Austin, Patrick, Black Enterprise
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IF YOU'RE LOOKING FOR INNOVATION IN MUSIC, TALK TO GRAMMY-NOMINATED jazz singer Carolyn Malachi. Unafraid of the fast-paced evolution of the industry, she recently had fans select the wardrobe for her "All Right" music video using the social shopping app Shopcade. She also made a deal with Argo Tea for its customers to have exclusive access to stream her latest album, Gold, from its website. And she isn't stopping there. She's now rewarding her fellow risk-takers on the forefront of innovation with what she sees as the future of online payments. She's the first musician of any genre to accept bitcoin for music sales, the virtual currency that's shaken up the financial world in the last few months.
Bitcoin is a digital currency that is not tied to any country or government, meaning it's equal in value everywhere. The cost of transaction fees or transferring bitcoins from one person to another is either free or significantly less than the cost of transferring any other form of currency, since it doesn't go through a single person or organization. Bitcoin isn't backed by gold or insured by any organization, such as the Federal Deposit Insurance Corp. that insures financial institutions such as banks. At its peak, a single bitcoin was worth more than $1,120, but as of this writing, the value has dropped to about $440 for one.
Of course, all the flexibility comes with some drawbacks. Bitcoins are uninsured by any government, can be stolen without recourse, and chargebacks are currently impossible. This has made it the currency of choice for the seedy underbelly of the Web, where drugs and illegal goods are traded.
As far as theft is concerned, it has been rampant over the past few months. In February, Japanese bitcoin exchange service Mt. Gox--the then-largest bitcoin exchange in the world--lost more than $400 million in bitcoins and declared bankruptcy, leaving its users high and dry. In March, bitcoin startup Flexcoin posted a loss of 896 bitcoins through theft, the equivalent of about $620,000.
Malachi's conviction that bitcoin, despite its bad press, can be used for good has a short, but proven track record. "One thing that's been interesting to discover is the use of bitcoin by women in sub-Saharan Africa. They were able to acquire several when the value was minimal. They see the cryptocurrency as a way out of poverty."
It's true: More than one-third of Kenyans have signed up for Kipochi, a bitcoin wallet service available through mobile payment startup M-Pesa. More than 5 million Tanzanians have also jumped onboard. All these people may not own any bitcoins, but their interest is enough to encourage M-Pesa's parent company, Vodafone, to target the more than 700 million people in India who do not have a bank account.
The Washington, D.C., native's first experience with bitcoin began with seeing the virtual currency on Bloomberg TV, after which she worked with her management company to get in on the ground floor. On her site, she sells signed CDs with a banner proudly stating that you can "Pay with Bitcoin" in addition to PayPal. To accept payments, she set up an account with bitcoin exchange Coinbase, one of the more popular (and well-funded) bitcoin exchanges. To set up a bitcoin wallet, all that's required is a credit card and a bank account.
Malachi, who spearheaded a bitcoin-themed concert in Austin, Texas, wouldn't say how much she's made since accepting bitcoin, but she did say she had an increase in listeners thanks to the inclusion of bitcoin as a method of payment. …