Buy it with bitcoin in New York, but it's not cheap

December 3, 2017

An illustration of a Bitcoin sign in Hong Kong. Investors' interest has been piqued by the cryptocurrency's surging value
An illustration of a Bitcoin sign in Hong Kong. Investors' interest has been piqued by the cryptocurrency's surging value
At Melt Bakery, a hole in the wall that sells ice cream sandwiches in New York's upscale Manhattan neighborhood, you can pay for your guilty pleasure in bitcoin.

And while a few swipes of a mobile app are all it takes to fill your electronic wallet, the novelty, for now, comes at a hefty cost.

Melt is one of several small stores in America's biggest city now accepting the bitcoins, hailed by some as the future of currency.

Investors' interest has been piqued by the virtual currency's surging value while industry insiders see it as an alternative instrument for consumers who want to shop online but don't have access to traditional instruments like a credit card.

It has even triggered an expanding ATM network that lets people turn their cash into bitcoins, and their bitcoins back into cash.

At Melt's checkout counter, each transaction can take several minutes to process and trigger varying fees.

That means a $5 chocolate ice cream sandwich cost $9.29 for a recent bitcoin purchase.

Gift cards

Though its presence is growing, bitcoin use is still far from widespread at the storefront level.

A New York chiropractor who released a statement in 2014 announcing he would accept bitcoin payments has yet to receive any.

A man walking past a signboard in Tokyo informing customers that Bitcoin can be used for payment, as more and more major compani
A man walking past a signboard in Tokyo informing customers that Bitcoin can be used for payment, as more and more major companies now accept virtual currency

Nick Allen, head of product development at the Blockchain Technologies startup, acknowledges such use is limited.

"It's just for promotion," said the 24-year-old.

"Bitcoin will never be used largely in real life. Transaction fees are too high and an owner is not able to track the transactions made by its employees."

For his part, Allen converts his entire income into the currency which he then uses to do all his shopping online, including basic groceries.

He buys store gift cards on an online platform where, he says, vendors "want bitcoins more than they want gift cards."

In just a few clicks, he can buy $100 worth of takeout food delivered by UberEats for just $36.

But he found himself in a bit of a bind during a recent trip to Amsterdam, where, without a credit card and just 200 euros ($238) in cash, he couldn't find anywhere to convert his bitcoins.

Buy tickets, sofas

More and more major companies now accept virtual currency, including Bitcoin but also others, as a valid form of payment—from booking a flight on Expedia to a new sofa from retailer Overstock.

Value of bitcoin in 2017
Value of bitcoin in 2017
"We are a big believer that it is good for us," said Jonathan Johnson, president of Medici Ventures, Overstock's subsidiary that oversees a portfolio of blockchain technology and fintech businesses. "It is another way for customers to spend money at our stores and it is cheaper for us because we don't have to pay a credit card transaction fee."

The firm initially converted all its bitcoins into dollars, but now retains half in order to pay suppliers, and to take advantage of its surging value.

A bitcoin was worth about $1,000 at the start of the year, but is now more than $10,000.

At a small grocery store in Harlem, Matthew, a former financier who now works in tech and who gave his first name only, said he bought his first bitcoins in 2016 and was now withdrawing his profits from an ATM.

"Buying bitcoin at an ATM is the easiest and safest way to do it," he said, adding he did not entirely trust other platforms.

Investors make up 25 percent of the userbase of Coinsource, a nationwide bitcoin ATM network, according to its manager, Sheffield Clark.

The majority of users see the currency as "a medium of exchange to buy things online," explains Clark, who adds that in the future, bitcoin will likely complement rather than replace real money.

It is especially useful for those who "may not have access to a PayPal account or access to traditional financial services such as a credit card or debit card account," he adds.

Explore further: What is bitcoin? A look at the digital currency

Related Stories

What is bitcoin? A look at the digital currency

November 29, 2017

The price of a single bitcoin has pierced the $10,000 level and some experts say it could rise further. The world's most popular virtual currency allows people to buy goods and services and exchange money without involving ...

What is bitcoin? A look at the digital currency

May 16, 2017

It's worth more than an ounce of gold right now, it's completely digital and it's the currency of choice for the cyberattackers who crippled computer networks around the world in recent days.

Dutch family sells everything to bet on bitcoins

October 19, 2017

A Dutch family has sold virtually all they own, including a business, their home, two cars and a motorbike and invested the takings in bitcoin just as the virtual currency is soaring to new heights.

What is bitcoin? A look at the digital currency

December 9, 2015

Australian police raided a home and office Wednesday that, according to technology websites, belongs to the founder of the virtual currency, bitcoin. However, the origin of the currency remains murky, as is the identity of ...

Recommended for you

Coffee-based colloids for direct solar absorption

March 22, 2019

Solar energy is one of the most promising resources to help reduce fossil fuel consumption and mitigate greenhouse gas emissions to power a sustainable future. Devices presently in use to convert solar energy into thermal ...

NASA instruments image fireball over Bering Sea

March 22, 2019

On Dec. 18, 2018, a large "fireball—the term used for exceptionally bright meteors that are visible over a wide area—exploded about 16 miles (26 kilometers) above the Bering Sea. The explosion unleashed an estimated 173 ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.