Bitcoin gaining acceptance — slowly
South Florida businesses taking a cautious approach
In a downtown Miami currency exchange, Andrew Barnard popped a $100 bill into a Bitcoin ATM machine, and within moments, his electronic “wallet” was credited with a fractional portion of the virtual cryptocurrency.
“The demand for Bitcoin has grown a lot since we first started,” said Barnard, co-founder of Miami-based Bitstop, which operates Bitcoin ATMs in Florida and California. “In 2015, we put our first ATM in Wynwood, and then downtown Miami.”
Now, Bitstop has 50 machines statewide. Its customers: senior citizens, doctors, lawyers and other white-collar workers.
Despite the wild swings in the price of Bitcoin, or perhaps because of them, South Florida consumers are eager to get in on the action. They like the ease of use, speed of transactions and the anonymity. And a growing number of local businesses are eager to serve them.
Monarch Air Group, an on-demand private jet charter company in Fort Lauderdale, in November announced it would accept Bitcoin. The company caters to Fortune 500 corporations, entrepreneurs and government agencies.
“What led to the decision is customer demand,” said company President David Gitman. “People requested it several times … I’m not sure how serious the requests were, but it was out there. We did research.
“Today, it is real. As a service provider in the private aviation industry, we look to innovate. We definitely decided it was something we needed to do.”
Gitman acknowledged that customers appear to be reluctant to use Bitcoin to buy goods and services because many jumped into the market when the price
peaked, only to see it drop sharply in recent weeks. After rocketing toward the $20,000 mark in mid-December, it has since plunged to below $8,000.
“Once Bitcoin fell, a lot of people lost interest,” he said.
Denison Yacht Sales of Fort Lauderdale recently accepted Bitcoin to charter a yacht for a client, said company founder and President Bob Denison. The company is also accepting Bitcoin from customers who want to buy new vessels. Denison has sold two boats and expects to close a third sale using Bitcoin within the next month.
“The anonymity is very nice for anybody who wants to buy a big asset and not have everybody in the world know who it was,” he said, “and you can transfer Bitcoin from one wallet to another very fast.”
Small business operators want in as well.
At Hair Las Olas, a salon in downtown Fort Lauderdale, owner Marco Pulgarin first became an investor and then decided to accept Bitcoin from customers. A sign on his counter offers 10 percent off to any customer who pays in Bitcoin.
“You can see the excitement there, and that’s what drew me to it,” said Pulgarin, who recalled jumping into Bitcoin last October when the price was $6,000, then sold his position at the nosebleed level of $18,000.
In real estate, one of the bedrock industries of South Florida’s economy, real estate agent Stephan Burke of Brown Harris Stevens said he and partner Carol Cassis executed the region’s first home sale using Bitcoin in 2014 — only it involved a buyer who converted Bitcoin to cash. “He had amassed enough cryptocurrency to buy a property,” Burke recalled.
Three years later, the brokers assembled what they believe to have been the first known Bitcoin-to-Bitcoin home transaction in the United States — for a condo in the Edgewater section of Miami.
“There are a lot of non-believers,” Burke said. “Well, it’s here.”
But the precise extent of consumer and business involvement in Bitcoin is hard to calculate.
The Federal Reserve Bank of Atlanta, which tracks economic activity in Florida and other Southeastern states, has no information on the extent of Bitcoin’s use in the region.
And bankers and economists sound less enthusiastic than the businesses and consumers who are giving it a try.
John Harris of Coral Gables Trust Co., which maintains offices in Fort Lauderdale and West Palm Beach, said he knows clients who hold Bitcoin as a hobby. But it’s not an asset he would hold as part of a wealth management portfolio.
“We’re very conservative,” he said. “[Wealth management] runs counter to what the cryptocurrency stands for. We invest for preservation.”
The recent wild swings in the dollar price of bitcoin removed any notion of price stability during the pendency of real estate transactions.
“Some of these people willing to sell real estate for Bitcoin were hoping it would go up,” Harris said.
Security is also significant issue. Within the past three years, Bitcoin exchanges have lost millions in the cryptocurrency to hackers who stole it. Facebook has stopped taking ads that would involve cryptocurrencies because of the potential for fraud. And regulators from Asia to Europe to the United States are stepping in to curb fraudulent “initial coin offerings” that appear to be flooding the marketplace.
Matthew Kohen, an attorney with the Carlton Fields law firm in Miami who advises ATM operators, exchanges and other companies, said porous security is a significant problem facing the marketplace.
“The biggest challenge at this point is probably not legal,” he said. “It’s the technological challenges.”
These include protecting consumer identification keys to ensure that “no malware or a malicious actor can get a hold of it.”
Others warn that cryptocurrencies are a means of exchange with no government backing.
“To me, a currency has to have underlying value. For example, the dollar is backed by the United States and regulated by a central bank,” said Antonio Villamil, a longtime South Florida economist who heads the Washington Economics Group consulting firm in Coral Gables. “I’m watching it, but I don’t know what the end result will be.”
Despite the enthusiasm of Burke, the Miami real estate broker, others in real estate and development either rule out its use completely, or approach it with extreme caution.
Shahab Karmely, the Miami developer behind KAR Properties, is not a believer because cryptocurrency, unlike real estate, is not a storehouse of wealth.
“The broader issue is why are these digital currencies actually getting any traction at all?” he said. “I think all digital currencies are subject to theft. The technology has to be fully ironed out.”
Peggy Fucci, whose One World Properties sells high-end real estate in Broward and Miami-Dade counties, and who is establishing an office in China, observed that many buyers and sellers are hesitant because they don’t understand how the system works. But she’s intrigued by the cost-cutting aspects offered by cryptocurrencies.
“If you’re a vendor and you accept credit cards, you have to pay 3 percent [in fees] or whatever to use the system,” she said. “When you move into cryptocurrencies, none of that exists.”
Still, she doesn’t think the real estate industry is ready to sign up for widespread use.
“It’s just too early in the game to affect our industry in a different way,” Fucci said. “In another two years, we may be having a different conversation.”