If you’ve recently visited Jones Bros. Cupcakes in Aksarben Village, you might have noticed a new fixture tucked into a corner.
He’s not an employee, a resident pet or an ATM, but he does have his own Facebook page. His name is Jonas, and he is Nebraska’s first Bitcoin Teller Machine, or BTM.
Named by Alpha Bitcoin, the local company that helped bring him to Omaha, Jonas allows users to buy and sell bitcoins right inside the walls of Jones Bros. And soon you’ll be able to buy a cupcake with bitcoin, adding Jones Bros. to the list of about 15 local establishments that accept the digital currency as payment — a list that includes a roofing company, a law firm, a Council Bluffs dentist, a tattoo shop and a handful of local Asian eateries.
“We did quite a bit of canvassing, calling and trying to find the right spot” for the BTM, said Edward Weniger, president of Alpha Bitcoin, a local firm that focuses on advocacy, lobbying and consulting for businesses that use the digital currency. He worked with the BTM’s California maker, Zenbox, to bring the first one to Omaha.
Alpha Bitcoin and Zenbox split the proceeds, which typically amount to 5 percent to 7 percent from each transaction. The price of one bitcoin at the machine is inflated to reflect the fees, Weniger said.
Why Aksarben Village? Weniger said that with the University of Nebraska at Omaha campus, Peter Kiewit Institute and the Scott Data Center nearby, “there’s a startup kind of hum to it.” The typical bitcoin user is generally an affluent male with tech experience, so Aksarben Village is “right up our alley as far as what we’re looking for in terms of a potential user.”
Jones Bros. owner Bill Jones said he wants his business to be at the forefront of digital payment, whatever it is.
“I think digital pay, period, whether it’s bitcoin or something else, is completely the future of the industry. I rarely carry cash anymore, but I always have my phone,” Jones said. “I shouldn’t even say it’s the future because it’s starting to happen right now. We want to be a part of that, and we feel this is kind of our way to ... level the footing with some of these larger corporations.”
But bitcoin has another appeal for Jones and other businesses: There are no fees associated with each transaction, and the payment processing is anonymous and untraceable, with few security risks for identity theft or data breaches.
The BTM simplifies the process of buying bitcoins, which normally must be done through an online “exchange” that operates similar to a bank. The online exchange process has become easier since bitcoin launched in 2009, but generally it requires users to prove their identity and can take up to a few days.
Setting up a mobile “wallet” to deal with bitcoin, on the other hand, is a fairly quick and painless process. Generally, a user buys bitcoins online (or at a BTM) and transfers them to a mobile bitcoin wallet, which operates much like a mobile banking app, tracking transactions and the bitcoin balance of its user.
Here’s how the BTM works to buy bitcoin: Type in your phone number, get a special code that is entered into the BTM, choose to buy bitcoins (or a portion of a bitcoin), scan your mobile bitcoin wallet on the machine and you’re prompted to insert cash. Then your bitcoin balance is updated on your mobile wallet to reflect the purchase, and now you own a bitcoin — or, perhaps, parts of one.
The price of one bitcoin is always fluctuating because of external factors such as speculation or a failing economy somewhere in the world, but as of this week it hovered around $350.
The process to sell bitcoin via the machine is similar. After the user selects the “Sell Bitcoins” option and the amount, a text message is sent with a code (a process that can take up to 10 minutes) to redeem the money. The user enters the redemption code and gets cash. The BTM dispenses the money, and the user’s wallet is updated with the new bitcoin balance.
The BTM can be valuable for those looking to buy bitcoin on the fly and buy a cupcake. But the real value may be in transferring currency between countries, Alpha Bitcoin’s Weniger said.
For example, say a foreign exchange student would like to send money back home. Inserting cash into the BTM allows the student to transfer currency to anyone on the globe, as long as the prospective recipient also has a mobile bitcoin wallet. The recipient could use a BTM there to sell bitcoin and get cash from the BTM in that country’s currency.
Or say you are traveling to Mexico and don’t want to carry cash with you. You could simply buy bitcoin at Jones Bros., store it on a mobile wallet, and then withdraw cash in Mexico City, where there are two BTMs. Hundreds of machines are dotted around the world as far away as Australia, South America and Thailand, according to coinatmradar.com, which keeps a map of BTMs with information about their locations.
“I could use my phone to send money to somebody in South Korea just as easily as I could buy a cupcake, because it doesn’t matter what currency it is or where you’re located geographically,” Weniger said.
White Castle Roofing began allowing customers to pay with bitcoin earlier this year, said the company’s marketing director, Luke Hansen. As a bitcoin user himself, Hansen said he has transferred money to a friend in South Korea to split the cost of a digital video converter. “It was done instantly,” he said. “Bitcoin is like the Internet of money. Why are there barriers between me sending someone in South Korea money?”
When it came to the roofing company accepting bitcoin from customers, Hansen thought, why not? It was as easy as downloading an app on Hansen’s smartphone to accept it.
“I realized how easy it was to take it. We try to take credit cards, but they come with a 2 to 3 percent fee. On a cup of coffee that’s maybe 5 or 10 cents, but on a big project, we could be forfeiting $500 in fees,” Hansen said.
So far, however, no one has paid via bitcoin at White Castle Roofing. “I’ve had several people ask and tinker around with the idea, but they all ended up paying with dollars,” Hansen said.
Joe “Smitty” Smith, owner of Big Brain tattoo shop in the Old Market, said accepting bitcoin as payment has probably gained him some customers.
“I think it’s people who support bitcoin and support the process and the idea behind it that were our clients, so it’s 10 people I wouldn’t have gotten otherwise,” he said. “Which is good in the beginning, but I can’t say I’d like to run that way in the future. ... I would like them to come in because they want a tattoo.”
Right now, bitcoin users are a small but vocal minority. Many are interested in the digital currency because it’s unregulated by the Federal Reserve and maintains privacy and anonymity, but most early adopters are hanging on to their bitcoins with the expectation they will be worth much more someday.
The more evenly distributed bitcoins are among the population, the less likely their prices will fluctuate so much, Weniger said.
“The constant conversation, it seems, is the whole chicken-or-the-egg scenario,” he said: Why would a merchant accept bitcoin if no one is using it, and why would anyone use it if no merchants accept it?
“It’s very much an investment tool right now,” Weniger said, although companies such as Dell, Overstock.com and Dish Network all began accepting the digital currency this year. Thursday, Microsoft announced in a blog post that it will begin accepting the currency in the Windows Store.
But at least a few local merchants see the value, if only because, like Hansen, they are bitcoin enthusiasts. That’s where Weniger and his wife, Bethann Weniger, come in. Through Alpha Bitcoin, they hope to spread the word to merchants, help them with accepting it as payment and let people know about Jonas the BTM.
Jones Bros. will host a launch party for Jonas from 5 to 8 p.m. Jan. 16, featuring free cupcakes, drinks and prizes. Edward Weniger said the couple also will be working with UNO and other Aksarben Village shops on promoting bitcoin and spreading awareness.
“To some degree, part of the hurdle is the pretty huge uphill (awareness) battle we are fighting.”
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