Last week Trevor Nott, of Nott Auto, became the first car dealer in Winnipeg — and maybe in the country — to accept cryptocurrency as payment for a car.
Last week, he sold an Audi RS4 for around $60,000 and is about to close a sale on a Tesla for $80,000 with the buyers using bitcoin and not Canadian dollars.
As the premier luxury used car dealership in the city, Nott Auto has been selling Teslas for about eight years. (He’s not able to sell new ones any more as the company is building its own corporate store in the city.)
Nott has become a bitcoin enthusiast very recently — but not because of Tesla founder Elon Musk’s famous endorsement of cryptocurrency — after selling a number of cars using conventional payments to a young bitcoin millionaire.
"This guy, a young guy in his thirties, was buying all these crazy cars and one day I said to him I wanted to buy him lunch and learn about this," Nott said. "Since then he’s sort of taken me under his wing."
The fact that bitcoin valuation has been spiking these days — trading at around C$70,000 on Thursday — has made some bitcoin holders extravagantly flush.
Meanwhile, the pandemic lockdown has prompted well-heeled individuals to indulge themselves.
"There’s no $500 Jets or Bomber games or trips to Disneyland," Nott said. "Instead people are buying cars or other toys. Boats and snowmobiles are sold out. It is a wild time."
As he started to learn about cryptocurrency he joined some online forums with other digital currency enthusiasts and quickly learned that almost all of them were also very into cars.
"They are young, tech-savvy and they love cars," he said. "I figured, why am I not selling all of our services, not just the cars but customization work as well. They all want to make the cars unique."
Without getting into the nuts and bolts around the creation of coins (for the uninitiated it is just too abstract a concept to think about mining for coins), Nott said that accepting payment this way could not be easier or faster.
The encrypted key or code to the coins is transferred and there’s no need to get the banks involved with their volumes of documents and waiting for money to clear. It’s much faster than any kind of bank transfer.
"It’s as easy as getting a tea at Tim Hortons," said Nott.
Nott said even his bank is encouraging him. Although there is a risk for the vendor that the value of the bitcoins they have received in payment will decline, the easy way to mitigate that is to immediately convert them to Canadian dollars, which is what Nott has done.
He said he is considering keeping some and maybe doing some of his own procurement with cryptocurrency.
In any case, he expects to do more deals accepting payment with the digital currency.
"Because I am living in the bitcoin world myself now the people on the forums know I own a luxury car dealership, I expect I’m going to be quite busy," he said.
That may be true in the medium term, but in the short term maybe not so much, that’s because the recent increase in valuation — bitcoins have doubled in value since the beginning of the year — might convince some to hold on to to them longer.
Matthew Burgoyne, a partner at Calgary law firm McLeod Law LLP (and an ex-Winnipegger) whose practice specializes in the cryptocurrency and blockchain industries, said his was probably the first large law firm in the country to accept payment for legal services in bitcoin back in 2014.
He said up until about five months ago retainers were often being paid in bitcoin or Ethereum, the second-largest digital currency whose market cap is about 25 per cent of bitcoin’s.
"But lately not many want to part with bitcoin because of the increase in price. They’re hoarding it and don’t want to spend it on goods and services," Burgoyne said.
There is still a reluctance to use bitcoin to pay for goods and services, but some of that anxiety around the newness of the technology is starting to abate.
"It’s a very fast, efficient way to accept payment, especially when receiving money from people out of the country," said Burgoyne. "Our accountant didn’t have much difficulty accepting it."
For vendors the risk is mitigated by converting right away.
Considering the outrageous spike in valuations, maybe the smart play is keep it in the digital wallet.
Nott thinks he’ll probably start doing just that.
"Who knows where it will go," said Burgoyne. "I could see it going close to $100,000 in the next year or so."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.