Alex Dery-Chaffin sees a revolution ahead.
A bitcoin revolution.
“We are on the brink of a massive change,” says Dery-Chaffin, manager of Tucson’s Chaffin’s Family Restaurant, which recently began accepting the cryptocurrency.
“It’s brand new, cutting edge, but it makes a lot of sense.”
Bitcoins have been a hot topic recently — from money-laundering accusations to a volatile market to a possible computer-programming flaw that has left the world’s largest bitcoin exchange sputtering.
But those problems can’t deter Dery-Chaffin and other Tucsonans who are sure bitcoins are here to stay.
“I believe that by the end of the year you will be surprised at how many people will know what it is and accept it,” said P.J. Dixon, who uses bitcoins whenever they are accepted, has invested in the virtual money, and has a business, Bitcoin Consulting, to help set up retail businesses to use bitcoins.
One of those businesses is Cartel Coffee Lab in downtown Tucson.
At this point, the coffee shop/restaurant has one or two transactions a day with bitcoins, but Jason Silberschlag, founder of the Tempe-based Cartel, sees a future in the cryptocurrency, which allows him to cut out the fees banks and credit-card companies charge.
“For me to see any benefit, I think it’ll take five years,” he said.
Though he does not yet use bitcoins himself, he thinks cryptocurrency has a future, and he likes jumping on to new possibilities early in the game.
“There’s no risk to us,” he said. “At the end of the day, our bitcoins will be converted into dollars.” That allows him to avoid the volatility of the bitcoin’s value, which fluctuates wildly from day to day.
And then, of course, there’s this: “I appreciate the subversive attitude,” he said. “It tends to push against the mainstream to find new and better ways.”
Dery-Chaffin likes the idea that transaction fees will be low to nonexistent with bitcoins, which means a small business like Chaffin’s will stand to make more of a profit.
In addition to accepting bitcoins at the restaurant, Dery-Chaffin has invested in them. But he didn’t go into it blindly.
“One of the detractions is that it’s politically loaded,” he said. “The founder is completely anonymous, and that terrifies people, and (that) made me search other forms of virtual currency. But no one else has the name recognition, which is important in valuation.”
Dixon accepts bitcoins for his consulting business, as well as for his motivational speaking services. He uses the currency whenever it is accepted, and plans to use it extensively on a trip to Japan.
“It’s exciting using this brand-new currency,” said Dixon. “We are in the early-adopters stage; probably less than 5 percent of people has even heard of bitcoin. To know you are using something and involved in a movement — that’s incredibly exciting.”
Since November, he has invested heavily in bitcoins, and he hasn’t been deterred by the volatility of the market.
“For me, the value has gone up” since he bought his first bitcoins last year, he said.
Sierra Vista artist Marguerite Torres isn’t new to the cryptocurrency world — she has been “mining” bitcoins for about two years. Miners are part of a worldwide network that records and verifies bitcoin transactions. She invests in bitcoins, exchanges them for her artwork, and uses them whenever she can.
“Not everyone was sure about the Internet or how to use it when it first came out,” she said. “It’s the same with cryptocurrency.”
She isn’t concerned about the volatility.
“How it fluctuates isn’t important to me,” she said. “I’m more excited about the technology behind it.” She thinks it will take another two years before bitcoins catch on.
But Simone M. Sepe, an associate professor of law and finance at the University of Arizona College of Law, has his doubts.
“I definitely don’t think it has potential as a currency,” he said. “What is the legal nature of bitcoin? Is it a security? Or commodity? Of course it’s not a currency.”
He also cites the risks for fraud and double-spending and, especially, using the cryptocurrency as an investment.
“My major concern is people are saving in bitcoins. In three years time, somewhere, a group of people will develop a new, more efficient software with a more efficient mining process, and people will leave bitcoins and it will collapse to zero. Bitcoin can never be given the dignity of a currency.”
He isn’t alone in his skepticism.
In December, The People’s Bank of China announced that banks and payment processors could not convert bitcoins into yuan. The price plummeted, and put the future of BTC China, one of the world’s largest bitcoin exchanges, in question. Though BTC China began accepting bitcoin deposits again in late January, the earlier move damaged the cyrptocurrency’s image.
There has been other bad news: In late January, Charlie Shrem, CEO of the massive bitcoin exchange BitInstant, was charged with money laundering, and earlier this month, Russia banned the use of bitcoins.
The Japan-based Mt. Gox, the world’s oldest bitcoin exchange, temporarily suspended transactions in early February because of a software bug the organization said would allow fraud. The Bitcoin Foundation quickly countered that there was no bug but a technical issue Mt. Gox has long had and should have prepared for. No matter the reason, the news once again sent bitcoin’s price tumbling.
But advocates of the virtual money will not be deterred.
Mitchell Moen, owner of Tucson’s Spirit Art House, organized an art exhibit earlier this month and advertised that bitcoins, as well as more conventional forms of currency, would be accepted for works purchased. A portion of the proceeds of all sales went to the nonprofit BICAS (Bicycle Inter-Community Art and Salvage).
“It’s important to me that people see that there are legitimate places to use bitcoins,” said Moen. He said less than $100 worth of artwork was purchased with bitcoins at the event.
“I’m hoping people will follow our lead.”
Dery-Chaffin hopes it catches on, as well.
“There are drawbacks, which can make it undesirable,” he said. “But we are at a very exciting time in our economy. … I believe we are on the brink of a revolution with online currency.”