Turnabout is fair play: Bitcoins mined with Adafruit's miner used to buy Adafruit products
When the open-source hardware makers at Adafruit began taking Bitcoin as payment yesterday, among the first customers were some who had earned their Bitcoins using Adafruit's miner.
When Adafruit Industries, a leader inmanufacturing, published a Bitcoin mining tutorial last summer, helping people mine the controversial digital currency to purchase Adafruit products was not the goal.
"We didn't think about that at all," said Phil Torrone, Adafruit's co-founder. "I wish we were that clever."
But that's just what happened. Yesterday, New York's Adafruit's mining tutorial to buy the company's products., which sells a wide range of tools and equipment designed to help people learn electronics, began accepting payment in Bitcoins, and already, its customers have used Bitcoins they earned using
Although there are only two customers doing so already, that number could easily explode. After all, Adafruit, a $20 million company with 60 employees, has only been accepting Bitcoin for a day, and the Bitcoin economy is currently worth nearly $9 billion.
Here's how it worked. In June, Adafruit published instructions on how to build a PiMiner -- a Raspberry Pi-based Bitcoin miner. In the interim, a number of people took advantage of that knowledge to mine Bitcoins, and now that Adafruit is accepting them as payment, they've been able to buy more of the company's products. As Torrone put it, "learn electronics at Adafruit, make a Bitcoin miner, mine coins, spend the coins at Adafruit, learn electronics."
For Adafruit, starting to accept Bitcoin was a no-brainer. After all, founder Limor Fried said, the company's customers were clamoring for it to do so.
Fried said that the process to get set up to take Bitcoin was easy, thanks to BitPay, one of a number of services that process Bitcoin payments on merchants' behalf. Among the most important elements the company required was being able to stay out of the currency and exchange process, Fried explained, and knowing that they could easily set up BitPay.
Although the value of a Bitcoin can fluctuate wildly, and many have questioned the fundamental logic behind giving any value to a purely digital currency in the first place, those are not problems Adafruit has to worry about. Instead, when a customer makes a purchase with Bitcoin, BitPay does an instant conversion to U.S. dollars, and Adafruit gets "a daily drop of [dollars]."
According to BitPay co-founder and CTO Stephen Pair, Bitcoin's intrinsic value comes from the fact that the currency enables electronic transactions that settle immediately, that it can be accepted in any nation on the planet, and that it was designed for use on the Internet. The very demand for Bitcoin is what gives it its value, Pair said.
To be sure, the value -- Bitcoin is currently priced at more than $800 a coin -- is at least in part psychological, and if confidence in it plummets, so will its value. Indeed, if any kind of major flaw in its design is ever uncovered, its value could quickly "go to zero," Pair said. But he also said that "if the technology continues to prove itself, then its value should continue to rise over time, as adoption increases."
For the folks at Adafruit, one of the biggest selling points is that "it's another [payment] choice for some pretty great customers who really like electronics," Fried said. And it must be working. Just a day into its Bitcoin experiment, Adafruit has already sold more than $3,000 worth of product to more than 50 Bitcoin-paying customers.
In short, the experiment, which might collapse at any time, is a geek's dream. "We're selling open-source hardware, [and] we give away the designs for a currency that is based on math, and may not even be around soon," Fried said. "You couldn't ask for a better science-fiction present."