However hesitantly, Israeli businesses are joining the trend toward accepting bitcoin as a valid method of payment, and using it for investment purposes as well, Globes reported on Sunday.
The virtual exchange has risen dramatically. In 2013, one bitcoin was valued at less than $5, whereas it was up to $3,000 last May, and businesses all over the world are taking note.
The number of Israeli firms willing to conduct transactions in bitcoins are still limited, but they may soon proliferate.
“We started to offer the option of paying in bitcoins in order to appeal to the younger segment of buyers, which uses virtual currency. Since bitcoins are the most famous virtual currency, which has also passed the test of time, we included it. We can’t rely on every new virtual currency, because it’s hard to predict whether it will survive. Today, we’re considering adding other advanced means of payment, but only after we have seen that they have proved themselves in the market,” says Anton Goldstein, co-owner and CMO of the Zipy online shopping platform.
Payment using virtual currency is conducted through a digital wallet on a smartphone. The apps are managed like a bank account. When a person registers, the particulars of the credit from which the payment is deducted are typed in, and the balance is according to the currency. Money can be transferred to the business through a QR code scan, or through its account number.
Conversion to shekels is accomplished through a standard exchange rate which is updated every 10 minutes. The transactions are subject to tax laws like any conventional currency.
The risk in using virtual currency lies in its lack of stability. “It’s like a social convention that can disappear. If the value of bitcoins plunges tomorrow, what I have will be burned, and that’s the risk of virtual currencies. On the other hand, the bitcoin has proved itself so far, and therefore serves my interest as a business, and that of the consumers who hold bitcoins and want to make payments with them,” Golstein says. But he minimizes the risk by keeping the amount of transactions he makes in bitcoin to a small percentage of his overall volume.
Convenience is a big selling point. As one Israeli businessman explained: “In this way, my clients can pay me any way they want, and in any currency: dollars, euros, or pounds sterling – as long as I get shekels at the par value according to the transaction date. Payment in bitcoins is quick, the real value is available, and the price is not subject to dispute.
“In comparison with credit cards, for example, the procedure is easier. While with credit, the amount can be lower, because of the clearance commission, with bitcoins, because of the exchange rate, it’s possible that I’ll get more in the end. For example, if the amount of the transaction is NIS 1,000, with a credit card it will be NIS 950 net of the 5% clearance fee, while with bitcoins, I might get NIS 1,020, depending on the exchange rate. Furthermore, a bitcoin transaction can’t be canceled, and as a business, this gives me important confidence.”
Much of the appeal is its gimmick value, something new and quirky. But, like any gimmick, the appeal can quickly fade.
In fact, some who’ve tried it have already given up on the virtual currency, either due to technical problems or lack of interest among their customers. Whether it will become a permanent part of the world economy remains to be seen.