Buying boats with Bitcoin


In 2013, two software engineers created a new coin called Dogecoin. The name, written in Comic Sans, and logo came from a picture (or meme) of a popular dog. The founders were making fun of the wild speculation that was going on at the time. In early April 2013, the price of a single Bitcoin crashed from $266 to $50. It quickly rebounded. At the end of the year, one Bitcoin hit $1000 despite Alan Greenspan, the chair of the Federal Reserve saying that it was a bubble.

Today one Bitcoin is worth more than $56,000. The total value of all Dogecoin that have been mined electronically (where a computer creates a coin by completing complex calculations) is $42bn. By the end of the year Dogecoin wants to be the default cryptocurrency for merchant payments. In April, Elon Musk, founder of Tesla tweeted about Dogecoin and it climbed 400% in a week.

While most headlines focus on the rise in values, Bitcoin was never intended to be a speculative currency. The coin’s anonymous founder – Nakamoto – wanted to create a secure system of transactions that avoided banks and could not be controlled by governments. This is one reason that some yacht buyers want to pay for their vessel with crypto.

Denison Yachting has now closed seven sales using Bitcoin. Bob Denison, its CEO, told SYI that the company has seen even more enquiries in the last few months. As well as Bitcoin, the brokerage is ready to accept Bitcoin Cash, Doge, and Ethereum and has even taken to mining cryptocurrency in the office (pictured). It has only closed Bitcoin transactions so far. Denison believes that will have changed by year end.

“It’s actually so hard to keep up these days with the amount of coins that are out there, we have aimed to pick the most popular and easily recognisable,” says Denison. “All crypto in the last few years has been fundamentally very volatile, the ones that we have selected hopefully at some point will start to stabilise.”

‘Love the spirit and irony’

“We’ve had a few enquiries [about Doge], but no transactions yet, I really hope that it happens,” said Denison. “I don’t own any Dogecoin myself yet, but I love the spirit and irony of it and of course there’s been people around the world who’ve made a considerable amount of money off Dogecoin in the last few months. I’m hoping by the end of the season we will have a few transactions under our belt.”

All regulatory hoops that a brokerage firm would need to jump through are in place for Bitcoin transactions, said Denison. This includes Know Your Client checks, which puts the burden on the firm and the banks, to verify the identity of the client.

It took about a year for the first Bitcoin transaction to be completed after the firm began accepting the cryptocurrency. However, Denison sees cryptocurrency transactions as a natural progression and part of its aim to improve efficiency and flexibility for its clients.

As well as offering cryptocurrency as a payment option back in 2014, in the same year Denison Yachting also opened a multi-currency escrow account with HSBC in Hong Kong. “We were one of the first to do it and I think we remain one of very few, so we can essentially accept any of the major global currencies and it can be held there during the process of a deal. It can remain there for 30 or 60 days and hold its local currency’s value.

“The move into cryptocurrency for us in essentially just an extension of that. We are trying to find ways to make the yacht buying process easier and less stressful,” said Denison.

The modernity of cryptocurrency might be expected to draw a younger clientele into yachting, but Denison says that most of their crypto buyers have been over the age of 50.

“I think our industry spends way too much effort chasing younger clientele,” says Denison. “Accepting BTC might accomplish that goal indirectly, but I don’t think that should be the primary reason a brokerage firm decides to jump into crypto.”

Biggest problem is volatility

The biggest problem for buyer and sellers is the volatility of cryptocurrencies. It is hard to create a fixed price for crypto transactions.

“For example you agree on a value pre-purchase, yet within the contract period the price of crypto plunges or surges: what happens then? Of course, you could always have a rider clause to allow for either party to make good on any short fall, or increase within the contract terms,” says Rupert Nelson, senior broker, Burgess Yachts Monaco. “However, what happens 3 months post completion if the value of the coins drop so far as to represent a significant loss for the seller?”

Nelson believes brokers need to take cryptocurrency seriously. Using it also makes sense for buyers who hold significant amounts. He said cryptocurrency can be seen in a very similar light to an asset, property or shares. “There is a trading value and so a buyer can always trade his crypto for cash and thus purchase or charter a yacht.

“Once the novelty factor wears off and the volatility calms down, then why shouldn’t it be a currency in yachting?” says Nelson. “It could be a change for good and simplify the process.”