Norwich business Gift Off is developing a loyal following selling digital gift cards for Bitcoin. But how does it work? And will Bitcoin reach the mainstream? SABAH MEDDINGS reports.
It is an online digital currency shrouded in mystery, allowing transactions to take place under the radar of governments and banks.
Critics of Bitcoin point towards its anonymity, but in fact thousands of digital natives are using Bitcoin to do their weekly shopping, send gifts to friends, and order dinner, according to the founders of Gift Off, an online business which accepts it as payment.
The two-year-old Norwich business allows holders of Bitcoin to exchange the currency for gift cards. It has sold £2.1m of gift cards so far, and saw more than £200,000 worth of Bitcoin pass through its website last month.
Co-founder Rusty Nash, of Alma Terrace, off Aylsham Road, said: 'We sell HS Samuel gift cards. There was a guy who used Bitcoin to buy an engagement ring and proposed to his girlfriend, which was really nice.'
Mr Nash first traded in Bitcoin through acting as a middle man on Amazon - buying products in sterling for customers who would pay him in Bitcoin.
But the 31-year-old knew the model was not scalable, and came up with an idea for Gift Off.
'I realised I should just sell them Amazon gift cards but I spoke to Amazon in the early days and went quite far with setting it up. But then they said they wouldn't work with a company younger than two years old. We purchased the cards ourselves and that worked really fast.'
Now Amazon is among the scores of retailers who give Gift Off a discount on the cards - allowing a 6pc profit margin.
Mr Nash said he had realised Bitcoin was 'going to be big' when he first discovered it.
'I had got into Bitcoin as an investment and really liked it,' he said. 'But the only thing you could really buy was webhosting. There was too much risk for these retailers.'
The company liquidates its Bitcoin at one of the UK's exchange sites, transferring it into sterling.
It was launched two years ago, sold £30,000 of gift cards in the first month, and is expecting to grow 130pc this year.
And the company has taken an unconventional route to growth - technology developments take place in Lithuania by using a sub-contracted team of developers.
Mr Nash and communications manager Lois Foulger currently work from a home office, but have not ruled out expansion and recruiting an in-house developer in the future.
And while some criticise Bitcoin's untraceable qualities for allowing criminals to operate under the radar, Mr Nash said this was no different from cash. 'It is a consideration, but it is like accepting cash in a shop,' he added. 'We don't know where that cash comes from.'
The business is mid-way through an investment round, which has so far raised more than £30,000.
Miss Foulger said: 'We have created a business which works, and have proven the model. It has more appeal to investors to grow into a big company.'
And while Mr Nash said a US rival was sold in a multi-million dollar deal in recent months, he had no current plans to sell. 'It would be a good exit strategy to be bought by another company,' he added. 'But if we start doing really well it would make sense to stick with it.'
What is Bitcoin?
Bitcoin is a form of decentralised digital currency, created and held electronically.
No one controls it. Bitcoins aren't printed, like pounds or euros – they're produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
It was created by Satoshi Nakamoto - whose real identity is unknown - in 2008, and introduced as open-source software in 2009. There are currently about 13.1 million Bitcoins in circulation.
Cash-free currencies at home
While Bitcoin, and about 400 other digital currencies are growing online, cash-free transactions have been thriving in Norwich for many years.
Norwich Local Exchange Trading Scheme (NorLETS) is aimed at helping people in Norwich exchange goods or services without the need for real currency. Members work to build up credits – about 10 an hour – which they can exchange with other members.
And Trade School - based at the Forum - provides classes, which are given in exchange for goods, rather than cash.
Is your business achieving record growth? Email sabah.meddings@archant.co.uk
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