DETROIT -

Michael’s Auto Plaza in East Greenbush, N.Y., accepts bitcoin — a perhaps more well-known, but still very little understood cryptocurrency — as payment for vehicle purchases.

The reason is simple, said Michael Severance, the used-car store’s sales manager.

If his customer has bitcoins and wants to buy a vehicle, he wants to sell it to them. It’s also about staying competitive and being nimble enough to adapt to changing market conditions.

“Customers can go into different dealerships whether they are financing or writing a check, whether they are doing a wire transfer, but somebody that is sitting on ever how many bitcoins can’t go into your regular everyday (dealership) and use bitcoins to pay for something,” said Severance, who happens to have the same first name as the store’s owner.

“That’s why we decided to accept bitcoins for purchases, and knock on wood, it’s worked out fairly well.

“Besides the three, four, or five sales that we’ve had, we’ve had plenty other people inquiring if we accept bitcoin payment. A lot of people want to know it’s not a fly-by-night sort of thing that we accepted bitcoin for a month or two, and we no longer do.”

Bitcoin is the most popular form of cryptocurrency and is creating a lot of buzz and bewilderment among dealers and others in the industry. The virtual currencies’ supporting technology is also attracting a lot of attention because of its other potential uses.

Virtual and volatile

Here’s why:

Cryptocurrency is virtual, and its funds are neither guaranteed by a central bank nor is it considered legal tender by the U.S. government.

Its transactions are recorded on digitalized ledgers using a technology called blockchain. The ledgers or blocks are chained together by computers using software that encrypts the connection between each block, so they are immutable.

Transactions on the blocks must be verified by everyone using the blockchain. Users store and monitor their transactions in digital “wallets.”

Besides having a hard time wrapping their minds around funds that you can’t see or touch, many people are leery about the much-talked about bitcoin because its value is volatile and fluctuates much like the price of stock.

For example, according to Coinbase’s website, on June 17, a bitcoin was valued at $6,521.33 in U.S. currency. That was down from $19,205.11 on Dec. 17, which was around the time Severance’s dealership started accepting the cryptocurrency.

Coinbase is based in San Francisco and describes itself as a “digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum and litecoin.”

To avoid swings in bitcoin value, Michael’s Auto Plaza checks the exact value of bitcoin at the time of transaction, has that amount immediately transferred to the dealership’s bitcoin wallet and then immediately converts it into U.S. currency.

“We’re not in it to play the market or make money off of the bitcoin itself,” said Severance. “We’re just using it as a different avenue to try to generate business, which it has done.”

Though blockchain is mostly associated with cryptocurrency, the industry is looking at other uses.

Other blockchain applications

In May, a group of auto companies and suppliers came together to create MOBI, which stands for Mobility Open Blockchain Initiative. The consortium seeks to “foster an ecosystem where businesses and consumers have security and sovereignty over their driving data, manage ride-share and car-share transactions and store vehicle identity and usage information,” states its May 2, news release.

MOBI counts BMW Group, General Motors, Ford Motor Co., The Bosch Group and Groupe Renault among its founding members.

Don Gottwald, KAR Auction Services’ chief operating officer and chief strategy officer, said the company has many of the same questions and concerns about blockchain as others.

To get answers, the company assembled a team that is “growing in size and their understanding as they assess how we might leverage these new technologies like cryptocurrencies and underlying blockchain technology,” Gottwald said.

The KAR Auction Services team is studying the merits of cryptocurrency as an exchange medium because its salvage operations, Insurance Auto Auctions, has a large international base of buyers. Many of those buyers, hailing over 100 countries last year, have to convert funds to U.S. currency, Gottwald added.

“Could cryptocurrency become an international currency? Our assessment is ‘not yet’,” Gottwald said. “It is very volatile and unregulated.”

Chased by people, organizations, dollars

But Gottwald notes there is a school of thought that blockchain technology has the potential to become a game changer.

In theory at some point, blockchain-supported transactions could be less costly for businesses because transactions are peer-to-peer, meaning there are fewer middlemen involved, and it democratizes a lot of transactions and processes that could be less likely hacked or disrupted, Gottwald said.

“What industry, what usage, what timeline is anybody’s guess, but there are a lot of people, a lot of organizations and a lot of dollars chasing this,” he said.

It’s crystal clear that the number of dealers accepting cybercurrency is miniscule.

Brian Benstock, general manager and vice president of Paragon Honda and Paragon Acura in Woodside, N.Y., is among the dealers steering clear of bitcoin, at least for the time being.

Why? Too many unanswered questions.

“I’m not saying there isn’t potential value,” Benstock said. “I understand the concept and that there are crazy fluctuations in the value.

“What happens between the time I make the transaction and I conclude the transaction and there is a significant drop in valuation? I don’t have answers to that. Customers are welcome to cash in their bitcoins and give us recognized legal tender.”