The top half of a building that Aaron Seekford owns on Columbia’s Main Street has been vacant for half a year.
So when a friend suggested Seekford accept bitcoins – rather than dollars – for rent, Seekford thought: Why not?
“It’s better than just letting the building sit there,” he said.
The relatively new digital currency has received a lot of attention in recent weeks, not all of it good.
One of the major Bitcoin exchanges, Japan’s Mt. Gox, filed for bankruptcy protection after losing hundreds of millions of dollars worth of the currency. In response, the value of bitcoins dropped slightly; however it is down 50 percent from its all-time high last year. Undeterred bitcoin supporters said Mt. Gox’s failure was important to weed out “bad actors.”
Businesspeople, including Seekford, are trying to capitalize on the attention generated by the novel currency. Instances are popping up around the country of business owners accepting bitcoins for payment, including a café in North Carolina, a steel building manufacturer in Colorado and a lakefront property owner in Idaho. Even Overstock.com is getting on board.
“It’s an attention-getter,” said Steven Mann, chairman of the finance department at the University of South Carolina’s Moore School of Business.
Mann said accepting bitcoins is a smart gimmick by business people trying to attract attention. But will the digital currency survive? “The jury’s still out,” he said.
“There’s going to be a digital currency that succeeds one day because it has some advantages,” Mann said. “It’s likely not Bitcoin because it’s probably too early. But something like Bitcoin will be here in five years” in widespread use.
Seekford said he is unconcerned about the future of bitcoins.
“This is my one experiment, and (I’ll) see how it goes,” he said.
Seekford didn’t know what bitcoins were earlier this year when his friend suggested that he accept the digital currency as payment for the 3,120-square-foot space at 1537 Main St., above Carolina Hair Studios, that he is trying to rent.
But Seekford had been trying to rent the space for months, and getting no where, after a wedding consultation business moved out last year. Besides, he is a risk taker.
“It’s treading the unknown waters. That’s for sure,” said Seekford, a real estate agent in the Washington area and a 1995 USC graduate. “You always have to be skeptical, (but) you don’t cross the ocean if you get scared by the first storm that goes by. You’ve got to go out there and take a chance in life.”
The Main Street space that Seekford is trying to rent mainly consists of an open room with a large window overlooking the resurgent street below. It also has a private office, a kitchenette and a storage area. Seekford said he envisions it would work well as a law firm, consulting firm or information-technology firm, or perhaps even a retail operation.
Seekford is asking $14 a square foot for rent – about the average for Main Street. That works out to about $3,640 a month. He said he will price the rent in bitcoins at roughly the same rate. But, since the value of bitcoins can change daily, the number of bitcoins charged for rent could be different each month.
Seekford said about a month ago he added his willingness to accept bitcoins to marketing materials in a commercial real estate database. So far, the new bait has yet to land a bite.
“I’m willing to take the venture and see if it gets me any traction,” he said.
USC’s Mann said it is smart for Seekford – and other business owners – to market themselves as accepting Bitcoin.
Digital currency, which is outside of government control, has some advantages. It has an anonymous quality like cash, Mann said. “You can’t track it.”
But that also means the digital currency appeals to some involved in less-than-legitimate business transactions. It “keeps the drug dealers from carrying around suitcases of $100 bills,” Mann said.
Another benefit to bitcoins is the supply is fixed, he said. Only a set number of bitcoins will be issued each year. And while the currency might change in value daily, it’s not subject to inflation like government-controlled money.
Bitcoin was created about five years ago, and its value has fluctuated widely. That value has reached as high as $1,200 per Bitcoin, but, on Thursday, a single Bitcoin was worth only about $640.
So why does Mann think bitcoins will fail?
“It’s usually the second person that we latch onto,” he said. “People don’t like to be first because it’s too risky. They like to be second. Alexander Graham Bell didn’t invent the telephone. He was second. … Apple didn’t invent the mouse; that was Xerox. I’m not a historian, but there’s a lot of examples.”
Still, anything that is widely accepted as a medium of exchange will be successful, Mann said.
“That could be anything. Native American Indian tribes accepted blankets as a medium of exchange. Societies have accepted gold, salt. ... The bitcoins will survive or not, and that’s going to be determined by if people will readily accept them as payment.
“When the Circle K down the street starts to accept bitcoins, then you’re talking.”