Behind the hype and the shiny headlines dominated by giants in education, software and travel, is there any real value in digital and crypto-currencies? Alina Popescu reports

Digital and crypto-currencies have been all the rage in tech news but then in June 2014, a major player in online travel threw its weight behind the technology. We’re talking Expedia, of course, which announced that it would accept bitcoins for hotel bookings.

But Expedia wasn’t the first online travel agency to do so. In 2013, CheapAir was the first to start accepting the currency for flight bookings and then in 2014 said it would do so at over 200,000 hotels. For those with plenty of dosh, Virgin Galactic, the space tourism company of British billionaire Richard Branson, was another prominent early adopter in the travel space.

So Bitcoin is certainly making a big push for publicity and adoption, and it’s gathering momentum in certain places. Financial sites and business directories, for one, are jumping on the wagon with Yahoo Finance introducting a Bitcoin ticker and Yelp establishing a dedicated category for businesses that are Bitcoin friendly. There has even been a film dedicated to the subject: The Rise and Rise of Bitcoin.

On the bigger stage, some USA states and Canada, for example, are currently focusing on the legal aspects of having Bitcoin treated as money and removing any obstacles to usage.

But, as with anything disruptive, it’s not all plain sailing. Some countries, don’t know what to make of Bitcoin and other virtual currencies and China, for one, has taken a stand against them. It’s central bank recently barred financial institutions from handling Bitcoin transactions; China is happy for individuals to use thet currency but they must take the risk.

We want consumers to have more choice and greater flexibility in the way they interact with us

Michael Gulmann, VP of Global Product, Expedia

So perhaps it’s not surprising that Expedia is proceeding cautiously. “Right now, Expedia is focusing on offering Bitcoin to our hotel customers and does not have plans to expand into accepting the currency for other transactions,” says Michael Gulmann, VP of Global Product, Expedia.

That said, Gulmann says Expedia remains committed to investing early in new platforms and providing an array of payment options. “We want consumers to have more choice and greater flexibility in the way they interact with us, and are always looking for new and emerging technologies in order to best serve our customer base,” he says.  

Taking a long-term view

This open-minded view could eventually pay off. Consider this: since November 2013, CheapAir has sold airline tickets, hotel rooms, and Amtrak tickets worth $1.5 million. Although Bitcoin sales still amount to just 1% of CheapAir revenues, this represents an future opportunity; there have also been short-term benefits.

"In the short term, being the first to accept Bitcoin has helped us introduce new customers to CheapAir that otherwise may never have tried out our service,” says Jeff Klee, CEO of CheapAir.com, who says the Bitcoin community “has been very supportive and very loyal”.

Bitcoin is a real opportunity to disrupt an industry that desperately needs disruption

Jeff Klee, CEO, CheapAir.com

Over the longer term, however, Klee believes that what is attractive about Bitcoin and the technology behind it is that it poses a legitimate challenge to entrenched players in payment processing “who really haven’t kept up with the times”.

In 2014 it still costs roughly 3% to process a payment. “This 3% is embedded in the cost of almost everything that any of us buy – not just travel products,” says Klee, who believes that the banks and credit card processors have been complacent for decades because there has been no other game in town. “Bitcoin is a real opportunity to disrupt an industry that desperately needs disruption,” he says.

Cost cutting exercise?

Up until now, the challenge was to make it easy for customers to pay for the travel services they were acquiring. Accepting a wide range of credit cards, PayPal payments, wire transfers, and any other option available was what all companies tried to achieve. But now there is an opportunity to reduce costs comes into play.

Expedia’s Gulmann sees things differently and, for the moment, flexibility is the key objective; Bitcoin helps them achieve their goal of including more people by not discriminating against a new way of hotel booking. “We think Bitcoin is a great way to allow people who don’t use traditional payment methods such as credit cards to shop and book via our site,” he says.

But it’s still early days and the number of adopters of currency is still limited, though the general impression is that they are here to stay. The question of whether to adopt crypto-currencies in the end should be driven by the market a travel company addresses.

“We hope that our acceptance of Bitcoin has at least piqued the curiosity of other players in the industry and some recent announcements suggest that it has,” says Klee. However, he recognises that for Bitcoin to succeed it has to become more universally accepted.

In the travel space, that would mean airlines and other suppliers and not just OTA’s. “If an airline would accept Bitcoin, that would be a great move for both the airline and the currency. I think it will happen eventually,” he says.

What do you think? Tell us in the comments box below if you think crypto-currencies are the future and what you are doing to prepare for it?

Writer, traveller and coffee addict, Alina Popescu is a freelance journalist and self-appointed geek. She's been covering the tech, travel, and marketing fields for print and online magazines for nearly a decade. Follow her on Twitter - @alina_popescu, or find out more about her on her website