Bitcoin remains an underground currency in Asheville

ASHEVILLE – For 18 years Robert Mulligan has taught his students at Western Carolina University about the ins and outs of economics — from how its conditions can influence social issues to understanding money, financial markets and economic policy.

But the longtime economics professor has had to teach himself about Bitcoin — a topic so new that college textbooks aren't even mentioning the digital currency by name.

"The economic landscape could change much more rapidly than many people realize," Mulligan said. "Once more people start accepting Bitcoin, then it's a medium of exchange. Every inch the snowball rolls downhill, the more momentum and more mass it will take on."

That snowball for Bitcoin acceptance by businesses and consumers has been slow to gain traction in Western North Carolina despite its worldwide influence.

According to Bitcoin's website, the value of all Bitcoins in circulation exceeded $1.5 billion U.S. dollars at the end of August 2013, with millions of dollars worth of Bitcoins being exchanged daily.

Just three businesses in Asheville — a coffee cart, a law firm and a national chain of jewelry stores — accept Bitcoin as a method of payment, though all see potential for greater use in coming years.

"I look at my parents and how they just got debit cards, like, four years ago. For years, they refused," said Ryan Prentiss, who owns The Coffee Pedlar, a Bitcoin-accepting business in Asheville. "But Bitcoin, well, it is still just so foreign to people."

An uncommon currency

Most afternoons on the corner of Pritchard Park, Prentiss can be seen manning his artisan coffee shop on wheels, which is a custom-built coffee bar that has been mounted to his trike.

"I think coffee is a great social lubricant," he said. "For me, this business is half about coffee and half about my interactions with people and developing those relationships."

Within minutes, a woman is ordering a Japanese iced coffee.

After the two talk briefly about the difference between Ethiopian and Rwandan coffee, she pays him in cash, takes her iced coffee and leaves.

Prentiss starts to chuckle as he looks at the "Bitcoin Accepted Here" sticker, which has been plastered to the front of his mobile coffee cart for almost a year.

"It's almost laughable because I am a push-cart vendor that accepts Bitcoin, and I've only ever gotten two customers that have ever paid me in Bitcoin," the 30-year-old entrepreneur said as he put the money he just earned in a leather pouch. "It's just more of a conversation piece at this point than an actual practical thing."

The most common question he fields from inquisitive customers is simply, "What is Bitcoin?"

Bitcoin is a form of digital money or crytpocurrency. Just like sending an email, Bitcoin is transferred directly from person-to-person.

Unlike the woman who handed Prentiss her money at the coffee stand, Bitcoins are transferred completely online rather than in the physical world.

An individual can purchase Bitcoins online through a Bitcoin exchange. Those Bitcoins will then be stored in an individual's digital wallet. Bitcoins can then be sent electronically through a computer or electronic device with the push of a button.

One Bitcoin equaled $244.27 on Monday. That would make a $3.50 iced coffee pour-over at the Coffee Pedlar worth .014 Bitcoin.

Daniel Spuller, a self-described Bitcoin enthusiast and the cofounder of the Cryptolina Bitcoin Expo event held annually in North Carolina, said Bitcoin's decentralization is its most important characteristic.

"No single institution controls the Bitcoin network. This puts some people at ease because it means that a large bank can't control their money," said Spuller, who served as the public information officer for North Carolina's Secretary of Commerce from 2013-14.

Though each Bitcoin transaction is published online in a public log known as the block chain, the names of the buyers and sellers are never disclosed beyond their Bitcoin wallet ID number.

A criticism of this feature is that it has helped Bitcoin become the preferred currency for people who are participating in nefarious activities online, like buying and selling drugs.

Despite Bitcoin's originality, Mulligan said public awareness about the cryptocurrency remains low in WNC.

"Whenever you see a magazine article on Bitcoin, what they do is they show those commemorative golden medallions that people made to promote or capitalize on the popularity of Bitcoin. But it's a virtual currency and doesn't exist like that," he said. "One thing that money should do is it should be a generally accepted medium of exchange. But for the most part, with Bitcoin you still have to go through this extra conversation. That may change as more merchants accept it, but at this point it is still not there."

'We were hoping some nerds would think it was neat'

While The Coffee Pedlar has had two customers pay in Bitcoin, it's more than Minick Law can say.

Attorney Lance Williams, who pushed for the firm to start accepting Bitcoin, sighs before he begins to talk about the digital currency.

Despite having law offices in Asheville, Charlotte, Gastonia, Hickory and Waynesville, no one has paid the firm in Bitcoin.

Williams, who has been practicing criminal and personal injury law at the firm for three years, said he thought accepting the digital currency would help the law offices to stand out and appeal to a variety of potential clients.

The firm was doing some work with a few South American clients last year. Rather than making them drive to a physical place to exchange their money for dollars, Williams thought converting their money into Bitcoin would be easier.

And there was the novelty factor. "We were hoping some nerds would think it was neat and flock to us for that particular reason," he said.

But Williams said they aren't giving up on Bitcoin just yet. That's because it does not cost anything to accept Bitcoin.

As a solo entrepreneur, Prentiss said the no-cost factor was part of what prompted him to start accepting it.

Compare that to Square, a point-of-sale app Prentiss uses to accept credit cards at his coffee stand. The service charges him a credit card processing fee of 2.75 percent on each sale made with a card. Bitcoin charges nothing.

But Prentiss said he tries not to get too wrapped up in the behind-the-scenes mechanics of each sale he makes.

"You scan it, money appears in my account and you pay me. That's the bottom line for me," he said.

Reeds Jewelers sees Bitcoin success online

Last summer, Reeds Jewelers started accepting Bitcoin on its website and at its more than 60 brick-and-mortar locations nationwide, including its storefront inside the Asheville Mall.

The jewelry company, which began almost 70 years ago in downtown Wilmington, was also the first retailer in the country to accept Bitcoin both online and in stores.

"In today's world, you've got to be able to give those customers what they want, whether it's Amazon checkout, Google Wallet or Bitcoin," said Mitch Cahn, the director of marketing and business development for Reeds Jewelers.

Though Cahn said he was expecting to see the company's first Bitcoin transaction take place on the company's website, the first two Bitcoin payments actually happened in-store in Huntsville, Alabama, and in Baltimore.

Since then, Cahn said the split between Bitcoin transactions and other payment methods has been "pretty 50-50."

However, the retail jewelery store chain has noticed something unique about its customers that choose to pay in Bitcoins.

Though Cahn was unable to disclose a specific dollar amount or range due to company policy, he did say that the average ticket total for Bitcoin customers is almost double the average ticket for other customers.

"That tells me that people that hold Bitcoin tend to spend more than those paying with credit or cash," he said.

Despite the success Reeds Jewelers is experiencing with Bitcoin, Cahn said more education is needed in the greater marketplace about what the currency is and how it functions.

"I actually just did a roundtable discussion recently at a university. The kids were young and tech savvy and they had all these questions about it," he said. " I think the industry as a whole has got to do a better job of getting people to understand it."