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So you've got some Bitcoins. Now what, you ask yourself. You can't spend them on apps, alcohol or amusement park rides. For the vast majority of purchases, online and in real life, they're pretty much useless.
That's beginning to change. There's a growing number of websites and businesses that accept Bitcoins, as well as an area of Berlin where the virtual currency is legit.
Now, in the UK, you can spend your Bitcoins on a few pints down your local pub. That is, if your local happens to be an Individual Pubs pub.
The Pembury Tavern in Hackney is one of those pubs. On 23 May it became one of the first pubs in the United Kingdom to accept Bitcoin payments -- along with its sister pubs in Cambridge, Norwich and Peterborough. "I don't like to make it difficult for people to pay me," says Stephen Early, founder and director of Individual Pubs. A former computer scientist from the University of Cambridge, Early says he hacked Bitcoin payments into his custom-built till software in a couple of evenings. "I was stuck in Norwich [...] I had done all the paperwork I could stomach, and so I thought, right, here's a thing I've been wanting to do for a while, let's just sit down and do it."
The system is fast, easy, and completely straightforward. I order a pint of Milton Brewery's Sparta -- a light, poppy and seriously tasty ale -- and tell the bartender I want to pay with bitcoins. He enters the price into the till as normal, clicks a button for Bitcoin payments, and a QR code appears on the screen.
I simply scan the QR code with my Bitcoin app -- I was using Blockchain for iOS -- and we're done. It was faster than paying with card, and there was no change to worry about either. A quick and easy pint of ale for just BTC 0.0492 (£3).
39 years old, Early spent 10 years at Cambridge University, first as an undergraduate and then as a research assistant working on virtual machines. He was part of the team that would later create Xen. He eventually bored of academia, he says, and left his PhD to start a career running pubs, opening the first Individual Pub in Peterborough in 2002. The Pembury Tavern was his third pub, opening in 2006. "Integrating [Bitcoin] is simple. [...] It's a 1000 lines of code.
500 in the till and 500 on the server," he says. "And most of the code on the till is to do with displaying and printing QR codes."
Of course, this computer scientist had a little bit of a head start over your ordinary pub owner. "I was starting with a little bit of an advantage. The till system we use was written by me." He wanted an EPOS system that included stock control, but couldn't find a cheap enough version.
So he wrote his own. "In the course of a month of evenings I wrote an EPOS system that does stock control and we've been using it ever since.
The system works like this: when the bartender tells the till to accept a Bitcoin payment, it sends a message to Early's server, which returns a unique Bitcoin address for that transaction. The till converts that address into a QR code, which is displayed on screen or printed off. The customer scans the QR code, transferring money from their Bticoin wallet to the unique address for the transaction.
The server checks the transaction address repeatedly until the money arrives -- as soon as it does, it tells the till that everything's hunky dory. It all happens in a matter of seconds.
Early accepts the payments without waiting for a new block -- or in layman's terms, before waiting for the Bitcoin network to verify the transaction. This makes sure there are no delays, but also increases the risk of a double spend, which is when someone spends the same bitcoins twice. "By not waiting for a block, we are vulnerable. On the other hand, my attitude is if they do, they're standing right here.
They've got a pint in front of them. You can go and take it off them. People [in pubs] hang around after a purchase, rather than walking out, so I think the risk of a double spend is minimal."
The exchange rate of Bitcoins to pounds is checked by his webserver twice a day, using bitcoincharts.com. He uses a seven-day weighted average, adding an eight percent hedge in his favour as a way of offsetting potential fees in converting the bitcoins. "It's just as if someone comes in with an American credit card, the currency conversion is done in that case by the card company, and we get paid in pounds," he says. "It's exactly the same here, except the currency conversion is being done by me personally, not by the card company" "Gradually I think [Bitcoin] is becoming a bit more stable," says Early, adding wryly, "and a bit more resilient to press coverage. [...] I think it's actually useable as a currency these days." "It's not like the cost of your beer is changing from one round to the next," he adds.
So far, his pubs have taken around £750 in Bitcoin payments in the few weeks he's been accepting them. Most of the transactions have been at the Pembury Tavern, and a Bitcoin Meetup at the pub on 23 June is sure to send that figure even higher.
Early is yet to figure out a sustainable method of converting the bitcoins, but he's not worried at the moment. "While transaction volumes remain small, I'm ok with [holding on to them].
For someone wanting to do £1000s of trade, I wouldn't recommend it just yet".
In the meantime, the Pembury Tavern's doors are open noon to 1am on most days. Why not head over and buy your first cryptocurrency pint -- make it a real ale, I'd recommend Sparta.
Read Wired.co.uk's Bitcoin 101 if you're interested in trying out the virtual currency.
Also, find out if you live near an Individual Pub here.
Finally, read more about how Stephen Early integrated Bitcoin payments into his business on his website here.
This article was originally published by WIRED UK
