While the idea of cryptocurrency came about in the mid-90’s and Bitcoin made its debut in 2009, it has taken quite some time for consumers to actually start investing in it and wanting to use it for everyday purchases. The crypto industry is perceived to be quite volatile, and due to its potential instability and widespread unfamiliarity with it, many vendors have been hesitant to accept it as payment for goods and services. However, cryptocurrencies are becoming more and more accepted by both buyers and sellers, including some of those within the auto industry.
Despite ongoing skepticism by many consumers, a lot of car buyers are looking to buy cars with cryptocurrency but struggle to find a dealer that accepts it. The good news, though, is that as more consumers look to fund purchases with cryptocurrency, more dealers are starting to allow it as a form of payment.
How does it work?
Car dealers who accept cryptocurrency as payment typically partner with some form of digital asset management firm that will conduct the transactions for them. Such firms include NYDIG, which deals solely with Bitcoin, and Digital Asset Capital Management Inc., which focuses on all aspects of blockchain technologies. Digital Asset Investment Management, or DAIM, is another popular firm dealing with digital assets and transactions. These firms can set dealers up with a transaction system that will allow the dealer to accept the payments and watch them as they happen in real-time.
The customer sends a transaction for the auto sale and dealers can then use a so-called block explorer to verify the transaction’s information such as a unique identifier, the payment amount, and the customer’s addresses. DAIM’s Chief Operating Officer Mike Soroudi said that vendors using his firm’s technology typically have cash within an hour and are then able to convert the cryptocurrency into cash and/or leave it in their digital asset wallet.
|Related: Tesla buys $1.5 billion in Bitcoin, will sell cars for cryptocurrency|
Who’s accepting it?
Most dealers who currently accept cryptocurrency as payment for their vehicles are luxury dealers, including used car dealer Marino Performance Motors (MPM) based in Palm Beach, Florida. MPM has partnered with DAIM to conduct Bitcoin and Ethereum transactions, as the dealer reported that more and more customers have been interested in using cryptocurrency to pay for their vehicles. MPM executive Gil Courchene said many of his dealer’s clients were “intent on paying with cryptocurrency” so he consulted DAIM to set up a platform that would enable these transactions.
MotorCars of Atlanta has long been a spot for pro athletes, celebrities, and other millionaires to purchase luxury vehicles, but in the Fall of 2017, a then-little-known 35 year old visited the dealership and purchased a $200,000 Lamborghini Huracan for 45 bitcoin, which is currently valued over $1.6 million. Lamborghini Newport Beach in California and Post Oak Motor Cars in Texas are other new and pre-owned luxury vehicle dealerships that offer Bitcoin as a financing option. Carriage Nissan in Gainesville, Georgia is one non-luxury dealership that accepts Bitcoin as payment.
What does it mean?
While some consumers still think of cryptocurrency as an unstable, high-risk currency and remain too afraid to invest in it, auto dealers should at least look into how they may be able to offer it as a payment method. They should assess the success of their competitors that accept cryptocurrency and possibly consult with a firm like DAIM to understand exactly how their customers could pay with it in a safe and confidential manner. Getting a feel for what percentage of their customers are wanting to pay with cryptocurrency is also critical, but ultimately, accepting the new payment method would give customers more options and may bring in more business.
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