Although there are estimated to be tens of thousands of Bitcoin users worldwide, the currency hasn’t quite caught on in the District. Peruvian Brothers is one of just a few Washington area businesses to accept Bitcoin payments. Others include the Internet strategy consulting firm EchoDitto and DCMJ, a campaign to legalize marijuana.
The Lanzones decided to accept bitcoins because their friends Tyler and Cameron Winklevoss persuaded them to do so. The Winklevoss twins are Bitcoin investors and have been trying to raise awareness about it. (They also are former Harvard University classmates of Facebook founder Mark Zuckerberg, whom they sued in 2004 for allegedly stealing the concept and source code behind Facebook.)
Cameron Winklevoss “and I convince the @perubrothers Food Truck to accept #bitcoin,” Tyler Winklevoss recently tweeted, including a link to a blog post in the Washington City Paper about the truck.
Guiseppe Lanzone thought the currency might help his business. “We think it’s a great way of adding a different choice of payment, to give customers one more way of paying us.” Even potential customers who forget their wallets can still pay for food using bitcoins stored on their smartphones, he said.
Bitcoin is a virtual, decentralized payment system. Bitcoins are bought and sold for cash on various independently run Web sites, with no central authority regulating the exchange.
Users often store bitcoins in virtual wallet apps on mobile devices, as well as on hard drives. As of Friday, one bitcoin was valued at $621.51, according to bitcoinexchangerate.org, but reached more than $1,200 in November.
Since Peruvian Brothers started accepting Bitcoin, only one person has paid that way. The customer’s bill was 0.0095 bitcoins.
“A lot of people are still asking what it is, and we’re still explaining to them how it works,” Guiseppe Lanzone said. “We’re not expecting a huge volume of people” paying in bitcoins.
The Lanzones set up Bitpay, an Internet application that allows them to accept payments on a computer in their truck. Bitpay translates the dollar price for a sandwich, for instance, into Bitcoin based on the current exchange rate; it then displays a black-and-white square design called a QR code, which customers scan with their smartphones. The payment is then transferred from the customer’s account to the merchant’s, and Bitpay takes a processing fee.
For Nicco Mele, founder of Washington-based EchoDitto, Bitcoin payments are a cheaper way to pay large bills.
EchoDitto’s clients include the Clinton Global Initiative, actress and comedian Rosie O’Donnell and the Massachusetts Institute of Technology. EchoDitto is planning to accept Bitcoin payments starting this month using a service called Coinbase.
“Most of our projects are six-figure projects, or within seven figures, and most of our invoices are five-to-six-figure invoices. If you go to pay a six-figure invoice with a credit card, you get slapped with a heavy fee,” Mele said. “Bitcoin presents a compelling way to do payment of large invoices without any additional accrued cost.”
He said he isn’t worried bitcoins might suddenly drop in value: “The risk associated with Bitcoin are pretty similar to the risks associated with payment in foreign currency — there are fluctuations in value of foreign currency. If we were to accept payment in Canadian dollars, the value of a Canadian dollar relative to the U.S. dollar goes up or down, and the value has an impact on the profitability of the work.”
As more businesses accept and use Bitcoin payments, “the risk of losing something in the exchange goes down,” Mele said. And it could also be a marketing tactic, making the firm seem more digitally savvy. “By offering Bitcoin and joining a Bitcoin marketplace, I hope it helps us stand out from competitors,” he said.
But using Bitcoin has serious risks, Georgetown University finance professor James Angel said. Aside from the currency’s volatility — its value often fluctuates between 10 and 20 percent a day — the software used to store bitcoins could be vulnerable to hacking, he warned.
“I suspect that after the faddishness passes and people
realize this is not the next gold, the value will probably dribble away fairly close to zero,” Angel said.