Talk about money: Bitcoin a growing, fluctuating currency option

If you go wine-tasting on a shuttle bus operated by the Santa Cruz Experience, you can pay the fare with cash or a credit card. Better yet, pay it in bitcoin.
“We’ll give you a discount if you pay in bitcoin,” said Austin Twohig (pronounced “too-hig”), CEO of the firm that shuttles passengers to wineries, weddings and airports in the Santa Cruz mountains. “It’s safer for us than credit cards.”
Bitcoin is an electronic money and payment network introduced in 2009 by an anonymous software developer. People buy it at a website, in full bitcoins or fractions, and then use their computer or smartphone to transfer it to merchants willing to accept it.
Twohig recalled transporting about 20 of a company’s employees on a tour. The fare came to $1,700 and was paid with a credit card. Three months later, company officials requested a chargeback from their credit card company, so Twohig never got paid.
“Someone in their finance department decided they weren’t sure the tour happened,” he said. “I couldn’t find the signed invoice to prove we gave the tour, so we were out the money.”
That couldn’t have happened with bitcoin, Twohig said.
“Someone buys something from me, I receive the bitcoin, and that’s the end of the transaction,” he said.
Bitcoin also saves the merchant money on transaction fees. Credit card companies charge about 3 percent to process a charge, but a bitcoin transactions cost Twohig a tiny fraction of that.
Bitcoin is also safe for customers, he said. When you pay a merchant with a credit card, they have your credit card number and can charge you again. And credit card receipts have been used in identity theft. With bitcoin, the merchant does not have any of your account information, he said.
Twohig isn’t the only one enthusiastic about bitcoin. English airline magnate Sir Richard Branson recently endorsed bitcoin and announced that his space flight business, Virgin Galactic, will accept bitcoin as payment.
The U.S. Congress held hearings last month that were expected to lead to a crackdown on the decentralized financial network. But that’s not what happened. All three Obama administration officials who testified said bitcoin has legitimate uses and argued that no new regulations were needed to police it.
There are more than 12 million bitcoins in circulation so far, and the supply of them has been capped at 21 million.
Skeptics say bitcoin isn’t a serious currency because its value fluctuates widely. At the beginning of November, one bitcoin was worth $210; by month-end, speculators had driven the price up to $1,200. Back in 2011, bitcoin rocketed from 30 cents to $32 before plunging back to $2. How can you pay for things with a currency that goes up and down like a rollercoaster?
Twohig said it’s not a problem.
“The volatility doesn’t matter to me,” he said. “When I get paid in bitcoin, I can immediately convert into dollars. Or I can keep it in bitcoin. I had some bitcoin a couple of months ago that I sold for $200. They’re now worth $1200. I wish I still had them.”
He said he is now holding on to a small amount of bitcoin.
“I can’t wait to see where it goes,” he said.
– Mark Rosenberg is a financial adviser with Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 831-439-9910 or 

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