Bitcoin struggles to gain traction with Vancouver businesses

But tech startup pushing more transactions of the cryptocurrency for local merchants 

Float House co-founder Mike Zaremba is a Bitcoin enthusiast but he admits that customer response to the availability of the cryptocurrency payment service at his business has been “very mild” | Photo: Chung Chow

Setting up his business to accept Bitcoin was a “piece of cake,” says Float House co-founder Mike Zaremba.

Vancouver’s Bitcoin Co-op equipped his Gastown location’s computer with the CoinOS program that customers now use as a point-of-sale service.

But getting customers to pay for float-tank sessions using the cryptocurrency has not been met with the same success.

“[Customer response] has been very mild,” said Zaremba, a big enthusiast of the digital currency that’s not governed by any central authority and allows users to exchange bitcoins directly without a middleman charging fees.

Bitcoin’s value is derived from its usefulness as well as its limited supply — just 21 million bitcoins will ever be generated (“mined” in Bitcoin parlance) by sophisticated software.

But a 2015 PwC consumer cryptocurrency survey found only 3% of respondents had used a cryptocurrency such as Bitcoin in the past year. Another 6% said they were either “very” or “extremely” familiar with these digital currencies.

“Consumers will accept and adopt cryptocurrency on a broad scale only when they gain better knowledge of it and see improved availability, reliable cash exchange and an affordable level of effective consumer protection,” PwC said in a separate 2015 report.

Skye Chilton said his Vancouver-based company, Rocket Cases, began accepting Bitcoin on its website in mid-2013, “once [Bitcoin] started to gain a lot of traction in the news.”

But the custom iPhone case manufacturer disabled the option in early 2015.

“The integration with our shopping cart was a bit of a headache, and there wasn’t much demand for it. Most of the Bitcoin attempted purchases never completed their transactions,” he said. “I can’t think of any customer requests asking for Bitcoin payment since we dropped it.”

Amanda Krystalovich, owner of Vancouver’s Krystal Fit fitness studio, began accepting Bitcoin three years ago at the request of friends who were using it.

While initial response was enthusiastic, she said interest among customers has waned.

“It hasn’t really [struck] any new interest,” Krystalovich said. “It was only amongst clients that I already had that wanted to use the currency.”

Despite difficulty gaining traction among small- and mid-size enterprises (SMEs), Payfirma CEO Michael Gokturk said his company would continue to facilitate transactions into 2016.

The Vancouver-based financial technology (fintech) startup processes credit and debit payments for approximately 6,000 SMEs across North America.

Payfirma enabled Bitcoin acceptance last November.

“Unfortunately, to be very blunt with you, we didn’t see too much demand,” Gokturk told Business In Vancouver.

He said general consumers aren’t going into stores asking to use Bitcoin. Instead, the market for the cryptocurrency is mostly made up of Bitcoin loyalists seeking out merchants who will accept it.

“There’s still a lot of skepticism around who holds the risk, what happens when we accept Bitcoin, [and] ‘How do I get paid?’” Gokturk said.

Because of those concerns, the CEO said, Payfirma set out to make Bitcoin acceptance as easy as possible.

The payment processor’s clients check a box on their systems indicating whether they will accept the digital currency. Meanwhile, Payfirma accepts bitcoins from the consumer on its client’s behalf, exchanges it for its dollar value and then transfers the money to the client.

While the new service might not have generated much interest over the past two months, Payfirma is still pursuing Bitcoin services in the new year.

There is about US$500 million worth of unused Bitcoin floating around, and Gokturk said he wants Payfirma to be able to process those transactions even if general consumers remain skeptical.

However, that persistent doubt about the cryptocurrency may not be unwarranted.

Cybertheft drove the Mt. Gox Bitcoin exchange into bankruptcy in 2014. That same year, U.S. federal prosecutors announced charges following an investigation into money laundering and drug trafficking using US$1 million in Bitcoin on the Silk Road online black market.

“Simply put, the technological innovation of cryptocurrency, with its positive attributes, has brought with it a ‘dark side’ in which its most fundamental innovations – speed, secure transfer and store of value and limited personal data exposure – are exploited by hackers and criminals,” PwC’s report said.