Listening to the bitcoin buzz

Could more locals adopt 'cryptocurrency' over traditional money?

By Cody Hooks
chooks@taosnews.com
Posted 1/18/18

With the fantastical emergence of "cryptocurrencies" in mainstream media and financial markets in the last year, the bitcoin phenomenon is starting to reach even this hinterland community.

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Listening to the bitcoin buzz

Could more locals adopt 'cryptocurrency' over traditional money?

Posted

How would you like to pay for that today: cash, check or bitcoin?

Depending on financial forces far beyond Taos, this is a question that could become more common at checkouts around town.

Like other rural places, the wages and the rates of technological literacy in Taos are generally low. But with the fantastical emergence of "cryptocurrencies" in mainstream media and financial markets in the last year, the bitcoin phenomenon is starting to reach even this hinterland community.

One of the most obvious "real-world" places to see the adoption of this new type of currency is Wolfgang's Spa Works, a hot tub dealer in Taos since 2003.

For about the past month, the company has accepted bitcoin, the most popular cryptocurrency in circulation. As manager Neil Collins explained, pioneering bitcoin payments in Taos is just the newest way for customers to pay for a tub.

"Some people became fairly wealth this past year off of bitcoin," Collins says.

"If you had a good run" in the bitcoin market and amassed a lot of valuable cryptocurrency, he said, it might be a timely idea to liquidate those digital assets by "spending their gains directly."

Most of the outlets that take cryptocurrencies deal in luxury goods -- low-orbit space flights, high-priced cars and expensive jewelry. But smaller companies like Wolfgang's are starting to adopt new forms of currency as well.

Specifically, Wolfgang's takes bitcoin.

In the same way hundreds of government-backed currencies -- such as the U.S. dollar, peso, yen or euro -- are traded and exchanged, so are hundreds of cryptocurrencies. Bitcoin is the most popular, but others on the market include Monero, Dash and Ethereum.

Bitcoin and other cryptocurrencies rely on the same basic "blockchain" technology. Instead of a central bank holding the ledger, the record of financial transactions, that information is held on all the computers on the bitcoin network. Every time someone makes a cryptocurrency transaction (such as trading it in for cash or buying a hot tub), it's verified against all the nodes in the network. If a person has hooked their computer into a cryptocurrency network, all these transactions happen in the background with unused processing power.

By adding their computer to the network, people can "mine" the cryptocurrency -- that is, slowly rack up more of it into a type of digital bank account, or wallet.

Cryptocurrencies were first unleashed on the world around 2009 when an anonymous developer going by the name of Satoshi Nakamoto created an open-source digital currency software. Since then, the popularity of cryptocurrencies has steadily grown, especially among tech-inclined market watchers and investors.

In 2017, the new currencies made a big splash in media, at traditional banks and on trading platforms. Big-name investors like PayPal founder Peter Thiel, as well as millions of individuals, have put their financial clout and energy behind cryptocurrencies.

One of the things that makes it so attractive is that the market is largely unregulated. In traditional money transfers, such as Western Union, there are "100-year-old cathedrals of middle men ready to collect their fees," Collins explained.

That's not the case for cryptocurrencies. Yet, some governments have made efforts to more tightly regulate the market or ban it outright.

All of this has conspired to make the international bitcoin market incredibly volatile.

Case in point: the value of one bitcoin in January 2016 was a little more than $400. By this time last year, the value was about $1,000. The market value of one bitcoin topped out at $20,000 in early December and its value has been jumping and dipping in the past few weeks.

When it comes to buying a hot tub, the cost in bitcoin depends on the day -- and hour -- a customer decides to make a purchase.

The average price of a hot tub at Wolfgang's is about $5,000, Collins told The Taos News Tuesday (Jan. 16). As of publication, an average hot tub would cost about half of a bitcoin. Last week, that same hot tub would have cost about one-third of a bitcoin.

Because the price is so volatile and the market so unregulated, Wolfgang's uses a mobile app called BitPay to make the process manageable. Collins spent about $30 to get the service set up. Now, if a customer chooses to use bitcoin, BitPay locks in the price for 15 minutes, during which time the customer checks their email and finishes the transaction.

To avoid what would undoubtedly be a nightmare for accountants, the mobile app immediately trades the bitcoin for U.S. dollars so that Wolfgang's never actually holds any bitcoin in its bank accounts.

While Collins is hoping to attract big-time bitcoin investors with a house locally, he knows there are some Taoseõs who might start buying with the currency. Although Northern New Mexico has its share of technophobia, people hate "big banks" and "don't want to be part of the empire out here," Collins said. The cryptocurrency-inclined zeitgeist could prove to be widespread enough that bitcoin could come into broader adoption even in places like Taos.

Or the bubble might burst.

Even after all the effort of following the cryptocurrency market and getting the company set up for digital payments, not a single customer has bought a hot tub with bitcoin.

"If nothing happens, nothing happens," Collins said.

He's still watching the market and is prepared to ask customers, "Cash, check or bitcoin?"

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