Overstock.com surprised shoppers and analysts by accepting the virtual currency Bitcoin in exchange for merchandise, and since January has sold more than $1 million in products to Bitcoin users. Today, a Silver Spring-based e-commerce start-up is also hoping to cash in on the crypto-currency.
For the past several months, BitcoinShop.us, an e-commerce site exclusively accepting Bitcoin, has been offering tens of thousands of items — from baby strollers to digital cameras. Shoppers can buy a five-pound bag of gummy bears for about 0.0348 bitcoins — about $22, on March 6 — or a 13.1-inch Apple MacBook Air for 2.0573 bitcoins, or about $1,356. After shoppers place orders in Bitcoin — and are charged using payment app Bitpay — BitcoinShop pays vendors in dollars, and places the order for customers. BitcoinShop takes a transaction fee for itself.
“Bitcoin is pretty new,” BitcoinShop.us chief executive Charles Allen said. When the site started in September, “people were buying them, but there was nowhere to spend them — if you can’t buy anything with them, what’s the point? Our goal is market participation. We want to get holders of Bitcoin.”
In the past several weeks, the global Bitcoin network — which operates without a central authority — has suffered a crisis of confidence. In late-February, the Tokyo-based exchange Mt. Gox, where Internet users could trade currency for Bitcoin, filed for bankruptcy, allegedly losing hundreds of millions of dollars.
“There’s a lot of skepticism around the Bitcoin system in general,” Allen said.
But he noted that his company, which now trades publicly on the New York-based over-the-counter financial platform OTC Market, is trying to avoid Bitcoin controversy by remaining transparent. “By being a public company, we give investors and consumers a way to look at our business ... We thought it was important for the Bitcoin community.”
Shares currently trade under the ticker BTCS, for about 80 cents on Thursday.
Last month, BitcoinShop.us raised $1.8 million from investors after merging with another publicly held technology company, Allen said.
Michal Handerhan, formerly an IT consultant to NASA, and Tim Sidie, a former software engineer at the Space Telescope Science Institute, formed the company in June of 2013. Allen joined as the company’s chief executive in February of 2014 after working in investment banking.
Only a handful of Washington area businesses currently accept Bitcoin, but Allen said the team isn’t discouraged by the lack of interest in the Mid-Atlantic area.
“It’s irrelevant, the local market. We’re an online retailer, and not really competing with brick and mortar stores in that sense,” he said.
BitcoinShop plans to stay completely virtual — instead of establishing its own warehouse and shipping to customers directly, the six-person team relies on its software to coordinate transactions.
“Part of our growth strategy is looking to expand to more sellers and vendors,” Allen said. “We’re never touching the package. In theory, what it takes for us to scale should be minimal.”