Bitcoin merchants: From plastic surgery to haircuts

One day it's up. One day it's down.

The volatile, electronic bitcoin has quickly become the currency topic du jour, attracting investments from entrepreneur heavyweights including Cameron and Tyler Winklevoss and Andreessen Horowitz.

While adoption among merchants is still minimal, businesses are increasingly accepting bitcoin as a way of avoiding credit card fees and attracting enthusiasts, who use the currency.

Click ahead to read about various businesses, from a plastic surgeon to a rental software start-up, which are dabbling in the bitcoin world.

—By CNBC's Katie Little. Follow her on Twitter @KatieLittle
Posted 21 Nov. 2013

For Chicago-based Rentalutions, accepting bitcoin was a "no brainer" since it would help customers who wanted to pay with the currency, and also signal its role as a disruptive software in the rental space, said Ryan Coon, the company's co-founder.

On behalf of landlords, the company accepts rental payments in bitcoin and then sends the landlord the money in U.S. dollars. Since the company doesn't want to carry any currency risk, Coon said it uses Coinbase, which has raised more than $6 million so far from investors, to convert the money to dollars immediately.

"As you know, the bitcoin community is very enthusiastic about it so many bitcoin evangelists like the flexibility of being able to pay with any payment method that they choose," Coon added.

Since the start-up began offering the service early last month, a handful of tenants have signed up.

The move to bitcoin has also increased visitors to Rentalutions' site. "The day we made the announcement, we saw three times the number of visitors to our website compared to the 30 days prior to the announcement," Coon said. "Since then, bitcoin-related news and search traffic has accounted for roughly 15 percent of all traffic to our site."

Repeat customers can use bitcoin to pay for 100 percent of their cosmetic surgery procedures at Vanity Cosmetic Surgery, while new patients can pay for up to 20 percent of procedures using the virtual currency. This means that as of Wednesday, a rhinoplasty will set consumers back 5.2 bitcoins, or $2,999, while a breast augmentation is about 4.7 bitcoins, or $2,699.

The Florida-based business is "testing the waters" of bitcoin payments as a way of expanding its Web presence, said Carlos Yela, Vanity's advertising and PR manager.

"We were looking at different trends on the Internet and niches, and this was one we found that was interesting and growing at a fast pace," Yela said.

About 12 to 13 customers have expressed an interest in using bitcoin to pay for treatment since the company began offering the option about two weeks ago. To date though, no one's paid this way due to the nature of surgery's multiweek time frame, he added.

For about six months, San Francisco-based Gyft has allowed customers to pay for gift cards with bitcoin from about 200 participating retailers including Starbucks and Target.

"Our Bitcoin orders have grown more than 1,000 percent over six months from the first month," said Vinny Lingham, chief executive of Gyft, an online platform that lets customers buy and manage gift cards.

The company encourages users to pay in bitcoin through its loyalty points system. Bitcoin users earn triple the number of loyalty points of credit card users and double the number of PayPal users.

Gyft converts most of these bitcoin payments into dollars, but keeps its margin from buying gift cards from retailers and reselling them to consumers in bitcoin, Lingham said.

"If you're a long-term believer in the currency, you tend to hold it," he added. "I think the bitcoin is overvalued in the short term and undervalued in the long term." The volatile currency traded around $580 Wednesday on the Mt. Gox exchange. But bitcoin values can swing dramatically. Within the past month, prices ranged from $900 to $183.

The company also tries to pay advertisers in the currency as a way of supporting the bitcoin economy, he said.

In March, a string of family owned businesses in Brooklyn, N.Y., including two organic grocery stores, a wellness spa and a restaurant, began accepting bitcoin.

"For the first sixth months, I didn't have a single customer use it and then within the last two months or so, the uptick has been pretty significant—almost to a point where it's consistent," said Dan Lee, the manager of Oxford Kitchen, the restaurant.

Between five and 10 people each week now use bitcoin, he said.

"Every single person who's used Bitcoin didn't come here by happenstance—they actually physically sought it out for the basis of solely using bitcoin to pay," Lee said.

Facing monthly credit card charges running in the $200 to $300 range, Bee Bond, a hairstylist at Ohm Salon in Venice Beach, Calif., decided she'd been nickel-and-dimed enough.

In part to avoid these fees, she began accepting bitcoins on Monday. Customers who choose to pay with the virtual currency will get 30 percent off their bill.

When the value of bitcoin "rose from $100 to $600, I realized I should start accepting these because it seems like what the future holds for us with money," Bond said.

While no one has paid using bitcoin yet, Bond said she doesn't plan to convert future bitcoin payments to dollars because she's not worried about the virtual currency's volatility.

For about two weeks, Sapan Shah, a Subway franchise owner in Allentown, Pa., has been accepting bitcoins. Since then, bitcoin users have traveled across state lines to visit his store, he said.

"Right now a lot of enthusiasts are coming in," he told CNBC's "Squawk on theStreet" on Tuesday. "Bitcoin enthusiasts are coming to show a lot of support for this. A lot of kids are coming two or three hours to drive. We're getting a lot of students from local areas who have studied bitcoin and understand it."

Looking for a root canal or teeth whitening discount? At Dr. Nestor Reyes' firm, Caring Dentists, in Indianapolis, patients paying in bitcoin get 20 percent off. The dentist accepts the virtual currency for all procedures.

Since January, New Jersey-based A Class Limousine has been accepting bitcoin for customers booking sedans, limousines, vans and shuttle buses.

Short on time and on cash? Beginning in mid-April, food delivery website Foodler started letting customers order takeout from more than 13,000 restaurants using bitcoin. After customers deposit their bitcoins, the money is then converted to Foodler credits that are valid during checkout, according to the company's site.

When the company launched the service, its co-founder Christian Dumontet said, "Interest in bitcoin is soaring and, as people are becoming accustom to using bitcoin to pay for everyday items—whether it be at a coffee shop or local restaurant—we wanted to provide an easy way for the more than 11 million people with bitcoins to pay for their meal deliveries."