Imagine a place where there is no paper money. No coins, not even credit cards. This is the world of Bitcoin, a digital currency with no physical presence.
Video explanation of the Bitcoin.
While Bitcoin is very popular in other parts of the world like the Czech Republic (where one strip mall accepts Bitcoin as its only form of payment), the technology is still pretty new in Los Angeles. Some love its convenience, some are into it as an implementation of the Libertarian notion of decentralization, others are using it to purchase illegal services and substances; and there are those who question its value.
Bitcoin in its infancy
But then there's super fan Pinguino, who goes by her first name only. She uses it, blogs about it and tries to convince local merchants to accept it.
It didn't take much convincing for one merchant.
Francisco Domiguez, manager of Hollywood-based Meltdown Comics was immediately convinced. “I liked the whole concept but my question was, ‘How many people have it?’ She [Pinguino] told me there's a world out there that has it, but nobody really knows where to spend it," he said. "Ding! I thought, how do I get them to spend it here?”
Dominguez and Pinguino complete their first Bitcoin transaction. - Photo Courtesy of Pinguino
A VIEW FROM THE OUTSIDE
This is “the city of dreams, where people move to and try to make it," said Levin, when asked why he chose L.A. With all of that moving around comes a lot of money transfers, to and from other places all over the world. Levin explains that is the kind of environment that is ripe for Bitcoin to succeed.
Companies like Tony Gallippi's BitPay are helping to promote its value, too, by urging merchants to accept it. Prior to BitPay, Bitcoin could only really be used to buy things online. Merchants now have the option to convert any Bitcoin they receive into U.S. dollars (or the local currency of their choice) at the end of each day. The funds can then be direct-deposited into their bank account, generally at a lower cost than credit card transactions.
And, according to Victoria van Eyk, Vice President of Community Development of ChangeTip in San Francisco, it can stimulate conversation and subsequently the universe. "For the first time, we are able to use a topic that isn’t taboo to open up ‘what is money’ and ‘how does money work’ and ‘how do we get it’ and ‘how does it operate," said van Eyk, who attended the Keynote 2015 conference. "Once we open up the conversation and we create a new, better money that we actually control, that changes the world.”
LOCAL ISSUES ABOUND
But while there's convenience to using Bitcoin, L.A. attorney Andrew Beal, suggests that there's not much protection.
“With Bitcoin, there’s no insurance and no protection if you are the victim of fraud," he said. And, unlike credit cards, you can't spend Bitcoins you don't have.
Bitcoin is a double sided coin that can stray through some risky business.
Not everyone, however, is using Bitcoin for good. Joe Black of Good Vapor in Downtown L.A. says he sees Bitcoin used on a daily basis, sometimes for illegal purposes by pimps and prostitutes.
Joe Black discusses how BTM's draw an eclectic crowd.
“It varies,” Black says. “Some days you won’t get anyone, and some days you’ll get five to six people, so on average I’d say it’s two to three people per day” that come in to use the Bitcoin teller machine located in his store.
In addition to its illegal usage, Bitcoin's value is constantly fluctuating. At one point it was worth around $1,100 and now it's roughly $270.
The future of bitcoin is uncertain.
While the future of Bitcoin in L.A. is still uncertain for some merchants, Joshua Lederman, Director of Product at Gem (a Venice Beach-based Bitcoin-startup), would really love to see this digital currency take off in L.A.’s farmer's markets.
“[When] you’re dealing with farmers, you’re dealing with people that are getting price gouged with merchant processing fees, or they take cash only,” says Lederman. “It’d be nice to be able to just pull out my phone and scan their QR code and send them Bitcoin that they can then quickly extract into cash [if and] when they feel like it.”
For Pinguino, the more options, the better. When the currency is circulating, it’s better for stability because if her Bitcoin “just sits in one spot, the price isn’t going to stabilize. It needs to be rotating through the system. That’s one of the reasons why if anyone is taking Bitcoins, I will always support them.”