of their transactions were in Bitcoin.
Bitcoin transaction fees are currently under a dollar per transaction, but peaked at $37 in late December. BitPay, the transaction platform that many companies, including WatchBox and Namecheap use to accept currencies, instituted a $5 minimum transaction fee that same month and warned users that “Many invoice payments under $100 may still be uneconomical for bitcoin purchasers due to high bitcoin network fees.”
Until Bitcoin is shown to be viable as a currency, rather than just an asset, it will be very difficult for these companies to comprise anything more than a vocal minority. Nevertheless, in a world where interest in Bitcoin is growing, and it’s impossible to predict what will come next, a small number of Bitcoin sales can serve as a large show of support for cryptocurrency on principle, and as a low-risk, but potentially high-reward gamble.