A bit of a change: Retailers banking on virtual money

When customers visit David Ayyash’s ChickPea in the D restaurant downtown, instead of pulling out a credit card or dollar bills, they can pay with a completely digital currency that’s not backed by any bank or government: Bitcoin.

Ayyash takes a customer’s payment by generating a code from his tablet, then shows it to the customer before scanning it. The customer then sends the payment over to Ayyash electronically, not from his credit card or PayPal account, but from his cache of bitcoins.

Ayyash started accepting Bitcoin in early June to offer his customers more payment options as well as to “make customers happy.”

“If people ask for a new way to spend their money, we’ll be more than willing to attract them,” he said.

The Bitcoin, launched in 2009 by Satoshi Nakamoto, is worth nearly $300 per unit, rising from just fractions of a cent since its inception. Since Bitcoin’s creation, many international businesses, such as travel agency Expedia and tech giant Microsoft, have started accepting the currency in the same way they would U.S. dollars.

Bitcoin use is relatively simple. Users store their digital credit in an e-wallet, such as Bitcoin Wallet or Bitcoin Core, to purchase goods and services. When it comes time to pay at a restaurant or online retailer, a one-time bitcoin address tied to the digital wallet will receive the funds transferred from one person’s wallet to another without any significant time delays. Even international transfers of bitcoin, as reported by bitcoin.org, take no more than 10 minutes.

And if users want to trade their unwanted bitcoins for cash, it’s as simple as buying them through a reverse process used on many Bitcoin trading platforms.

Now, many businesses within metro Detroit are adapting the currency. Consumers can buy bitcoins and use them at various restaurants and shops across metro Detroit, just like they would a credit card.

“We saw that Bitcoin could potentially be the future,” said Marc Zuccato, owner of the Bronx Deli.

Since November 2013, Zuccato’s restaurants based in Farmington Hills and Pontiac have accepted bitcoins as a form of payment. As a result, his stores have seen a new market of younger, tech-savvy customers emerge.

“The Bitcoin market would be a market that we wouldn’t have otherwise,” he continued.

“I had customers ask for it, and we simply went forward from there,” Ayyash said.

Moussa Boussi, 17, has participated in Bitcoin transactions for more than a year. Since he began, the Dearborn Heights resident has purchased products with his bitcoins ranging from video games to sneakers.

“I started reading up on Bitcoin and got really interested,” Boussi said, ”so I set up a wallet and began mining.”

Mining refers to the process in which new bitcoins are confirmed to be valid, circulated and distributed into the market by its user base.

Peter Klamka, CEO of Bitcoin Brands, further broke ground last year by placing Bitcoin ATMs across Ann Arbor and East Lansing, according to DBusiness. The Bitcoin ATMs work exactly like a regular ATM, except instead of dispensing U.S. dollars, a digital credit in bitcoin will be sent to the recipient.

Zuccato, who maintains a Bitcoin ATM in his Farmington Hills location, says some customers walk in simply to use the machine.

“I ought to put up a sign that reads, ‘It’s OK to dine in!’ ” he joked.

The Bitcoin craze, however, has proven unstable. In February 2014, Mt. Gox, one of the world’s leading Bitcoin exchanges, shut down amidst security issues, in turn losing more than 740,000 bitcoins ($400 million), according to CBC News.

Meanwhile, Ross William Ulbricht, former leader of the Silk Road online drug market, laundered about $4 million worth of bitcoins to fund his drug trafficking business before his 2014 arrest and subsequent life imprisonment. These incidents, among many more, have caused the value of the Bitcoin to fall dramatically both in value and in public standing.

“I don’t like losing money,” said Boussi. “It’s kept me from buying with Bitcoin a few times mainly because I didn’t want to spend my bitcoins on an item that’d be worth less than I actually spent later on.”

However, there appears to be new-found hope for Bitcoin. According to recent charts on Coinbase, Bitcoin values have largely stabilized. As of Monday, one bitcoin was valued at $290, up by more than $60 from just one month prior.

“While I think that Bitcoin, as currently configured, has limitations, the technology ... is one of the most potentially revolutionary developments of the last century,” John Mauldin, head of Mauldin Economics and the publisher of the “Thoughts from the Frontline,” wrote in his newsletter. “I think we evolve to Bitcoin 2.0 or 3.0, using the same block-chain technology, but with a way to make the new currency a truly stable medium of information that can be easily exchanged for goods and services.”

As for Zuccato, he’s positive that the market can only keep improving. He added that he’s never turned in his bitcoins for cash since he began accepting it in his restaurants.

“I actually haven’t cashed any out,” he said, laughing. “I’m hopeful that it’s going to climb back up.”

Contact Sean Vichinsky: svichinsky@freepress.com. Follow him on Twitter @jeepersfreepers.

Bitcoin Q & A

QUESTION: Which retailers in metro Detroit accept Bitcoin?

ANSWER: Other businesses, besides Chickpea in the D and the Bronx Deli, that accept Bitcoin in metro Detroit include:

Urban Bean Coffee, 200 Grand River Ave., Detroit

Papa Romano’s Pizza, 5399 Crooks Rd., Troy

Gracie’s Pastaria, 26734 Michigan Ave., Inkster

Saturn Printing, 35175 Plymouth Rd., Livonia

Q: Why does the value of a bitcoin fluctuate so much?

A: The value of a bitcoin is dictated much like the value of a stock is: factors such as consumer confidence, rising supply, wavering demand, and public perception of the currency based on current events can cause a rise or fall in the value of a bitcoin.

Q: Where can I purchase bitcoins?

A: Anyone can set up a Bitcoin Wallet and obtain bitcoins through secure websites like www.coinbase.com, www.bitcoin.org, and www.multibit.org.