First-Growths and Bitcoin: Cryptocurrency Enters the Fine Wine Chat

Traditional wine auction houses and retailers see more opportunity as digital currencies gain traction

First-Growths and Bitcoin: Cryptocurrency Enters the Fine Wine Chat
Cryptocurrencies like Bitcoin have sped up their transaction time in recent years, making it easier for wine merchants to accept them as payment. (Courtesy of BTC)
May 11, 2021

When Louis de Bonnecaze started diving into digital currencies in 2015, he saw a unique opportunity for the fine wine industry. Three years later, the CEO of BTC Wine, a Bordeaux-based wine retailer, became one of the first to accept cryptocurrencies, or “crypto,” as payment for prestigious French wines.

"I thought it was a good idea to use crypto as payment because it is fast, secure and convenient," de Bonnecaze told Wine Spectator. "People want to spend the virtual currency and change it to a tangible asset, and buying fine wines can be a solution."

In the past few years, wine auction houses and retailers have increasingly accepted digital tokens such as Bitcoin in the wine world, but many are still hesitant about virtual currencies—decentralized, digital money not issued by a government.

Acker, a 200-year-old wine merchant that saw record-breaking auction sales in 2020, recently announced that it will be accepting digital tokens for auction and retail purchases via BitPay, a payment service provider that helps convert digital currency to cash for merchants. The accepted tokens include Bitcoin, Bitcoin Cash, Ethereum, Dogecoin, PAX (Paxos Standard Token), Gemini Dollar and BUSD (Binance USD).

Acker president John Kapon says it felt like the right time to provide additional payment options that have become popular among Acker's network of wine lovers. "It is clear that there has been significant wealth created by cryptocurrency, and we feel strongly that people already investing and transacting in cryptocurrencies will also be receptive to an alternative asset class like wine, which has also performed exceptionally over time," Kapon said.

Chicago-based auction house Hart Davis Hart has been accepting crypto since 2019. That same year, Toronto-based auction house and retailer Iron Gate Wine became one of the first to accept crypto for its products. The company, founded by Warren Porter, has retail locations in New York, storage facilities in Toronto and conducts auction events throughout Canada.

"To me, it's important to be first when the technology makes sense, and it did," Porter said about initially accepting crypto. "It's not to me any different than a euro or anything else. Anything that I can convert immediately into U.S. dollars I'll take."

Porter, who uses BitPay as well, explains that customers buy wine with their digital wallets and he receives the money in U.S. dollars the same day. In fact, Porter prefers that customers use crypto. "My processing charge is significantly less than a credit card," he says. "My processing fee is 1 percent with zero chance of fraud while my credit cards are over 4 percent because I have fraud protection from my provider; that's a big difference."

Across the Atlantic, de Bonnecaze uses Crypto.com to exchange his tokens for euros. He enjoys the convenience of digital money. "When we use wire transfer for international business, it takes three or four days to pay, but a Bitcoin payment is nearly instantaneous," he says. "You can receive it 10 minutes after."

De Bonnecaze adds that the rise of crypto has increased sales. He says most of BTC Wine's buyers are men between the ages of 25 and 45, and that people who have won big with Bitcoin investments are driving his sales of Bordeaux first-growths. As of today, Château Cheval Blanc kickstarted the 2021 Bordeaux futures campaign with the release price of its 2020 vintage. De Bonnecaze says his team sold their first en primeur in crypto with Cheval Blanc futures, the majority of buyers paying in Bitcoin and Ethereum.

What are the risks?

Kapon and others are comfortable that the risks in accepting crypto are limited compared to investing in it. The value of Bitcoin and other cryptos are highly volatile, but these merchants are converting it to dollars or euros. Returns, however, are potentially an issue, Porter says: Since he does not hold on to cryptocurrencies, he can only refund payments in U.S. dollars.

Governments are still figuring out how to regulate crypto, which has become the currency of choice for many international criminals and hackers. Regulatory hurdles have been a problem for de Bonnecaze, causing him to change payment processors over the years. He also adds that in-store purchases can be slower, as customers must wait five to 10 minutes for the blockchain transaction to be validated. Businesses also need to consider tax issues.

Although auction houses such as Christie's and Sotheby's have yet to accept crypto for wine, Kapon sees a bright future for a largely unknown form of payment. And he claims young wine consumers are leading the way.

"We have seen a wave of younger buyers enter the industry with significant buying power, so it makes sense that crypto investors are looking to diversify with wine," he said. "Cryptocurrency is becoming a more normalized payment, so we’re sure other companies will continue to join."

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