Another step for Bitcoin entering mainstream commerce and consciousness. The Sacramento Kings basketball team has started to let fans pay for tickets and merchandise using the cryptocurrency — becoming the first professional sports team to hop on the Bitcoin bandwagon. People who visit the Kings’ physical retail store in Sacramento can already go in and pay for goods in Bitcoin in person; online sales are due to start March 1.
To start accepting Bitcoin, the Kings have teamed up with BitPay, the startup that has aspirations to become the “PayPal for Bitcoin” by providing a processing platform for it and other virtual currencies.
Backed by an impressive list of investors including the Founders Fund (the VC run, coincidentally, by several veterans of the so-called PayPal Mafia), Li Ka-shing from Horizons Ventures/Hutchison Whampoa and Shakil Khan, BitPay has been making decent inroads with mainstream brands that want to tap into some of the buzz around Bitcoin. Just last week, Zynga started testing Bitcoin payments using BitPay on some of its web-based games.
Tony Gallippi, co-founder and CEO of BitPay, tells me that the mass market run won’t end with the Kings, either.
“We are working with several other major brands and by the end of January we’ll have at least one more to announce,” he says. He won’t say who that is “to tip the hat of competitors” except to hint that it’s a well-known name in consumer electronics, which makes sense. “Look at the overlap between the demographics of people with Bitcoin and what they want to buy,” Gallippi says.
While Bitcoin has perhaps not broken through as a mainstream currency with the average consumer just yet, for those who are dealing in it, returns are looking promising. BitPay recently passed the $100 million processed mark, and Gallippi tells me the company has been profitable since March of last year — so much so that it wouldn’t have to raise any more money soon, except that it might turn to picking up a Series A to use for marketing.
“We don’t need the money because we’ve been capital efficient. But when we have competitors who have raised $25 million and are using it for marketing, we may need to do more.” The reference there is to Coinbase, which picked up a $25 million round last month led by Andreessen Horowitz.
Meanwhile, those keen on accepting the currency for payments are jumping in with both feet. Gallippi says that he only met the Kings team last week during CES in Las Vegas.
“They approached our booth at CES and had this idea, and said, we as a team want to be tech focused, so what can we do? They had a lot of questions but once we answered them, they were ready to move quickly,” he says. “They kicked it into fast mode and took less than a week to close the deal after they realised they could be the first sports team in the U.S. to take Bitcoin.”
In fact, team owner Vivek Ranadive has been pushing a bigger idea that he calls “NBA 3.0” — a concept of growing the team as a business by investing in technology, globalization and community partnerships. The BitPay solution will help towards first two of those: its Payment Gateway API will let the Kings accept payments in 150 currencies and provide next-day settlement on them.
“We are maniacally focused on creating the most seamless experience for our fans in all facets,” he said in a statement. “With BitPay, we are able to implement a technology that allows our fans to make Kings-related purchases without physically reaching into their wallets. A major tenet of the NBA 3.0 philosophy is about utilizing technology for the betterment of the fan experience, and this is yet another step in that process.”
Dangling in front of him is the projection that sports-related revenues are poised to rake in nearly $68 billion in sales by 2017, according to PwC.
While the attraction on one side for groups like the Sacramento Kings is about establishing cutting edge credibility, tapping into a crowd of people who are early movers in using Bitcoin and using any means necessary to convert more sales, there are other potential financial upsides as well.
For starters, there are the fees that Bitcoin payment providers take. BitPay’s for example starts at 1% of the transaction and comes down as value goes up past $3,000/month. In comparison, credit card companies typically charge 2% in stores and 3% online.
There is also the issue of security. While there have been some notable examples of breaches in cryptocurrency, Gallippi claims that in fact a currency like Bitcoin is significantly more secure than “any other payment method” if you consider how many credit card hacks there have been and are yet to come. “In stores, Bitcoin is more secure than paying cash, which needs to be secured, counted, transported,” he adds.
Although there are other cryptocurrencies that are emerging, such as Litecoin, Gallippi says that Bitcoin is by far the biggest. “The rest out there are basically clones of Bitcoin in terms of how it operates,” he says.