New York: The cyber currency bitcoin is seeing increasing adoption, said a May 31 panel on “Bitcoin and the Jewelry Industry: What You Need to Know.”
“In terms of the world’s economic system, bitcoin is doing small numbers,” said the panel’s moderator Verichannel CEO Jacques Voorhees, whose son works for a bitcoin company. “But the adoption rate is soaring.”
Some 50,000 merchants have signed up with bitcoin, Voorhees said, including jeweler Tivol and Overstock.com, which recently passed $1 million in bitcoin sales. He said that bitcoins are created through a process of “mining,” which is governed by an algorithm.
“The value comes from the intrinsic nature of what you can do with bitcoin,” said panelist Julian Tosh, founder of CoinBus, a Las Vegas bitcoin merchant. “You can send it across borders, you can encrypt it.”
Voorhees said that bitcoin offers the advantage of no credit card transaction fees or charge-backs. “You can refund money to a consumer,” he said. “But you’re the one who decides. If you bring back an empty box, they don’t have to do the refunds.” Jewelers can also reach global markets where credit cards are problematic.
He said his most important advice for accepting bitcoin in your business is that you shouldn’t touch the bitcoins, and get them converted to dollars, which does involve a transaction fee.
Sara Yood, assistant general counsel of the Jewelers Vigilance Committee, said that the IRS has issued guidance for bitcoin ownership, noting that for tax purposes bitcoin is considered property, and owners who receive bitcoins must include their fair-market value as income. “That is why we recommend using a third-party processor that converts it into dollars,” she said.
She noted that bitcoin is illegal in Iceland and Vietnam. Yood said that “it is anonymous currency. That is one of the benefits, but it presents risks.” She said that its increasing adoption had put it on Congress’ radar.