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It's a match: Free Staters and bitcoin

By DAVE SOLOMON
New Hampshire Union Leader

March 07. 2015 7:17PM




MANCHESTER - New Hampshire has become one of the hottest states in the nation for bitcoin transactions per capita, thanks in large part to the influence of Free Staters, big fans of the virtual currency who convene here this weekend in their Liberty Forum at the downtown Radisson.

One topic likely to generate some buzz is the effort by bitcoin backers in the Legislature to make New Hampshire the first state to accept bitcoin for payment of state taxes and fees.

A bill filed by newly elected state Rep. Eric Schleien, R-Hudson, would require the state treasurer to develop a plan for the state to accept bitcoin beginning July 1, 2017. The bill (HB552) calls for the state to contract with a third-party vendor that would convert bitcoin payments into cash at no cost to the state.

"Just to be crystal clear, New Hampshire would receive payment in U.S. currency," said Schleien, an avowed Free Stater himself. "The state will never have to touch a bitcoin."

You can't actually touch a bitcoin, anyway. The virtual currency resides only on the Internet, with values that can fluctuate wildly from day to day.

Bitcoin has slowly been growing in popularity since it debuted in 2009. It's based on the notion that if enough people believe in it, and enough merchants accept it, bitcoin can eventually become a form of international currency free of government and central bank authority, thus the appeal to liberty-minded folks like Schleien.

It's also a popular method of payment for suspect transactions on the "dark web" since it is untraceable.

A sophisticated computer program developed by an anonymous programmer ensures that only a fixed number of bitcoins will ever be made available. A handful of skilled experts with access to incredibly powerful and expensive computers can "mine" bitcoins, but that has become more and more difficult as the total available begins to decline.

Most users buy previously "mined" bitcoins with hard cash through online exchanges.

Bitcoin is a very speculative investment. Its value versus the U.S. dollar has fluctuated wildly over the years, reaching as high as $1,000 per coin, and dipping below $100. On Friday, a single bitcoin was trading for $274.

Complicated concept

It's a complicated concept that befuddled many lawmakers as HB 552 worked its way through hearings on Feb. 17. The bill was eventually "retained in committee" on an 18-1 vote, which means it could be reconsidered in the next session.

"Committee members were very clear that they did not want to kill it," said Schleien. "They could have easily done that if they thought it didn't have merit."

Among those testifying on behalf of the legislation were GOP gubernatorial candidate Andrew Hemingway, who accepted bitcoin donations in his unsuccessful primary campaign, and Robert Wilkins, CEO of Ziftr, a Milford-based online shopping portal that accepts digital currency and even has one of its own, ZiftrCOIN.

"A lot of members on the committee had never heard of bitcoin, and didn't know what crypto-currency was," Schleien said. "So by slowing things down, we're going to have some more time for them to be educated about bitcoin and crypto-currency. I'm confident it will come back in January."

Schleien predicted that "in the not-so-distant future every state will have some kind of third-party payment processor to accept bitcoin or some form of crypto-currency on their behalf, and I want New Hampshire to be the first."

There would be advantages to the state's economy if it achieved that distinction, according to Chris Dunleavy, a spokesperson for Ziftr, which could be one of those third-party processors.

"We're not saying Ziftr has to be the third party the state uses," Dunleavy said. "But we do want to shine a light on what could be happening."

National spotlight

The state is already home to the inventors of the first bitcoin ATM machine, which has gained national notoriety and could grow into a significant venture. The Granite State has a large number of merchants that accept bitcoin, relative to its small population.

Online retailer Overstock.com (a Liberty Forum attendee) reports that in 2014 New Hampshire was far and away the leader in orders paid for with bitcoin, at 131 per million population, compared to second-place Utah at 89 orders per million population.

"New Hampshire - the first colony to sever ties with Great Britain - is once again leading the revolution," wrote the editors of Bitcoin Magazine late last year. "Along with its centuries-long "Live Free or Die" culture, New Hampshire is becoming a mecca for digital currency enthusiasts. In just the last few years, bitcoin experts and entrepreneurs have been eagerly coming to New Hampshire to spread their message."

Wilkins expects his company to double in size, from 35 employees to 70, over the next 12 months.

"If we allow this to grow in New Hampshire, you are going to see jobs; you are going to see revenue from new companies coming in; and a national spotlight on this," Dunleavy said.

dsolomon@unionleader.com


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