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03:09 BST, June 13, 2014
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05:55 BST, June 13, 2014With the news that now Expedia accepts Bitcoin payments, the virtual currency has received a massive boost after a turbulent few months. The world’s largest full service online travel site says it will initially accept Bitcoins just for hotel bookings and only in its US website.
Apart from hotels, Expedia, which reported $1.2 billion in revenues in 2013, has a booking platform for cruise tickets, flights, rental cars and leisure activities.
Several smaller online travel agencies already accept virtual currency, including CheapAir and Travel Keys. Expedia is the first major player to try out Bitcoin.
Some online retailers, such as Overstock.com, accept bitcoins. In May 2014, the social online games company Zynga announced plans to accept bitcoin payments. Zynga said it had begun to accept bitcoin payments for tokens of virtual goods on its online versions of several games.
Bitcoin was first proposed by Satoshi Nakamoto in a paper he published “Bitcoin: A Peer-to-Peer Electronic Cash System”. It is a digital (virtual online) currency that can be sent peer-to-peer without having to go through a central authority.
A major boost for bitcoin business
Such a major company entering the bitcoin economy could have a considerable impact. In the US alone in 2013, consumers booked 146 million room nights through Expedia.
Michael Gulmann, Vice President, Expedia Global Product, said:
“Expedia, Inc. is in a unique position, as one of the world’s leading online travel agencies, to solve travel planning and booking for our customers and partners alike by adopting the latest payment technologies.”
“We’re continually looking at ways consumers want to pay for their travel; bitcoin is a great example of how Expedia is investing early in an array of payment options to give our customers and partners more choice in the ways they interact with us.”
According to Expedia, bitcoin will be integrated into customer check-out payment options, sitting alongside Visa, MasterCard, Diners Club, and PayPal.
Maybe other sectors to be included later
Joon Ian Wong wrote wrote in bitcoin’s news site CoinDesk that Expedia Inc., which has a market capitalization of $8.75 billion, “will also consider expanding its bitcoin policy to other travel sectors in its portfolio.”
Expedia will be processing bitcoin transactions through Coinbase, a third-party bitcoin payment processor. The bitcoins will be exchanged for US dollars on a daily basis.
Fred Ehrsam, co-founder of Coinbase, said:
“We are pleased to partner with Expedia.com to welcome them into the growing community of forward-thinking companies that have opened their businesses to accept bitcoin payments. By accepting bitcoin as a form of payment, Expedia is giving a wider community of users the opportunity to book hotels from their site’s inventory of properties all around the world quickly and easily.”
Bitcoin – a turbulent year
Bitcoin has had a turbulent year. Once the biggest bitcoin exchange, Tokyo-based MTGox, went offline in February 2014 after detecting “unusual activity”. It had been struggling with technical problems which undermined customer withdrawals and eventually lost hundreds of millions of dollars’ worth of bitcoins.
Expedia will initially accept bitcoin payments in its US website just for hotel bookings.
In March 2014, MtGox announced that it managed to find an old 2011 digital wallet with 200,000 bitcoins ($116 million), thus reducing the number of lost bitcoins from 850,000 to 650,000. Wallets are online programs designed to carry and transfer bitcoins.
There was panic-selling in December when China’s central bank, The People’s Bank of China, restricted bitcoin trade. The virtual currency’s value fell by more than 50% on the news. The central bank had already told banks, insurance firms and other financial institutions that it was forbidding bitcoin-related business. At the time China accounted for 40% of worldwide trading in the currency.
In December the European Banking Authority (EBA) issued a formal warning about holding, buying, or trading in virtual currencies in general. Users are not protected through regulation when using bitcoin. “There is no guarantee that (a virtual) currency values remain stable,” the EBA added.