There was a lot of buzz when Rollingdale became the first winery in the world to accept Bitcoins for payment.
But co-owner Steve Dale says the real buzz hit a year later as the value of that purchase soared to more than $1200.
“We had decided to accept Bitcoins because it seemed like an easier and less expensive means of payment, and frankly, I’m not that big a fan of the banks charging for every little thing,” Dale says.
“We offered a 50 per cent discount for anyone paying with Bitcoins, and the first bottle sold was a Merlot, for about $20.”
Since February, however, the value of Bitcoins has taken off. A dollar worth of Bitcoins then was worth $100 by the time this article was written, though the value rises and falls minute by minute.
“Most of the people who are holding them right now are holding them for growth,” Dale explains. “When they came out, people were using them for payment, but as the demand grew, the value grew as well. Early this year the word got out to the general public about Bitcoins, and the value went through the roof.
“Once the value went over $100 a coin, nobody is spending it. They’re hoarding it to see if the value keeps going up.”
Rollingdale hasn’t sold a lot of bottles for Bitcoins, but Dale says the move was well worth it because the value of the Bitcoins has grown so quickly.
“It has been great for us,” he says. “Yes, there’s a minute number of people using it, but the amount we have been taking in has grown a lot. That first bottle is now a $1,200 bottle of wine, and yes, the others weren’t as much, but they have all gone up quite a bit.”
Rollingdale took in about 60 bitcoins and has 35 left. All of them were valued at less than $100 when they were received.
“We spend about one-half of the ones we earned, and we’ve got a little over half of them left.”
As of this writing, on Jan. 26, the value of a bitcoin was roughly $885. That means the original Bitcoins Rollingdale received increased in value by 885,000 per cent. Their 35 Bitcoins would now be valued at roughly $31,000.
The big question is whether that growth will hold. Currently, the market has seen Bitcoins rise and fall in value. Some analysts are predicting the price will collapse in 2014, but others are predicting a sharp rise as investors try to cash in on the Bitcoin craze.
“The speculation is that it will be a hundred thousand dollars a Bitcoin by next year if this growth holds,” Dale says.
Whether or not that value remains, Dale is still dedicated to Bitcoin as a means of payment.
“The convenience is second to none,” he says. “It’s incredibly easy and fast to transfer funds, and the cost to transfer any amount of money is only five cents. It’s a lot cheaper for us to accept than any other form of payment.”
The Lowdown on Bitcoin
What is Bitcoin?
A digital currency which allows anonymous and instant person-to-person payments. It uses a shared public log system called a ‘Blockchain’ which contains all verified payment records in chronological order, allowing everyone on the network to see every transaction.
Where do Bitcoins come from?
Bitcoins are mined like digital gold. Computers connected to the Bitcoin network compete against each other to find solutions to very complex mathematical equations. The first to crack the equation is awarded new digital coins.
How are Bitcoins Used?
Computer programs allow users to exchange money anonymously, making them very popular with drug trafficking rings. As well, many retailers both online and offline are now accepting them for payment. In person, Bitcoins are often exchanged using a QR Code on a mobile device.