Bitcoin and superyacht brokers: An emerging affinity?
Cryptocurrency is never far from the headlines. In this article written specially for Superyacht Investor, Zahra Pettican and Matthew Scott of digital marketing agency Relevance discuss how it is affecting the superyacht industry.
Growing in popularity each year, cryptocurrency is a virtual currency that can be used to buy things online or traded to represent value. The most famous and popular cryptocurrency is bitcoin – a type of digital cash that can be transferred between people over the internet. Bitcoin has recently hit the headlines because its value has skyrocketed, and this hasn’t gone unnoticed by luxury yacht brokers and charter companies.
So how might the world’s best-performing currency affect the superyacht industry, as individuals consider chartering and buying superyachts with bitcoin?
What are cryptocurrencies and how do they work?
Created in 2009, bitcoin was the first decentralised cryptocurrency. Its value is determined by its perceived value and usefulness, and fluctuates like the dollar or the euro. Bitcoin payments are legitimised and confirmed by blockchain technology – a kind of transaction database – and a peer-to-peer network; when one person makes a payment to another person, the payment is recorded and the digital code, the blockchain, grows.
Cryptocurrencies aren’t unique because they are virtual – after all, we use credit cards and other forms of online payment – but they are unlike other currencies insomuch as they are completely independent of financial systems such as the US Federal Reserve. This means that independent users who buy, sell and own them are responsible for managing their existence and value via blockchain technology.
The purpose of cryptocurrency is to facilitate seamless digital payments that work on a global scale and across borders without the legal hurdles and banking regulations that limit traditional online payment platforms.
Other popular cryptocurrencies include Ethereum, Dogecoin and Ripple, but it is bitcoin that rules supreme. The current value of a bitcoin exceeds $4,600 and it rose to that amount by almost 800% in one year. There are currently 16.5 million bitcoins in circulation and a theoretical market cap of 21 million to limit their existence and keep them exclusive.
Why should brokerages be open to the idea of cryptocurrencies?
Cryptocurrency wallets, such as Bitpay and Coincase, provide a processing service that brokers and agents can use to accept cryptocurrency for charters and sales.
Brokers will be interested in the fact that transactions into cryptocurrency wallets are anonymous, which might appeal to superyacht buyers and charterers who like to retain their privacy. Brokers should also consider offering charters and even sales through cryptocurrencies to capitalise on a wider target audience, among other advantages that include:
- Buyers and charterers pay lower transaction fees compared to bank transfers and credit card fees.
- Payments are entirely anonymous.
- Providing there are sufficient funds, transactions will not be declined. Banks are known to block payments.
- Cryptocurrency eliminates the possibility of fraudulent payments. An existing problem in the industry, fraud has affected payments to and from brokerages and continues to cause concern. Due to blockchain technology, bitcoins are irreversible and final, and reduce the risk of double spending (spending funds twice).
- Payments are instant. Conventional bank payments can often take 48 hours to process and banks are increasingly cautious in releasing funds.
- No third party interruptions from governments or other institutions. Bank transfers are subject to “Know Your Client” regulations, but cryptocurrency payments are currently not.
Superyacht owners and brokerages have the option of converting bitcoin to the currency of their choice upon receipt of payment, meaning they are not entirely subject to the currency’s volatile nature. This is advantageous to bitcoin superyacht brokers as payments can be delayed until the currency has reached an agreed level.
In many ways, paying by bitcoin is similar to using a multicurrency account, which lets clients deposit funds into an escrow account in the native currency. This means that, during the often-timely process of buying a boat, the price remains steady, despite rate fluctuations.
The rise of bitcoin within the superyacht industry
The world’s first cryptocurrency yacht charter was booked with bitcoin in January 2014. Although it was only a four-hour, $2,400 charter in South Florida, it was the start of a bigger movement among the yachting fraternity. Certain brokerages around the world have already caught on to the appeal of accepting bitcoin, and are ready to handle cryptocurrency payments.
It was recently announced that the owner of M/Y TURQUOISE, a superyacht valued at EUR 20.5 million, would accept bitcoin as the currency of payment for the vessel. Might this be an indication that more superyachts will be sold for cryptocurrencies in the future? It is speculated that this is just the beginning of the cryptocurrency boom within the superyacht industry and many brokers have recognised the potential.
How might bitcoin affect superyacht sales and charters in the future?
Ultimately, cryptocurrencies are creating new opportunities for a new type of wealthy clientele and it is changing the face of superyacht charters and sales, albeit gradually.
Many early bitcoin investors are now very rich, having generated immense capital from a relatively small outlay. This target demographic certainly has the potential to charter and even buy superyachts with bitcoin; as cryptocurrency rates rise, brokers should spend more time nurturing relationships with clients from digital currency backgrounds. Due to the rise in bitcoin’s value, it is now possible to book a luxury charter for less than 100 bitcoins, which would have been impossible a few years ago. Yacht brokerages and charter companies would be wise to include cryptocurrencies in their payment methods so that they can stay ahead of the game and make a good impression on a younger, emerging clientele.
Might the increasing number of cryptocurrency millionaires lead to more yachting transactions with bitcoin superyacht brokers? The currency’s strong performance in recent years would certainly suggest so.
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