Bitcoin shows staying power as online merchants chase digital sparkle

Thu Aug 28, 2014 1:07am EDT
 
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By Gertrude Chavez-Dreyfuss and Michael Connor

NEW YORK (Reuters) - Bitcoin is catching on at U.S. online merchants including Overstock.com and Expedia, as customers use a digital currency that just a few years ago was virtually unknown but is now showing some staying power.

    Though sales paid for in bitcoin so far at vendors interviewed for this article have been a fraction of one percent, they expect that as acceptance grows, the online currency will one day be as ubiquitous as the internet.

    "Bitcoin isn't going anywhere; it's here to stay," said Michael Gulmann, vice president of global products at Expedia Inc. in Seattle, the largest online travel agent. "We want to be there from the beginning." Expedia started accepting bitcoin payments for hotel bookings on July 11.

    Until recently a niche alternative currency touted by a fervent group of followers, bitcoin has evolved into a software-based payment online system. Bitcoins are stored in a wallet with a unique identification number and companies like Coinbase and Blockchain can hold the currency for the user.

    When buying an item from a merchant's website, a customer simply clicks on the bitcoin option and a pop-in window appears where he can type in his wallet ID number.

Still, broad-based adoption of bitcoin is at least five years away because most consumers still prefer to use credit cards, analysts said.

    "Bitcoin is a new way of making payments, but it's not solving a problem that's broken," said George Peabody, payments consultant at Glenbrook Partners in Menlo Park, California. "Retail payments aren't broken."   Continued...

 
A customer prepares to use a Bitcoin ATM located in Flat 128, a boutique in New York's West Village August 22, 2014. REUTERS/Brendan McDermid