The future of money is wedged between a churning fountain drink machine and a few dozen cases of Coca-Cola at The Brown Derby Superstore on the corner of Tulane Avenue and Jefferson Davis Parkway. At least that is how Bobby Sharp sees it.
Sharp is co-founder of Coinsource, a Texas company that operates a national network of ATMs dealing in the virtual currency Bitcoin. He spent Tuesday morning (June 7) inside the convenience store feeding $5 bills into its newest machine to demonstrate the basics.
The ATM is one of the first in Louisiana to cater to Bitcoin users, who Sharp said comprise a small, but growing group in the city. It works similar to a traditional ATM, except, in this case, people instantly turn their cash into virtual currency, he explained.
“This Brown Derby just got really modernized,” Sharp said grinning.
Two years ago, Bitcoin captured media fascination thanks to its wild swings in valuation, a growing group of retailers large and small accepting the virtual currency, and questions about its mysterious creator. The buzz has since died down, but techies, early adopters and day-traders continue to tout the currency.
Bitcoin is entirely digital. There is no single source or manager of the currency. Transactions are peer-to-peer and recorded in a public digital ledger. You can’t physically hold Bitcoin, but you can use it to pay for in-store or online purchases from merchants that accept it.
As of Wednesday morning, a single Bitcoin was worth $581.28, more than double its June 2015 value. Bitcoin ATMs like those Coinsource installs allow people to insert as little as $1 to buy fractions of the digital currency.
Why put a Bitcoin ATM in a Tulane Avenue convenience store? Sharp said the company was getting regular calls from Bitcoin users in New Orleans asking if the company had plans for local ATMs.
Sharp said Coinsource typically puts Bitcoin ATMs in centrally located stores with 24-hour access. The Brown Derby, which fronts a bustling ExxonMobil gas station in Mid-City, fit the bill and the store owners were open to the idea.
Sharp sees the Bitcoin ATM as the ultimate ambassador in getting more people comfortable using the currency.
“People feel safer about watching the money go into a machine and seeing it happen right before them live,” Sharp said.
The Brown Derby is technically the second New Orleans merchant to boast a Bitcoin ATM.
Greg Hill, owner of Café Luna, a mellow, oak-shaded coffee shop and café on Nashville Avenue, had a Bitcoin ATM installed at his business in April. He worked with locally based Blue Flag Acquisitions to get the machine.
Hill uses Bitcoin himself and started accepting the virtual currency at Café Luna a year or so ago. He said he does “a couple hundred dollars” worth of sales in Bitcoin each year, mostly to a handful of regulars who, like him, are early adopters of the currency.
Hill likes the fact Bitcoin can be used anywhere in the world. Unlike credit cards, merchant fees on Bitcoin purchases are less than 2 percent. He can also earn money on the changing value of the digital currency. He said rising Bitcoin values more than covered the taxes he paid on Bitcoin sales last year.
“The global economy is where we’re headed,” Hill said. “This is the ground floor.”
Concerns continue to hang over the digital currency. In its early days, Bitcoin rose to notoriety as the currency of choice in the online black marketplace. The U.S. government and countries around the world have raised alarm about Bitcoin being used to back international criminal activity.
In May, an Australian tech entrpreneur told BBC News that he had used the pseudonym Satoshi Nakamoto to invent Bitcoin with the help of others in 2009. Craig Wright said he went public to stop the spread of “misinformation” about Bitcoin and blockchain, the technical innovation that makes the currency possible.
Hill said having a Bitcoin ATM in a New Orleans coffee shop shows everyday people use it.
“It brings it out of the shadows a bit,” he said.
Still, he has run into the darker side of the currency. A few people with questionable amounts of cash have walked in to use the ATM. Recently a woman entered the shop. Her identity had been hacked and the hacker wanted her to send payment in Bitcoin to relinquish control of her accounts. The woman was upset and convinced Hill was in on the scam.
The ATMs at The Brown Derby and Café Luna are one-way machines, meaning users can purchase Bitcoin but cannot convert the digital currency into cash. Hill’s machine is limited to $3,000 a day in transactions.
Sharp acknowledged a Bitcoin ATM on Tulane Avenue could raise local brows. The corridor, while rapidly changing, brings a recent history as a hub for prostitution and crime. He said he sees a neighborhood attracting a younger, urban crowd, the type who might be willing to give Bitcoin a try.
He noted Bitcoin users have to give over a lot of information before completing a transaction. Transactions as low as $1 require a telephone number, a unique personal identification number and connection to a digital wallet.
Coinsource red flags users who complete several thousands of dollars of transactions in a short period of time, he said. The company also has a compliance team to make sure the company meets anti-crime standards, including those outlined by Association of Certified Anti-Money Laundering Specialists.
“We don’t want this industry to continue to get hit and have black eyes,” Sharp said.