More businesses around the world are accepting cryptocurrency — or digital money — as payment, more people are using ATMs that dispense one of its best-known forms, and more of those people are baby boomers.
More regulations and enforcement were also on the way in 2020, but were slowed by policymakers shifting focus to pandemic-related issues, according to Derek Muhney, executive vice president of sales for Coinsource of Fort Worth, Texas.
The company operates ATMs that dispense bitcoins in exchange for cash, and its CEO, Sheffield Clark, is an Arkansas native. So, of course, Coinsource has grown its business here.
In 2019, Coinsource operated just three Bitcoin ATMs in the state. Now, it operates 15 Coinsource-branded ATMs and more ATMs bearing the brands of various clients, Muhney said.
He credits a new model for that growth in Arkansas and elsewhere. Coinsource now operates about 2,000 ATMs compared with about 400 in 2019. The new model, Muhney said, is a “platform-as-a-service” model.
“We’ve stopped expanding our own network, but we’re still growing exponentially, and I’m sure you’re raising an eyebrow like, ‘What do you mean?’” he told Arkansas Business. “We’ve developed this turnkey-like white-label solution where anybody through Coinsource and our licensing and our proprietary software can own their own Bitcoin ATM network, and we have just received unbelievable praise and traffic and inquiries from the state of Arkansas specifically about our PaaS model.”
In addition, hundreds of thousands of businesses across the world are accepting bitcoin as payment, he said, though he doesn’t believe more people are spending the currency on everyday purchases. He compared doing so to using a bar of gold to pay for a cup of coffee.
Instead, people use bitcoin for larger purchases, like vehicles, boats and real estate, Muhney said. There are many others who are holding onto their bitcoin because it’s reliably increased in value during the last decade.
“There’s so many people that are looking to diversify not only the way they manage their finances and spend their money but how they invest their money,” Muhney said.
He said both the number of Bitcoin ATM users and demand from businesses that want to install them have increased.
That can in part be attributed to people being more familiar with QR codes — two-dimensional bar codes — because of the pandemic, Muhney said. Users’ bitcoins are held in a digital wallet that uses that type of code. During the pandemic, many restaurants used QR codes that customers could scan with their phones to access online menus, eliminating the need for diners to handle physical menus.
Ted Clouser, president and CEO at PCA Technology Solutions of Little Rock, said Elon Musk discussing cryptocurrency on “Saturday Night Live” and via social media has also raised awareness and understanding of the currency, in addition to validating it. Clouser added that some people profited from buying and selling a cryptocurrency called Dogecoin last year. That, and more people accessing cryptocurrency through apps like Robinhood, legitimizes its use, Clouser said.
Boomers Buying Bitcoin
Muhney said that just a few years ago, most Bitcoin users were men ages 18-34. Now, however, many retirees are getting into Bitcoin to diversify their portfolios, he said. For older users, the Bitcoin ATMs his company operates resemble traditional bank ATMs that they’ve used for decades, so they’re more comfortable getting into the Bitcoin market using those kiosks.
At the same time, Generation Z (those born after 1996) and many millennials (those born between 1981 and 1996) are still using Bitcoin to “pivot away from traditional financial institutions” because of the fees they could be subject to with a traditional bank account. So Bitcoin is appealing to the unbanked or underbanked in Arkansas and elsewhere, he said.
As far as regulations are concerned, Coinsource is focused on being transparent, compliant and helpful, Muhney said. “We’re constantly in contact with the federal government on an invite basis from them, to help educate them and give them the guidance and the direction that they need to begin regulation and enforcement,” he said. Regulation can help rid the industry of nefarious operations, Muhney said.
More regulation and enforcement were coming in 2020, but that slowed due to the pandemic, he said.
“Arkansas typically tends to stay a little bit behind the curve” when it comes to trends like the rise of cryptocurrency, Clouser said. But that can be a good thing. It means the state can learn what to do and what not to do by observing what happens in larger markets, he said.
Clouser added that bankers, attorneys, accountants and financial advisers should be paying attention to digital money and bankers should embrace cryptocurrency rather than view it as an enemy. “We can’t sit back and think of cryptocurrency as some sort of fad. I mean, it’s real. And so I think [Arkansas Business] readers need to understand that,” he said.