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Bites for Bits: How Bitcoin Could Change the Food Business

Bites for Bits: How Bitcoin Could Change the Food Business

A closer look at Bitcoin and cryptocurrency used in the food industry: how the digital peer-to-peer payment systems are effecting food and drink industry.

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Way back in 2010, a programmer from Florida, USA, bought a couple of pizzas. Nothing unusual in that, you might think. But these were no ordinary pizzas. Because the programmer was Laszlo Hanyecz, and the pizzas were bought with Bitcoin. Back then, the Bitcoins Hanyecz had “mined” on his computer were worth around 0.003 cents each. He considered it something of a result for Papa John’s to accept 10,000 coins in exchange for dinner. Not bad for a digital currency that had been conjured out of nothing on a home computer. Except now those Bitcoins are worth somewhere in the region of $8 million.

Hanyecz’s story has passed into Bitcoin folklore, but it paved the way for future transactions with a new type of currency that could revolutionise the way we pay and get paid for things, including food and drink. For the uninitiated, Bitcoin is an online cryptocurrency - a digital peer-to-peer payment system, independent of governmental controls. Coins are created or “mined” when a computer solves a series of complex mathematical problems, then they are stored in online wallets. One of the attractions of Bitcoin is that payments can be made to anywhere in the world via the internet, bypassing banks and eliminating exchange rates and high commission charges. Another is that there will only ever be 21 million Bitcoins produced, which helps to safeguard against inflation. As internet crazes go, it makes a lot more sense than Rickrolling. However, the course of seamless online transactions never did run smooth. Like any new technology, not least the Internet itself, there have been teething troubles. Bitcoin has fallen prey to misuse and theft. Hackers have attacked Bitcoin exchanges and personal online wallets, resulting in sharp downturns in value and stolen coins. The online drugs marketplace Silk Road was shut down by the FBI and thousands of Bitcoins were seized after the site became a haven for users of the anonymous cryptocurrency. Nevertheless, 2013 saw the value of Bitcoin rocket to an all-time high of $1242. Richard Branson began accepting it for flights into space with Virgin Galactic. And as the currency stabilises at around the $800 mark, more and more bricks-and-mortar businesses are starting to accept it as a method of payment, and many of the early pioneers are bars and restaurants.

The Pembury Tavern was the first pub in London to accept Bitcoin. Here, a pint of real ale and Moravka beer-battered fish and chips can be paid for by scanning a QR code with a smartphone. Parent company Individual Pubs, which also has Bitcoin-friendly pubs in Cambridge, Norwich and Peterborough, says Bitcoin is easier than traditional card payments, with much less scope for human error. Others would appear to agree. The EVR gastro-lounge in Midtown New York was quick to adopt the currency. It helps that owner Charlie Shrem is also one of the founders of BitInstant, a payment processor for Bitcoin exchanges. Meanwhile, the first bar in Japan to jump on the Bitcoin bandwagon was The Pink Cow in the Roppongi area of Tokyo. It describes itself as a ‘California casual restaurant, art bar and funky event space’. Beijing’s Cafe Bar 2nd Place was China’s first Bitcoin bar; whereas the Killfish bar franchise has become the first in Russia to go crypto. So far, it’s unclear how popular the new payment option is with customers.

With Bitcoin prices high and prone to fluctuation, many owners of the cryptocurrency are keeping their wallets firmly shut. After all, nobody wants to be another Laszlo Hanyecz. But one thing is certain, Bitcoin ‘firsts’ mean great PR for your business. Diners can now pay in Bitcoin at the American Coney Island and Joe Vicari’s Andiamo Italian Steakhouse restaurants at the D Las Vegas Casino Hotel. It has become the first casino in Las Vegas to accept the cryptocurrency, assuring it plenty of healthy press coverage. It’s been grabbing headlines along with its sister property, the historic Golden Gate Hotel & Casino, which has a track record of adopting new technology. Apparently, in 1907, it was the first Las Vegas casino to install a telephone.

As more people start spending Bitcoins, bars and restaurants stand to make significant savings on card transaction charges. But food producers are also starting to see the benefits. Santiago Zaz is an organic farmer in Argentina. His small farm in Buenos Aires was struggling to make ends meet until he began accepting Bitcoin payments through the Tierra Buena website, which was set up with the help of web developer and entrepreneur Nubis Bruno. Zaz and other local farmers are offering all kinds of fresh organic vegetables, from cherry tomatoes to Colorado cabbage. But now they can can sell their produce online, without having to pay fees to credit card companies or Paypal. “I think Bitcoin empowers small farmers to get together and organise themselves, and reach their market directly without any middlemen,” says Bruno. And it could work both ways. Producers can pass on their savings to Bitcoin-savvy customers in the form of discounts, promotions and lower prices. But while the day everybody is buying their lunch with cryptocurrencies may be some way off, things are changing bit by bit.

Here is an interactive world-map of Bitcoin-friendly restaurants, cafes, bars and groceries.

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