People love flying via private jets for various reasons, but mainly for the convenience it offers. The process of chartering a plane, from booking to departure to landing, is more streamlined than in commercial airlines. That makes it stress-free and allows private aviation customers to relax.
Things are getting even better as air charter companies enter the cryptocurrency world to keep up with consumer demand.
Blockchain technology is rapidly growing. Along with it, cryptocurrencies are becoming more and more common in mainstream businesses. Aside from cash, cheque, and card, many companies now accept cryptocurrencies as payment. Their properties are so good they are so hard to resist.
It seems like the private sector of aviation is no exception. Some air charter services now list cryptocurrencies as one of the available payment methods. Specifically, they accept Bitcoins.
What Makes Cryptocurrencies Great?
A cryptocurrency is a digital or virtual currency. Unlike “real” money, it is impossible to counterfeit. Likewise, no one can double-spend when using cryptocurrency, thanks to its cryptography encryption. Aside from those, cryptocurrencies are praised for their portability, divisibility, inflation resistance, and transparency.
Cryptocurrencies are digital assets based on a blockchain. A blockchain is a digital ledger distributed across a large number of computers. They have a decentralized structure, allowing them to exist outside the control of governments and central authorities. Now, because of that, cryptocurrency transactions are fast and easy. They enable secure online payments without the need for a trusted third party like a bank or credit card company. Meaning, people can avoid the steep fees charged by banks and financial institutions. It is like handing the cash directly to the other person.
Knowing those, it is clear why people would prefer to pay in cryptocurrencies than other payment methods. The general idea is, it saves them some cash. Additionally, someone’s crypto coins can only be stolen through hacking. But, that is difficult to do because it is supported by blockchain technology. With that said, paying with cryptocurrencies is arguably the most convenient payment method.
Bitcoins
The world’s first and highest-valued cryptocurrency is Bitcoin. It was developed by Satoshi Nakamoto – a pseudonym used by the person or group of persons behind its development. Satoshi invented bitcoin in 2008, but it began use in 2009 when they released its implementation as open-source software.
Cryptocurrency wallet owners can create Bitcoins through mining. Then, they can be used to buy products and services. If one would like to, he can also exchange his bitcoins for real-world money.
PrivateFly Starting The Trend
January 14 is when PrivateFly started accepting Bitcoins. It is the first global private jet company to do so. A question in a post-flight interview caught PrivateFly’s founder and CEO Adam Twidell’s attention. It asked, “Can I pay in bitcoins next time?” Twidell got curious, so he researched cryptocurrency. In a statement, he said he started to investigate, and he could not find a reason not to accept bitcoins.
Twidell learned that cryptocurrency offers 24/7 transaction ability, faster processing times, and lower fees. Those are things the company, as well as its customers, would like to have. Moreover, setting up the company’s cryptocurrency wallet was relatively easy. And as the company said on its website, its goal is to make booking a private jet as seamless a process as possible. That led to the easy decision.
Twidell says that as a charter company, they don’t have the luxury to dictate how their customers interact with them. “Bitcoin is just another payment method we put in front of the customer that they can use or not use,” he added.
Customers can use bitcoins not only to pay for flights but also to purchase jet card memberships. Aside from Bitcoin, the company also accepts Bitcoin Cash, Etherium, and 4 USD-pegged stablecoins.
Advantages And Disadvantages Of Accepting Bitcoin
Accepting cryptocurrency payment helps attract new customers, particularly, the youth. Bloomberg reported that 58 percent of American Bitcoin investors are 18 to 35 years old. PrivateFly’s flight adviser, Wasim Omar, confirms this. He says their internal reports show that, on average, their Bitcoin consumers are four years younger than their typical customers.
However, David Gitman, Monarch Air Group’s executive director, discovered something. Monarch Air Group is another aircraft rental service that accepts bitcoins for payments. While it is true that accepting cryptocurrencies can attract new customers, they can also lose them just as fast.
The problem revolves around cryptocurrencies volatility. Right now, your bitcoins could be equivalent to a hundred thousand dollars. The next moment that could change to just fifty grand, even when you did not spend any.
Gitman says this has a noticeable effect on customer’s interest in paying for flights with cryptocurrencies. For instance, there was a significant drop when Bitcoin lost 50% of its value at the end of 2017.
But cryptocurrencies volatility also means its value can also rise in the future. Knowing that can happen, cryptocurrency wallet owners are reluctant to spend their investments.
The volatility of cryptocurrencies is not a problem exclusive to the customers. Managing Director of Premium Jet AG Fabio Hausammann acknowledged that the unpredictable valuation of cryptocurrencies is definitely a drawback. Private aviation companies could lose money because of it.
Solution
The gist of it is the value of cryptocurrencies such as Bitcoin depends on the current state of the market. It is ever-changing. Thus, an investor can earn or lose money even without doing anything.
Of course, companies want to earn profit. Thankfully, there is a solution to shield themselves from the risk posed by the volatility of cryptocurrencies. That is to convert them into fiat currencies immediately. This would minimize capital loss.
Since charter companies can convert Bitcoin payments anytime, Gitman is not concerned about a potential crash. He cites that some people believe cryptocurrencies will eventually be gone. Meanwhile, some believe it is the new way of payment. But, in Gitman’s opinion, it doesn’t really matter. We have it today; that is what’s important.
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