South Carolina businesses are exploring a future in monetary transactions via the completely digital currency bitcoin.
Most transactions by bitcoin, which was launched in 2009 by a still-anonymous creator, are done with a smartphone or tablet application. The person making a payment scans a QR code, a specially made square barcode, and the bitcoin “keys” – secret numbers that allow access to bitcoins – are transferred between two “wallets,” the term for bitcoin accounts.
Physical keys also exist in coin, plastic or paper forms and have the proper QR codes printed on them.
Typically, there is no third party, such as a bank, between the customer and the business during the transaction. The service is Android-based, and there is no easy way for an Apple device to use a bitcoin app.
According to coinmap.org, a website that allows users to pinpoint businesses worldwide that accept bitcoin, at least 11 businesses in South Carolina accept bitcoin as a form of payment. Most of them are related to medicine or construction work, though there are a few automotive-related businesses. All the listed businesses are privately owned, local companies or individual people.
Eric Boffe, owner of Southern Motor Co. in North Charleston, said his father, who owns an apartment complex in Clemson that accepts bitcoin as payment, gave him the idea to open up bitcoin payments for his used car dealership.
Boffe said he’s had one transaction since he began accepting the currency about six months ago. He said the entire payment process took about 20 seconds and was much easier, cheaper and faster than a traditional wire transfer, which he said could take up to a week to process. Boffe is optimistic about the digital currency’s potential and wants to see bitcoin become more widespread. He said Southern Motor Company would continue to accept the currency as long as it remains a stable and reliable service.
Duffy Ledford, owner of Dynamic Truck Repair in Columbia, said his business started accepting bitcoin around the beginning of the year to take advantage of lower transaction fees and the novelty of an all-digital currency. The company hasn’t had any transactions through bitcoin yet, but Ledford said that despite any “kinks” bitcoin might run into, he would keep the option open.
Barry Horst, owner of Wired Minds Tutoring, LLC, in Greer, said that the center started accepting bitcoin payments primarily as part of its focus on using cutting-edge technology.
Wired Minds has not received a single payment through bitcoin since it started offering the service in February. Horst doesn’t believe the future of bitcoin is particularly secure, but he said he would continue offering the service regardless.
“It’s kind of a fun, novel thing,” Horst said. “But I don’t foresee ever being paid with bitcoin.”
A person or group of people using the name “Satoshi Nakamoto” launched bitcoin in January 2009. It is still unknown who or what Satoshi Nakamoto is, though Newsweek attempted to interview a man with that name earlier this year. This Nakamoto was evasive, communicating only via email, and did not confirm or deny his connection to bitcoin. He later completely denied being the currency’s creator.
The IRS imposed new tax rules March 25 on what it considers “convertible virtual currency,” which is a virtual currency that has real monetary value and can act as a substitute for real currency. The IRS treats bitcoins and other virtual currencies as property, not currency, which means that any bitcoin transaction, gain or loss worth at least $600 is subject to information reporting laws and must be carefully tracked and reported when filing federal and state income taxes.
Bitcoins, according to the IRS notice, must be reported at “fair market value” at the time they were acquired, made tricky by the virtual currency’s constantly fluctuating value. According to bitcoinprices.com, a single bitcoin was worth about $495 on April 22 on exchange markets Mt. Gox and Bitstamp, but the value fluctuates constantly, often by $10 or more a day.
Bitcoin holders earlier saw trouble when Mt.Gox, the largest bitcoin exchange, filed for bankruptcy in February after losing about 850,000 bitcoins in a suspected hack, at the time worth about $450 million. Since then, Mt.Gox has “found” about 200,000, roughly $100 million in today’s values, in a forgotten wallet.