WUWM found a few people in Milwaukee who use the virtual currency Bitcoin. They hope it becomes more popular, but there are drawbacks.
We deal with money every day and in different forms. We might log into accounts to check balances. Use cash to buy a cup of coffee or swipe a card to fill the gas tank. So Chris Bresette says, in this digital age, why not Bitcoin. He says it’s a universal electronic currency.
“You can kind of send it to another person as if it were a file or an e-mail or something like that. But it’s not something that can be copied. Each Bitcoin is unique and accounted for,” Bresette says.
Bresette and other Bitcoin advocates are sitting outside the downtown bar, Bad Genie. They say it’s the hub of Bitcoin in Milwaukee. The group explains that no federal reserve prints the currency. Instead, the system uses complex algorithms to release a certain number of Bitcoins. There will never be more than 21 million. One is currently worth a little less than $500 U.S. Tareq Fares and Paul Sanchez like Bitcoin because of the lack of regulation.
“For one, I could transfer $1 million between me and him and he’s sitting right next to me. Or I could be in Germany or I could be in Botswana or I could be anywhere in the world. He could whip out his phone and I could transfer $1 million to him and nobody had to be okay with that.”
Fares says that would never happen with our traditional banking system.
“With a bank, they would look at that transaction and say this is a really large transaction, I want to see where this is going. For your safety I want to make sure he’s not doing anything shady. They might track his account, they might track my account and they might deny the transaction. And if they do okay it, it’s going to take several days,” Fares says.
While lack of regulation is a big reason people gravitate toward Bitcoin, it’s also one of the downfalls, according to Mark Williams. He’s a Risk Management Professor at Boston University.
“The biggest concern about virtual currencies, Bitcoin in particular, is the fact that there’s no consumer protection. So as a consumer, if you were to buy or sell or own Bitcoin, if these coins were taken from you, there’s no recourse. So you could actually be completely wiped out and lose everything,” Williams says.
Williams also says the fact that Bitcoin is not a legal tender means it’s subject to merchants’ whims.
“It’s legally required if I go into business let’s say in Detroit or anywhere else and to pay for services and goods I can use that dollar and it has to be accepted by that merchant. Well (with) virtual currencies such as Bitcoin there’s no requirement that a merchant ever have to accept that Bitcoin. So as quick as you can flip off a switch you can see merchants saying no, I won’t accept Bitcoin. And that means that that currency itself moves from having value to no value at all,” Williams says.
Only a handful of businesses across Milwaukee accept Bitcoin. One is Hotel of the Arts Days Inn and Suites. Patrick Prabhu is co-owner and general manager. He shows how the system works, on his computer.
“So we go in there, we log on and then we can take a payment. And we have an app on my phone so when I go into the app it also gives me an encrypted number that is only for 20 seconds. That encryption code is to make sure that the transfer is completely secure,” Prabhu says.
As you complete transactions, the Bitcoin total in your virtual wallet either increases or decreases. Prabhu says his hotel chose to accept Bitcoin because the system does not charge fees and it gives customers another option.
“In terms of accepting payment we want to be able to accept the widest range of possibilities. And also our hotel, we get a lot of international guests from Europe and my understanding is in Europe Bitcoins are a lot more popular than in the United States so we want to be able to accept Bitcoins for our European customers,” Prabhu says.
Prabhu admits that so far, in six months’ time, one has paid him using Bitcoins.
Back outside the Milwaukee bar where advocates meet, Eric Vinyl says the system is just natural progression.
“Most of the money that we have today is digital. It’s not really gold bars in a vault. If I want to pay my water bill, if I want to buy something large from you it’s a credit card or it’s transferred from my account to yours, which is all just ones and zeros going over a computer phone line,” Vinyl says.
In Milwaukee today, the largest business accepting Bitcoin is Miramar Theater.
