Cleveland is in the middle of a renaissance, and many forms of entrepreneurial innovation have been crucial in this process.
Clevelanders are bearing witness to incredible economic transformations. Entrepreneurs are assuming extraordinary risk in turning voids left by decades of economic instability into world-class opportunities and amenities. Cleveland is in the middle of a renaissance, and many forms of entrepreneurial innovation have been crucial in this process. Bitcoin is a technology innovation that has provided several small businesses in Northeast Ohio a new way to compete in a 21st century, Internet-Age economy.
Bitcoin is a digital currency system launched in 2009, which is not backed by banks or governments, and not owned or operated by any central entity. Bitcoin can be conceptualized as a globally shared, international currency exchangeable for goods, services, and other currencies such as the US dollar (USD). Bitcoin is an open source technology protocol, so its architecture is transparent for the world to scrutinize and improve.
Bitcoin promotional graphics, free to use:https://en.bitcoin.it/wiki/Promotional_graphics
Bitcoin is comprised of two important components:
1. Bitcoin (proper noun): A consensus-based payment network comprised of private computers distributed across the globe. The Bitcoin network validates bitcoin currency transactions between senders and receivers.
2. Bitcoins (common noun): The digital currency units traded over the Bitcoin payment network are called bitcoins, or BTC for short. Bitcoins are designed to function like cash. Similar to cash, there is no way for a sender to reverse a bitcoin transaction. Unlike credit cards, chargebacks are nonexistent.
Bitcoin presents real solutions to many problems inherent with traditional electronic payment systems, which continue to become more expensive, less safe, and inefficient for modern, 24/7/365 consumer expectations. These systems are largely the same today as they were before the advent of the Internet, and digital currency technologies like Bitcoin intend to fill this void in innovation. Increasingly popular in recent media, bitcoins are now used to buy goods and services from high profile businesses such as Overstock.com, Virgin Galactic, and The Chicago Sun Times. Bitcoin intrigues small businesses in Northeast Ohio too, and some have integrated Bitcoin into their business systems.
Three Cleveland-area small businesses now using Bitcoin are The Wine Spot in Cleveland Heights, David’s Grill and Bar in Downtown Cleveland, and Coffee Proper in Lakewood. These businesses can now process bitcoin payments, incurring far lower merchant fees over purchases made with a credit card. There are unique risks to accepting bitcoins, just as there are to accepting cash and credit cards, and bitcoin’s infamous market volatility is one of these risks. Merchants can eliminate this risk by choosing to convert their bitcoin sales to equivalent USD, guaranteed for the USD price paid at the time of purchase. For merchants who chose bitcoin as a speculative investment, they can instead invest all or part of their bitcoin sales in the currency itself.
The checkout process at each business is similar. Merchandise is tallied in USD using the existing cash register. An employee then launches a bitcoin checkout website, enters the amount due in USD, and a QR code (square UPC symbol) is generated. The QR code is embedded with how much the customer owes, and the location of the merchant’s bitcoin deposit account number. The customer uses a bitcoin-funded digital wallet on their smartphone, scans the QR code, and the digital payment is sent. The USD->BTC exchange rate is performed automatically using real-time market data, and therefore the merchant, employees, and customers have only to think in terms of their local currency.
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Bitcoin is not yet mainstream, and there are many years of innovation ahead for it to become so. However, entrepreneurs have a variety of sophisticated tools available to them today, which can help them integrate Bitcoin payment technology into their unique business systems. For businesses in search of a new advantage, advertising “Bitcoin Accepted Here” may be a valuable, and sensible consideration.
The Cleveland Bitcoin Meetup gathers throughout the year at various locations, and all are welcome.
Since this article was written, several Lee Road businesses in Cleveland Heights have organized to establish Bitcoin Boulevard US. Bitcoin Boulevard US will be a global destination for Bitcoin commerce and community, starting May 1. 2014. Visit the official Bitcoin Boulevard US website for up-to-date information. www.bitcoinboulevard.us
Nikhil Chand is an Information Services Manager at Case Western Reserve University. He is also founder of CoinNEO (www.coinneo.com, facebook.com/coinneo, @coinneo), a Bitcoin consultancy serving Northeast Ohio. Outside of technology, Nikhil is an avid explorer of Northeast Ohio’s cultural, arts, dining, music, and golf amenities.