You may never need to know about Bitcoin, Litecoin, Ethereum – or any of the other types of cryptocurrency – but since customers can now use “crypto” to pay for purchases at Whole Foods and Starbucks, it’s a good idea to become familiar with the term.  According to Merriam-Webster, cryptocurrency is “any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.” Got that?

There are no bills, coins or credit cards used when a customer makes a payment with cryptocurrency at Whole Foods or Home Depot. The transaction is done through a platform called Flex that converts Bitcoin, which is now the most popular cryptocurrency, into dollars. At Starbucks, the third-party digital wallet app called Bakkt converts Bitcoin to standard currency to use in payment.

Cryptocurrency is a strictly digital system whose value is produced by a complex process called blockchain mining. One of the advantages of cryptocurrency is that it is thought to be a secure digital payment system existing outside of conventional financial institutions. According to Swedish information technology entrepreneur Rick Falkvinge, “Bitcoin will do to banks what email did to the postal industry,” but that remains to be seen.

Those who buy these currencies today often do so in the hopes that they will increase in value. However according to Earthweb’s recent statistics, about 11% of Bitcoin owners used them to pay for goods and services.  Could that be a purchase in your store?

We have already seen a substantial switch from cash and checks to credit/debit cards, and digital wallets.  Virtual currencies could be the wave of the future. The important thing is that consumers continue to shop at our stores, no matter how they pay!

Happy retailing, 

Carol “Orange” Schroeder