Edited by Vani Rao
Dish Network to accept Bitcoin payments
If you are a DISH Network Corporation (NASDAQ:DISH) subscriber, you will be able to do just that from this summer. The multi-billion dollar satellite TV titan announced that it will start accepting Bitcoin payments beginning in July. The company claims it will be the world’s largest company to accept Bitcoins, giving the cryptocurrency another push toward widespread legitimacy.
In a about a month, when DISH’s first Bitcoin payments start flowing in, the Englewood, Colorado-based Fortune 200 corporation will join the growing list of companies that have started to embrace Bitcoin, including online retailer Overstock.com (NASDAQ:OSTK), Zynga Inc. (NASDAQ:ZNGA), Sir Richard Branson’s Virgin Galactic space tourism firm and National Basketball Association team, the Sacramento Kings. Not to mention more than 50,000 other merchants that have also started accepting the cryptocurrency.
Dish said that it will use Coinbase, a San Francisco-based bitcoin-payment processor, to process the payments, using that firm’s Instant Exchange feature. This means that although its customers will transfer Bitcoins through an online facility, Coinbase will absorb the digital currency and remit dollars to Dish, thereby eliminating the risk of price fluctuations for Dish.
With the latest move, Dish is not necessarily making a direct bet on the future of digital currencies, said Bernie Han, Executive Vice President and Chief Operating Officer. However, Dish sees its new payment option as a way to boost customer service. According to Mr Han, “A big part of that is giving customers choice and convenience; that includes things like technology programming but it also includes how they make their payments.”
Rising from the Ashes
DISH’s Bitcoin headlines might not seem like a big deal, but may be music to Bitcoin users. This news marks a pretty huge milestone for the world’s first cryptocurrency, marking another pivotal step towards it becoming a mainstream currency in the future years.
In a difficult start to the year, Bitcoin’s reputation was hurt by the arrest of prominent Bitcoin entrepreneur Charles Shrem on money-laundering charges, the collapse and bankruptcy of Tokyo-based digital-currency exchange Mt. Gox, which says it has lost 550,000 of its customers’ Bitcoins, and a crackdown on Bitcoin businesses by Chinese regulators. The collapse of a major trading exchange resulted in the Bitcoin losing two-thirds of its value in four months, but its price has rallied 27% over the past week. Moreover, Bitcoin’s value has shot up about 55% since hitting its lowest point of the year in mid-April.
Bitcoin prices probably fell too far earlier this year due to fears about the currency’s future following the bankruptcy of the once mighty Mt. Gox exchange as well as concerns regarding China and Russia cracking down on Bitcoin adoption. All those bad headlines about Bitcoins being used on illegal marketplaces like Silk Road for buying drugs and assassins for hire did not help either. Nor did the media circus that was the O.J. Simpson-esque chase of the “is he or isn’t he the creator of Bitcoin?” Dorian Satoshi Nakamoto.
The move by Dish signals that the Bitcoin is “getting closer and closer to the mainstream”. It is significant that Dish customers will use the Bitcoin for relatively small recurring payments in contrast to the big one-time outlays for cars or space-tourism tickets that have generated interest in the past. To become more popular, Bitcoin payments have to become more mundane.
It’s certainly headline-worthy that somebody like Sir Richard Branson likes Bitcoin enough to use it with his space-tourism business. However, when a company that does nothing more exciting than broadcasting to television stations when it decides to adopt the Bitcoin, it’s another sign that the digital currency is getting further integrated into normal, everyday life.
You can already buy real-world goods and services in many places with the virtual currency. Most of the outlets that accept it, however, are small retail outlets like coffee shops and restaurants. Online vendors like Overstock.com take Bitcoins, too, but that makes sense: an internet company taking internet cash.
TV seems different: interacting with your TV provider somehow feels more real, less abstract than interacting with an e-commerce site. So, by extension, paying for television with Bitcoins may get people over one of the cryptocurrency’s biggest conceptual roadblocks: What is it used for?
Easier Said Than Done
Critics say that the digital currency is too subjective to abuse, including criminals who want to launder their funds. The SEC recently warned that users may be targeted by “fraudsters and promoters of high-risk investment schemes.” However, the IRS also classified Bitcoins as a capital asset, making them subject to capital gains taxes.
The technology behind Bitcoin is complex, but its goal quite simple: to eliminate the chances of someone being able to determine who is actually transacting in the currency. That anonymity has made Bitcoin somewhat of a non-starter for major companies, fearing that they will not be able to identify the individuals actually making payments. Dish’s support for the currency, however, gives it yet another legitimacy boost.
The cryptocurrency was hit hard earlier this year when the Mt. Gox exchange, the largest Bitcoin exchange in the world was hacked, leaving hundreds of millions of dollars unaccounted for and effectively stolen by hackers who could not be identified. The Mt. Gox exchange has since been shuttered. That incident, along with Bitcoin’s inherent anonymity, has increased the scrutiny from governments around the world. Many companies have taken a wait-and-see approach as they allow transactions, while others have called for greater regulation. China has perhaps been the most active in its regulation of Bitcoin, saying that it may be used only by individuals and not by banks.
In concluding thoughts, the decision from DISH to put its weight behind Bitcoin does seems significant but its sounds more like a marketing gimmick, considering that Dish is willing to accept the currency as long its exposure to it is measured in no more than an instant. So, for example, you have a payment bill of $590 and the exchange rates is $571 (current rate), while making the payment the price fluctuates to $550, it’s the customer who faces the loss or Coinbase, or vice versa.
By providing a new payment option, DISH wants to stand out from among its lower-cost competitors like Netflix Inc. (NASDAQ:NFLX) and Amazon.com Inc. (NASDAQ:AMZN). It will also soon own the bragging rights to being the biggest company in the world yet to accept Bitcoin payments. That is until another mega brand steps up and takes its place.
And one will. It’s just the matter of time, not who.