Is it big time for Bitcoin? Deal with Sheetz seen as a step toward mainstream acceptance

As purveyors of Bitcoin seek out mainstream acceptance, the cryptocurrency – arguably the best-known in a diverse field – may have just gotten a boost in Pennsylvania.

Altoona-based Sheetz has signed an agreement with Coinsource, a provider of Bitcoin ATMs, to install Bitcoin ATM kiosks in five of its Pennsylvania stores and one in North Carolina.

The kiosks will allow customers with registered Bitcoin accounts to purchase more bitcoin or exchange it for cash.

For Sheetz, which has 580 locations, primarily in the Northeast U.S., the kiosks give people another reason to walk through its doors.

It’s not the convenience-store chain’s first foray into novel products or services. It recently added CBD oil products to shelves at 140 of its locations.

“Sheetz is constantly innovating and pioneering new offerings to give our customers what they want, when they want it, 24/7,” Ryan Sheetz, assistant vice president of brand at Sheetz, said in a statement announcing the agreement with Coinsource. “As cryptocurrency increases in popularity and demand, we are excited to add this service in our continual mission to be the ultimate one-stop-shop.”

For promoters of Bitcoin, however, it’s a small but important leap into mainstream credibility.

“Not only is it making it easier for the everyday public to use [Bitcoin], it really brings Bitcoin to the everyday consumer through a well-trusted, family-owned business,” said Derek J. Muhney, director of marketing and national sales at Coinsource.

Sheetz is not the first retailer to offer Bitcoin ATMs in its stores, but it is one of the more well-known.

Other providers in the region have Bitcoin ATMs, but most are in smaller independent shops. For example, the website coinatmradar.com shows Bitcoin ATMS at the U.S. Gas N Go on Airport Road in Allentown and at the Army & Navy Store in Whitehall.

Coinsource is one of the largest Bitcoin ATM providers, with 5,000 Bitcoin ATMs around the world.

Muhney said Coinsource currently has 250 machines in 30 U.S. states. By the end of the month that should increase to 300 machines in 40 states. The company hopes to have Bitcoin ATMs in all 50 states by year’s end.

“It definitely helps that such large businesses such as Sheetz are identifying that their customers are looking for this,”Muhney said.

And the demand for easier access to Bitcoin may be greater than those not following the evolution of cryptocurrency might realize, said Hank Korth, co-director of the computer science and business program at Lehigh University in Bethlehem.

“This space is not all Bitcoin. That’s just the one that gets the most media attention,” Korth said. “But there are other significant players, especially for international currency exchange.”

He cited the Libra Consortium, led by Facebook, and J.P. Morgan Chase & Co., the New York-based banking giant.

Korth said Bitcoin and other cryptocurrencies may have started out with a bad image. Because they weren’t as traceable as traditional currencies, they were often used for illegal transactions.

People dealing in drugs, sex trafficking and even terrorism used cryptocurrencies on dark-web websites like Silk Road.

“That kind of unsavory reputation has tarnished Bitcoin in some peoples’ minds,” he said.

He said there were also concerns over security, with stories of people’s accounts being hacked and wiped out.

But, Korth said, those incidents were more about the security of the exchanges where Bitcoins were being traded than about the cryptocurrency itself. Bitcoin, by its blockchain-based design, he said, is very secure because it is crowdsource-protected.

And now, he said, the technology is energizing the way people make financial transfers.

“The way we do things as compared to what we can do is actually pretty archaic,” Korth said. “Checks are stupidly insecure.”

Plus, he said, the way ATM kiosks process Bitcoin adds to the security and traceability of the currency.

A user needs to provide a photo driver’s license to register and use an account and is given a unique personal identification number. The number gives the same kind of trail that making purchases with a credit card would, but still offers security because it isn’t stored alongside personal information.

Muhney noted that Bitcoin can actually be used to make a surprising number of purchases, from booking a flight on Virgin Airlines, to buying a Tesla automobile to renting a pad on Airbnb. He said many colleges and universities have recently begun accepting Bitcoin for payment.

Korth noted that for a time there was a Subway restaurant in South Whitehall Township that accepted Bitcoin as payment.

The shop has since closed because of redevelopment in the area, but for a while he said it was drawing in people from far distances because of its Bitcoin acceptance.

“People would drive for miles because they want to buy a footlong with their Bitcoin,” Korth said. “There is a true enthusiast community out there.”

Besides making Bitcoin more accessible, Muhney said, ATMs are a big help to underbanked populations, which are generally urban and low income, or people who simply choose not to have a traditional bank account.

But there are a couple of quirks to the use of Bitcoin that still need to be worked out before Bitcoin ATMs can become a ubiquitous source of currency in the U.S., Korth said.

Because trading in Bitcoin is considered making a purchase of property, it is technically subject to capital gains taxes.

“Let’s say I go to Sheetz and take money out of the Bitcoin ATM, then I walk over and buy a coffee. That’s a reportable sale of property … with the same rules as the exchange of foreign currency,” Korth said. “That’s an obvious barrier to transactions.”

Currently, tax regulations on such small transactions aren’t really being actively enforced. And to avoid complications, it’s likely the IRS will reword regulations to exempt, for example, exempt transactions under $200 or so.

With such changes, Korth, said the proliferation of Bitcoin ATM kiosks could give traditional banks a run for their money.

“This creates a nice convenience here,’ he said. “Now you have a new way of banking.”

The following Sheetz locations will feature Bitcoin ATMs:

• 1915 Pleasant Valley Blvd., Altoona
• 1315 Lincoln Way E, Chambersburg
• 7970 Linglestown Rd., Harrisburg
• 3025 Babcock Blvd., Pittsburgh
• 101 Valley Vista Dr., State College
• 2505 Somerset Center Dr., Winston-Salem, North Carolina