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Use of bitcoin on the increase, but not without problems

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Use of bitcoin on the increase, but not without problems

The number of merchants in the Capital Region who accept bitcoin has grown to an eclectic bunch of m
Use of bitcoin on the increase, but not without problems
Paul Paterakis of NY Bitcoin Group, feeds a $20 bill into a Bitcoin ATM located in Tesoros Cafe' on Union St.
Photographer: Marc Schultz

A winery is doing it. A dentist is doing it. A nonprofit that houses the families of sick children is doing it, as are a creperie, a garden supply store, an overnight diner and a food-waste management company.

The number of merchants in the Capital Region who accept bitcoin has grown to an eclectic bunch of more than a dozen about a year after a Schenectady café became the first local business to accept the digital currency.

“California is the No. 1 place right now for cryptocurrencies,” said Paul Paterakis, a member of NY Bitcoin Group and the man who helped convince many local merchants to jump on the bitcoin bandwagon. “But upstate New York is way ahead of a lot of places when it comes to bitcoin.”

It’s been a year since the bitcoin boom of early 2014, and people are still trying to figure this thing out. The secure, decentralized digital currency can’t be counterfeited. Every single bitcoin transaction is recorded in a public, online ledger. But because it’s so new, few really know what to make of it yet.

Is it going to change world currency as we know it? Is it an investment tool? Should it be banned? Regulated? Left alone to thrive or collapse of its own accord?

Until someone figures it out, a select group of local merchants are trying their hand at bitcoin to varying degrees of success and satisfaction.

“It’s very easy,” said Gloria Herman, owner of Tesoros Café on Upper Union Street in Schenectady. “It’s just like a credit card. You just open the application on your phone, and the customer holds their phone up to ours and you click a button, and a couple days later the money’s in our account.”

The application is a bitcoin wallet, offered for mobile, desktop and Web devices from companies like (appropriately enough) Bitcoin Wallet, KnC Wallet, Hive, Armory, mSIGNA, BitGo, Coinbase and more.

Tesoros Café began accepting bitcoin about a month ago, Herman said.

One of her customers, an engineer at GE Global Research, had held a few bitcoin meet-ups — a meeting for local bitcoin enthusiasts — at her Latin-inspired café, and she became increasingly curious about the new currency.

Finally, after hearing from Paterakis, she decided to give it a go and already has one of only five bitcoin ATMs in New York set up inside her business.

Now, she gets a cohort of bitcoin-using customers that she wasn’t getting before.

“A lot of the people that come here and use it are big into software or from GE,” she said. “I’m surprised the women are doing it, too. We have women and a lot of young people come in and use it.”

Bitcoin seems to be popular among coffee shops and eateries, at least more so than other businesses, Paterakis said, likely because they’re hoping to appeal to and lure millennials.

“We find people between 18 and 34, typically men, are utilizing bitcoin,” he said.

Paterakis was actually the first merchant in the Capital Region to begin accepting bitcoin.

He ran a coffee shop called [email protected] that had locations in Schenectady and Albany. He sold both locations last year to focus full-time on bitcoin and launch a company that educates people on the digital currency.

He’s even pitching a course on digital currencies to Hudson Valley Community College.

Not everyone who jumps on the bitcoin bandwagon stays on it, though.

Louis Bannister, owner of the Enchanted Florist in Albany, was a tough sell at first. It’s not that bitcoin didn’t sound interesting or innovative; it did.

“When you operate a small business, the first thing you learn is you really have to think outside the box to make it,” he said. “But when I was first hearing about it, I thought it was a little too far outside the box for me. I spoke with friends to get their opinions, and articles bounced back and forth, until finally I just sort of very quietly thought, ‘OK, I’m going to do this, and if it doesn’t work, I’ll just stop doing it.’ ”

And that’s precisely what happened.

He performed a test transaction on his new bitcoin software and it worked “beautifully,” he said. Once word got around that his business was bitcoin-friendly, he even started to attract bitcoin users who wouldn’t normally be in the market for a bouquet.

“I sort of at one point was thinking that bitcoin was a hipster chic kind of thing, and it made me want to go out and buy skinny jeans,” Bannister said. “So I thought it would change the demographic of my customer base in a fun way, and it did.”

Except that the transactions never materialized as cash in his account. Or only fractions of them did — like $2 on a $75 transaction.

He contacted customer support, but his queries went unanswered. And then the next big holiday came around and he didn’t have time to think about resolving it.

“I would love to get this resolved,” he said. “I’m still not closed to the idea. I always say to people who call or come in and ask if I accept bitcoin that I think bitcoin is really great and I would love to accept it, but that I’ve had a few technical difficulties and once the kinks are worked out I’m on board. I’m a fair enough person, and I see the wonderful possibilities in this.”

Lawmakers and regulators continue to grapple with whether bitcoin is in need of regulating.

New York Superintendent of Financial Services Benjamin Lawsky proposed regulations last year that would have required digital currency software developers and individual users to get a license to operate or hold bitcoin in the state, but took the proposal off the table after outcry from bitcoin proponents.

Where regulations would offer protections for consumers and merchants alike and impose guidelines on things like the prevention of money laundering and cybersecurity, some experts say bitcoin is best left alone — either to thrive or die a natural death.

Paterakis is among the latter group, though he’s among those who think bitcoin is fated to thrive — perhaps in developing countries first.

“I’m opposed to having bitcoin regulated,” he said. “Consumers are scared, because it’s very volatile right now because it is still a new currency. But the industry is finding ways to stabilize volatility and in places where currency isn’t worth much, like Vietnam or the Philippines or Argentina, this currency is an attractive alternative.”

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