Stephen Silver Fine Jewelry’s flagship location shares an address on Sand Hill Road with a dense concentration of Silicon Valley venture capital firms, where office space is among the most expensive in the country. Given that its neighbors have funded Microsoft, Amazon, Facebook and Instagram, it’s fitting that the 38-year-old purveyor of fine gems and watches has adopted a startup ethos that is quick to adopt “disruptive” technologies.

While the potential for most luxury brands to transact in crypto resides largely in the hypothetical, the bitcoin business for this Silicon Valley boutique has gone gangbusters by appealing to customers eager to translate their volatile crypto assets into tangible goods that will withstand for generations.

Customers who pay with cryptocurrency tend to be big spenders, said company CEO Stephen Silver, who added that the value of crypto paid to the company “far exceeds the volume of dollars processed by credit card. Large sums of money are where we are finding cryptocurrency to be a huge advantage.”

About 20 percent of the company’s transactions are now paid via cryptocurrency, with the average sale being almost $1 million.

The company began accepting cryptocurrency payments in 2014, and that portion of the business finally picked up in 2017 as the price of bitcoin “took off like a rocket ship,” said company president Jared Silver. (Bitcoin is the most popular form of cryptocurrency.) He said that when customers see that the business accepts cryptocurrency, they can identify with it. Most of the company’s customers are 29 to 45 years old and early adopters (which is reflective of the Silicon Valley demographic), and are spending more on flashy watches than jewelry. “It’s not the stuffy Madison Avenue jewelry house. We have very much a Bay Area, San Francisco vibe,” he said.

“A lot of young, successful entrepreneurs are trying to reward themselves, so they decide they will buy themselves an MB&F watch, for example,” Silver said. (MB&F watches often cost more than $100,000.) He added that, for customers traveling internationally, wire transfers are “a huge pain,” as they can take more than three days to process. A $10,000 bitcoin bill, however, can come through on a customer’s cell phone and be transferred in less than 20 minutes, he said. The business pays a 1 percent fee to Bitpay for converting the currency into U.S. dollars (which he compares to the 3.5 percent transaction fee for an American Express purchase); Stephen Silver Fine Jewelry retains at least 5 percent of every cryptocurrency transaction as an asset.

Although awareness of blockchain (which powers cryptocurrency) is rising, there still is skepticism and confusion among businesses and customers, said Jared Silver, who became familiar with the technology while working as a strategy consultant for EY, advising Fortune 500 companies on how to facilitate innovation by embracing new technologies.

So far, few major retailers have adopted the technology. In addition to Stephen Silver Fine Jewelry, in 2014, brands including Overstock and Reeds Jewelers were among the first to accept cryptocurrency. At the time, Overstock CEO Patrick Byrne said it was an effort to attract cryptocurrency customers in other countries. “Adoption among the technorati is fairly pervasive, but it needs to make its way into the lives of the masses in the developed and developing worlds,” Byrne said.

Today, crypto payments account for about .25 percent of all Overstock sales, with top categories being furniture and large appliances, laptops and televisions, men’s watches and wedding rings.

Reed Jewelers vp of marketing Mitch Cahn said the company sees a 50/50 split between online and in-store bitcoin transactions, but he didn’t share details on what percentage of sales are bitcoin.

For now, most bitcoin billionaires seem to be investing their fortunes in streetwear, art and sports cars, in addition to fine jewelry and watches.

Former LVMH and Formula 1 executive Elizabeth White formed The White Company in 2017 to facilitate discrete, big-ticket transactions for the crypto-wealthy. An engagement ring on her site, for example, is offered at 40.65 BTC, which is about $300,000. A Hublot watch is 115.04 BTC, or about $800,000.

“The crypto-wealthy are especially drawn to luxury goods, because many of them are newly wealthy and are experiencing this for the first time, after Bitcoin and other cryptocurrencies appreciated more than 10,000 percent in just a few years,” White said. “While they purchase everyday items with their fiat (non-cryptocurrency) holdings, for large ticket items, they prefer to use their cryptocurrency, especially if they can buy the items directly without having to ‘cash out’ of the crypto themselves.”

Most of her clients reflect the demographic that has benefited from crypto: young and male — although she has seen a rise in female clients interested in travel and experiences. The White Company reports having converted more than $100 million in cryptocurrency into luxury goods and non-crypto, and has begun working with luxury brands, auction houses, art galleries and car dealerships to help them implement cryptocurrency payments.

“I believe that cryptocurrency is absolutely the future. While we anticipate that the crypto-wealthy holding bitcoin and other cryptos will continue to want to use their assets, we think the real advantage of cryptocurrency is the ability to instantly pay anyone, anywhere, nearly for free,” she said.

Blockchain technology, which allows for a decentralized, secure ledger of any type of transaction, stands to help luxury brands in ways that go beyond payments.

This July, economist and Richemont board member Jin Keyu said that for companies such as Cartier (which is under the Richemont umbrella), blockchain technology could help trace the provenance of diamonds and watches, and help control the gray market. De Beers in May reported that it had already tracked 100 diamonds from miner to retailer by using blockchain.

Silver isn’t holding his breath.

He estimates that it will still be another five to eight years until major fashion houses owned by a conglomerate like Kering or LVHM will start accepting cryptocurrency. “These companies are typically run by conservative business people. These are slow-moving companies that have been around for 250 years, and their main approach is to not lean forward and to protect themselves until they see [the technology] has matured,” he said.

Taking risks and failing is not ingrained into the Swiss watch industry the same way it is in Silicon Valley; for some, adopting e-commerce or Instagram is heralded as a big deal. “As a consultant who has been inside these companies, every company says they are forward-looking, everyone says they want to be innovative — but innovation is uncomfortable and risky, and ruins careers,” he said.

He said that if he were advising a luxury brand, he would look at embracing cryptocurrency payments, but understands that facilitating these payments means shouldering a lot of responsibility.

“It could be a catastrophe if it doesn’t go well or puts the company at risk,” he said. “When it’s your head on the chopping block, it’s important to make decisions you are comfortable with. We assessed something and decided it was time to embrace the technology.”

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