An island in Micronesia. A gold mine in Canada’s Yukon Territory. Tickets to the 2014 Victoria’s Secret fashion show in London. Those are just a few of the assets on offer at BitPremier, a website targeting bitcoin holders looking to unload some of their digital hoard.
The number of listings on BitPremier took off when the price of a single bitcoin – the controversial currency that exists only in cyberspace – skyrocketed to $1,137 at the end of November 2013 from $12 at the start of the year.
After regulatory crackdowns around the world, the value of bitcoins dropped by more than half. However, even with the price fall, there are those sitting on bundles of bitcoins with very few ways to spend them. Others are finding it hard to obtain large quantities of bitcoins without moving the price in the still-nascent market.
Bringing the two groups together is BitPremier, Bloomberg Pursuits will report in its Autumn 2014 issue. The site is the brainchild of 41-year-old Alan Silbert, whose day job is vice president of biotechnology leading at General Electric Capital Corp, (GE) in Washington. Silbert started buying bitcoins in February 2013, when the price was about $22, at the urging of his younger brother Barry, chairman of SecondMarket Inc., a New York-based brokerage specializing in hard-to-trade assets.
The brothers realized there was nothing in the bitcoin universe dealing in luxury goods and services and so established BitPremier in May 2013.
“At that point, you could only use bitcoins to buy T-shirts, coffee mugs and alpaca socks,” Alan says. “We saw a big void in the market that we wanted to fill. If you want to diversify into bitcoins, we’re the place to do it.”
Indeed, BitPremier helped broker one of the biggest transactions ever conducted in bitcoins: the February sale of a two-bedroom villa with a pool in Seminyak, Bali, for $650,000, or about 950 bitcoins. (Items are listed in dollars or euros and converted into bitcoins every 60 seconds.)
The seller, German real estate developer Ronny Tome, knew little about bitcoins until the stepson of his business partner suggested he use BitPremier to market his firm’s collection of properties.
The listing was up on BitPremier for just a week before the eventual buyer, based in Texas, approached Tome. While it took four months to finalize the deal, the payment in bitcoins was done in minutes, as opposed to the days it would have taken to transfer money between banks.
After BitPremier took its customary 5 percent commission, Tome sold half his bitcoins to finance the constructions of other properties and kept the rest for himself.
“It’s a little bit of a gamble,” he says, “but it looks like it could be an attractive investment.”
One of the challenges confronting Alan Silbert is the tendency of people to hoard bitcoins in the hope the price will spike again.
“People who hold enough bitcoins to make them a potential buyer have drunk the Kool-Aid, and they’re in it for the long haul,” he says. “The challenge for me is getting them to part with them.”
That has meant some sellers have received nary a nibble. One of the first to use BitPremier was Matthew Mellon, scion of the Mellon banking family, who listed a photo collage titled Orphaned Cheetah Cubs by renowned wildlife photographer Peter Beard for $1.1 million, or 2,319 bitcoins, in the summer of 2013. A year later, he hadn’t received a single inquiry.
“I was betting people who got into bitcoins early would say, ‘I have a lot of bitcoins right now, and I want to spend them,“ Mellon says. “Of course, it’s also possible that your typical bitcoin investor is not an avid art collector. Perhaps they’d rather have a Porsche or a Ferrari or a condo in Hong Kong than a cool photograph.”
Meanwhile, some sellers are waiting patiently for bitcoin prices to spike again to spur interest. Ryan Weaver, a software developer and early bitcoin enthusiast based in Micronesia for $459,000, or 968 bitcoins. Weaver says he received some interest when bitcoin prices surged above $1,000, only to have inquiries drop off again when the price plummeted, He nevertheless remains hopeful.
“Seasoned bitcoiners have learned to hold when prices slip and spend when it’s off like a rocket ship,” he says.
Those who think bitcoins are fool’s gold should know that they can be used to buy the real thing. Tim Coles, a 54-year-old Canadian, is currently shopping his Dawson City, Yukon, gold mine on BitPremier for $2 million, or 4,217 bitcoins, in a bid to cash out after 35 years in the business. Coles says he has sent out detailed information on the mine to four potential buyers who have subsequently signed nondisclosure agreements.
“I’d just like a new challenge,” Coles says. His next potential venture? “I’m thinking about going into bitcoin mining,” he says, referring to the process of using complicated computer algorithms to mint new bitcoins. “It seems like it could be quite lucrative.”