Bitcoin Money

Berlin Becomes Latest ‘Bitcoin Hotspot’

While Bitcoin can serve as a global currency, its growth is not occurring at the same rate universally.  While Bitcoin’s traction has primarily occurred online through exchanges and with merchants who sell online, its use as a payment method for purchases at bricks-and-mortar retailers and for in-person trade is not found that widely just yet.

There is progress though and it is occurring in geographic areas where clusters of Bitcoin enthusiasts exist.  In these areas are the first physical location and retail merchants that are finding commercial success from accepting the cryptocurrency.

A growing cluster growing in Berlin is the latest (and potentially the largest) to form.

Joerg Platzer, owner of bar and restaurant Room 77, announced Bitcoin Kiez.  Kiez is a German word to refer to a local neighborhood, similar to how SoHo is a community within New York City.  Vitalik Buterin of Bitcoin Magazine (@BitcoinMagazine) writes a post on Platzer’s initiative.  Excerpts:

Bitcoin Kiez is a project to get a large number of businesses to accept BTC in Berlin’s Graefekiez district.

The first participants include eating and drinking establishments and a record store.  [Platzer expects] further local merchants to announce their participation soon.

As a local Bitcoin community forms inside Berlin it will be a major step forward for Bitcoin as it will mark the first large-scale Bitcoin acceptance trial to take place in the physical world.

It would also be a great opportunity to see Bitcoin used in the real world by a non-technical audience, and would provide something very concrete to show to Bitcoin naysayers that the currency is now far more than just a speculative investment.

Another cluster is found in New Hampshire, particularly in areas whose population includes many who have moved to the state to join the Free State Project.

The list of merchants in the region who accept bitcoins for purchases include The Pao Cafe restaurant, the Strange Brew tavern (where some of the frequent Bitcoin meetups are held) and a guitar shop — as well as a number of businesses who sell their wares online.

This cluster includes NH State Representative Mark Warden who just won re-election in a campaign which succeeded with the help of donations made using bitcoins.   Vendors at PorcFest normally prefer to barter or do trade in gold and silver but at this past Summer’s event bitcoins were widely used.

Another cluster has emerged in San Francisco, home of many Bitcoin-related E-Commerce startups including CoinBase, the just-launched Bitcoin Store, CoinDL, and OpenCoin, and home to bricks-and-mortar merchants who accept bitcoins including Cups and Cakes bakery and soon as well, 20 Mission.

Finland, and in particular, Helsinki, is where another cluster exists.  Staff at Vegemesta know all about Bitcoin and payments are handled in seconds, as is shown in this video where Bitcoin was featured at length on a Finnish news station.  Bitcoin is even accepted by medical professionals, with a Helsinki dentist being among the first to begin doing so.

Simply accepting bitcoins doesn’t guarantee that there will be customers paying with it.  Bitcoins are not easily or inexpensively obtained in many parts of the world yet so in those areas, few physical merchant locations see any economic justification from accepting bitcoins.

But Bitcoin is steadily permeating throughout the world.  A business that ships most anywhere finds additional revenues when accepting a globally accessible currency like Bitcoin.  Even if Phoenix Arizona doesn’t seem to be a Bitcoin hotspot, Phoenix merchants like Liberty Coin can use the bitcoins they receive for payment for their purchases made online with other merchants — for instance, substituting a purchase that might otherwise have been made through NewEgg with dollars can now be made through Bitcoin Store.  The advantage to doing this is that a Liberty Coin can then avoid having to convert the bitcoins back to fiat.

There was the expectation that a new Bitcoin cluster would form as part of the private “model cities” project in Honduras but that nation’s Supreme Court struck down plans for that development to proceed.

Bitcoin hotspots are also expected to form where there are many travelers though the use of bitcoins during travel is still a relatively nascent practice.

The traveler wishing to use bitcoins today can usually make do with the help of local traders, many of which can be found on Local Bitcoins.  This allows a traveler to avoid carrying large amounts of cash to the travel destination and in many instances these trades occur at a much better rate than seen when performing foreign ATM withdrawals.

While the transaction volume for this in-person payments remains today at relatively trivial levels (even after counting the successful Bitcoin Friday), there is much growth potential.

Paying using a mobile and QR code is something Square, currently processing nearly a billion dollars worth of transactions each month, is driving forward.  And to the consumer using a Bitcoin mobile payment app isn’t that far of a divergence from using Square wallet.

Furthermore, while Square’s expansion into Canada does make them an international payments company, a consumer with just a Square wallet can’t eat at Room 77, or anywhere else in Berlin.

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