How Bitcoin Affects Hotels – A Primer
Bitcoin has always been one of those items that you noticed in the news, but maybe never really quite understood. Either that or you’re only familiar with the 2008 Silk Road scandal. In reality, Bitcoin is much more than a tool to buy drugs illegally through the internet – it is potentially the currency of the future, and it’s now important that hotel owners know exactly what it is and how Bitcoin affects hotels, with respect to bookings and services.
What Is Bitcoin?
It’s essentially an online currency and is universally accepted as long as you have access to the internet. Bitcoin is defined as being a cryptocurrency, and one of the first of its kind to be made public. One of the main attractions to Bitcoin is that it doesn’t utilize a centralized bank. As a result, there are no banking fees added to any domestic or international room reservation transaction.
It also means that there is no interest rate for Bitcoin currency, and the only way that it can change value is by means of its volatility rather than a government’s legislation on its banking system. Inflation and deflation of Bitcoin occur organically by the users through its use.
Since it doesn’t process through a centralized bank, Bitcoin cannot be hacked due to the use of “blockchain.” Coindesk defines blockchain as the host for Bitcoin, and this is what creates the anonymity of this currency. Scientific American compares blockchain to an internet browser in that there are millions of websites on the internet, but these websites can’t be accessed without first opening up your favorite browser like Chrome or Firefox. Keep in mind that Bitcoin is now just one of many AltCoins moving into circulation today.
As other blockchain applications such as Ethereum crop up, we will all witness the rise of decentralized information sharing that eliminates the middleman. This evolution will also eliminate censorship, application downtime, third party interference, and fraud from the equation.
Great, But How Can I Use It For Hotel Bookings?
Given the information above and how complicated cryptocurrency can be, you’re probably wondering how Bitcoin can be used in a day-to-day setting as a valued currency. Since it hasn’t yet found a concrete outlet for exchange into other currencies around the world, it still is not accepted as a form of payment in most retail applications. But, you can book hotel rooms with Bitcoin.
Fluctuations In Value
One problem that you might encounter when trying to use Bitcoin results from its volatility. Investopedia attributes this issue to its relative youthful life as a currency. “Volatility in Bitcoin does not yet have a generally accepted index since cryptocurrency as an asset class is still in its nascent stages. However, we do know that Bitcoin is capable of volatility in the form of 10x changes in price versus the U.S. dollar.”
The value of Bitcoin was exceptionally volatile in 2017, ranging from under $1000 in January to over $19,000 in December!
Other reasons for Bitcoin’s volatility:
- Bad press regarding international exchange issues
- Misunderstood perceptions of its value relative to other assets
- Inconsistent tax treatment from multiple countries
Because Bitcoin is so volatile, it can be difficult for both investing and using the currency in a retail sense, such as booking a hotel. From the time you check the value of Bitcoin to the time you’re ready to check out online for your hotel room, the value could have dramatically changed. If you do plan on using Bitcoin for hotel bookings, I would make sure to look at Bitcoin’s recent valuations, and also keep up with the seasonal pricing trends of the hotel.
Other Things To Keep In Mind Using Bitcoin For Hotel Bookings
- There are no fees for receiving Bitcoin, but there is a relatively tiny fee to send. Each person or “wallet” can select their default fee enabling those who are willing to pay more to get a quicker response from that business. So, if an experienced user of Bitcoin decides to book a hotel, reserves a higher end room, and is willing to pay a higher fee, they will probably expect a quicker response on the hotel’s end to get the transfer through to your business wallet.
- Booking a hotel internationally is just as easy for a customer as booking one in the same city. The funds transfer just as quickly, and there’s no waiting period stipulated by a bank. This will create an easier market for international travelers to reserve a room outside of their country, making it a more desirable experience for them overall.
- Accepting a new form of currency is a good way to open a business’s market for new clients. Advertising that your hotel accepts Bitcoin will be highly regarded within the community of cryptocurrency users. You are confirming that you recognize a positive trend and can accommodate the wishes of your patrons.
- BitPay and other payment platforms enable your hotel to immediately begin accepting Bitcoin as payment.
The more Bitcoin is used for room reservations and other everyday situations, the more likely it is that its value will stabilize due to its intrinsic nature. The introduction of cryptocurrencies into the hotel and hospitality sector will create an average value for Bitcoin that is more predictable. Once it becomes normalized, the more Bitcoin will stabilize, and it will be easier to use as a safe, everyday currency without the threat of being hacked through a nationalized bank.
The bottom line is, Bitcoin is a safe international currency, and forward-thinking hotels would be wise to investigate accepting it. If you need help determining the ways Bitcoin can benefit you, feel free to reach out to us at any time.