Electronic products retailer CeX became the first UK retailer to use Bitcoin in a store in an innovative payment trial. Retail Week looks at the pros and the cons of the virtual currency

bitcoin

Why are we talking about it?

Second-hand electronic products retailer CeX has become the first UK retailer to use only virtual currency Bitcoin in one of its stores. CeX is accepting only and paying out Bitcoins in its Glasgow store for three days.

What are Bitcoins?

Bitcoin, which was set up in 2009, is a virtual currency that works without the need for a central bank. Coins are transferred from person to person, and are kept in a digital wallet that can be accessed on a computer or mobile device. New coins are created through a process called ‘mining’, whereby users verify and record payments in a public ledger.

Which other retailers are using Bitcoins?

Most adopters seem to be smaller etailers at the moment. UK etailers Girl Meets Dress and Pets Pyjamas both accept Bitcoins but marketplaces eBay and Etsy allow customers to trade with each other using the currency. Listed US discount site Overstock started accepted Bitcoins in January and by March transactions were the equivalent $1m. The retailer believes it will take $10m to $15m via the currency in its first year and says that most customers using Bitcoins are new to it and spend around twice as much as regular customers.

What are the benefits to retailers of using Bitcoins?

The currency can make cross-border trading easier because it removes charges relating to exchange rates, according to technology marketing expert Geoffrey Barraclough.

The currency can be used anonymously, which could be viewed as a plus by consumers who may want privacy in their purchases and might also help prevent data breaches from retailers.

Will it be a credible currency in the future?

Barraclough believes the flaws outweigh the benefits. He argues that it’s not a true currency but an asset because its price has rocketed over the past year. “It has suffered speculation like gold. Retailers would need to change their prices daily,” he says.

He also points out that retailers cannot trade solely in Bitcoins. “You can’t pay for goods or pay wages in Bitcoins so there is no point,” he says.

Using the currency in-store is also difficult at this stage because no till system in-store accepts it.

Barraclough says there is no need for retailers to rush to adopt it because even if successful, it will just force banks to offer more competitive rates for traditional currency.