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Ship & Boat International eNews: June 2022

Dynamiq-GTT-160-(1)WEB

 

(image: Dynamiq)

 

Love it or loathe it, cryptocurrency is making steady inroads into the superyacht and megayacht segments. Since the beginning of the year, there’s been a notable increase in the number of brokers, and now boatbuilders, willing to take crypto payments for services and new orders.

 

As one example, brokerage SuperYachtsMonaco recently represented the buyer of the 40.2m, Benetti-built Oryx, who purchased the nine-year-old yacht entirely with crypto. On that deal, SuperYachtsMonaco worked with payment processing company BitPay, whose CMO, Bill Zielke, tells Ship & Boat International: “We are seeing an upturn in the purchase of luxury goods in general, including luxury yachts: our Q4 2021 volumes were up 27% vs Q3, and 2021 volumes related to the purchase of luxury goods surged to 31%, vs 9% in 2020.”

 

BitPay's crypto payment options include Bitcoin (BTC) but also a number of alt-coins. Over the past year, these alt-coins have become popular among investors who believe (rightly or wrongly) that they missed out on the BTC ‘gold rush', which culminated in an all-time high of more than US$68,000 per BTC in 2021. Zielke estimates that BTC payments accounted for 92% of BitPay’s volume in 2020, but dropped to 30-65% of processed payments last year. Alt-coin Ethereum (ETH) gained ground in 2021, representing 15% of the company’s volume, while stable coins, pegged to the USD (such as DAI and USDC), accounted for 13%. Meanwhile, new coins that BitPay added to its service last year – including Litecoin (LTC), Dogecoin (DOGE) and Shiba Inu (SHIB) – accounted for 3% of all payments. 

 

SuperYachtsMonaco received settlement for the Oryx transaction the next working day, whereupon it converted this crypto payment into Euros. Of course, crypto's price volatility may concern some, though BitPay has a way of mitigating this risk. “When making a purchase with BitPay, the customer will see a QR code with the exact amount of crypto needed for the transaction,” Zielke explains. “That price is locked for 15 minutes to give time to make the payment. If the time expires, the customer will be presented with a new QR code, and potentially a different amount.”

 

BitPay then verifies the funds and accepts the crypto on behalf of the retailer. “US dollars or Euros are deposited into the retailer’s bank account the next business day, minus a 1% fee that BitPay charges for the entire process,” Zielke says. “This fee is significantly less than the fees charged by credit card companies. So, crypto volatility poses no risk to the merchant.”

 

It’s not just yacht brokerages embracing crypto. Richard Liebowitz, design director at naval architect Liebowitz & Partners, says he would happily accept BTC as payment for providing design services – particularly given the dismal performance of fiat currency after the calamitous start to the decade. "The fact is, failed monetary policy in Western countries is leading to loss of faith in paper money as a store of long-term value," he says. "Fifty years ago, Western currencies guaranteed a tiny piece of precious metal linked to every paper note – but they cancelled that wise policy. Why does this matter? Because, with no gold backing he notes, they can print at will – but they cannot print themselves out of the vast debt accumulated in the past 50 years.”

 

As Liebowitz points out, there are only 21 million BTC in existence. “BTC is designed as a long-term store of value,” he says. “It was conceived to mimic the properties of gold, minus the physical hassle and peril of storing and moving it. For this reason, the price of BTC and gold will go upward, whereas the value of our fiat currency can only go down.” The banks would, no doubt, disagree – “of course, the old monetary guard doesn’t like losing its control,” Liebowitz notes. However, he views crypto as a natural progression for the yacht sector. “In the real world, BTC is not a political debate,” he says. “It’s been adopted by millions of people in a world plagued by broken financial systems: 95% of the world’s people cannot even access a bank.”

 

If you don’t fancy buying a superyacht outright, you could always use your crypto to hire one instead. Earlier this year, the 55m Motor Yacht (MY) Loon announced that it would be accepting BTC for its 2022 European charter bookings. Captain Paul Clarke of MY Loon comments: “We believe BTC is the future of global currency. Accepting BTC supports inclusivity, especially for the younger generation of charter guests, who are often more comfortable with a decentralised currency such as BTC.” He tells Ship & Boat International: “It’s all quite simple: funds are sent to our wallet and held in escrow until the charter commences. We can even do advance provisioning allowance [APA] and crew gratuity in crypto, if desired. I don’t know if BTC will ever become the norm, but I believe it will become increasingly popular for both owners and guests.”

 

And then there is the boatbuilder’s perspective to consider. Italian yachtbuilder Dynamiq would appear to be one of the first yards, if not the first, to accept crypto payments. “So far, we haven’t had any crypto deals yet,” says Igor Dobroserdov, Dynamiq sales and marketing manager, “but we do have several customers we’re negotiating crypto payments with. Crypto in yachting is still in its infancy, so we understand that the demand might not be there just yet when compared to traditional purchasing methods. In our mind, it’s better to be ahead of the curve and anticipate demand from clients.

 

"The advantages for wealthy clients are many, with the main ones being instant transactions, cheaper transfer fees and greater privacy. For us, the goal is to embrace the future and cater to our clients. The point is, we’ll build you an amazing boat regardless of what you choose to pay with.”

 

Dynamiq is currently facilitating all yacht-related payments with crypto – “from tablecloths to fuel”, Dobroserdov says – and will accept “pretty much any crypto coin out there”. As mentioned above, to mitigate the risks associated with price volatility, Dynamiq’s brokerage process would offer the customer a lock-in exchange rate, meaning that for a brief period – about 10-15 minutes – the sum paid in fiat would remain the same, regardless of the crypto coin’s movement. “The money is then quickly converted into fiat currency and whisked away to the bank,” Dobroserdov says.

 

(For the full, in-depth article, see Ship & Boat International May/June 2022)