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Some claim that the unregulated digital currency known as Bitcoin is imaginary, or a Ponzi scheme. I have a different perspective, because last week I used it to pay for a hummus platter with olives in midtown Manhattan.
It began when someone sent me a Fortune article, “The Clock Is Ticking on Bitcoin." The article was mainly full of gloom and doom about the future of Bitcoin, an encrypted digital currency that can be transferred between users without any involvement from banks or governments. But it also happened to alert me to the existence of Meze Grill, a restaurant near Columbus Circle that accepts both U.S. dollars and bitcoins.
I decided to hop over to Meze Grill — "where authentic Mediterranean food meets modern flavor" — with my laptop in hand. The restaurant sports a rather professional-looking “Bitcoin Accepted Here” sign in the window. My conversation with the man behind the counter began awkwardly:
“I heard that you take ... bitcoins here ... as a way of paying for food,” I said.
“Oh,” he said, looking confused. “Ask him about that,” he added and pointed to the restaurant owner, who was sitting at a table explaining Bitcoin to another employee.
I walked up to them. “Excuse me,” I said, “I heard you accept bitcoins here?”
“Yes, of course,” the owner replied, nonchalantly. What kind of restaurant did I think this was — of course they accept bitcoins!
The owner calculated the current exchange rate, which has fluctuated wildly in recent months amid rampant hype about Bitcoin. My lunch was $5.51 plus tax: I owed him 0.52 bitcoins.
He held up an enormous laminated QR code the size of an entire sheet of paper, which I scanned on my phone yielding: bitcoin:1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC. This was the address where I would send the money. Using my laptop, I opened up my account on the Mt. Gox Bitcoin exchange market, sent 0.52 bitcoins to 1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC, and about three minutes later the restaurateur received an e-mail indicating that the coins had arrived.
The entire transaction was anonymous — we didn't know each other's names or any other identifying details. Incidentally, I'm keeping my name anonymous in accord with that feature.
While we were waiting for the transaction to clear, the Meze owner and I talked about how much nicer it would be if I could send the transaction directly from my phone. As if on cue, a young man I’d prefer to remember as wearing a trench coat, mirrored sunglasses, and with slicked-back hair walked in with his entourage. I knew why he was there even before he began inquiring about Meze Grill’s Bitcoin support.
The young man said he was a blogger and Android app developer, and he was hoping to make it easy to make a Bitcoin transaction from a phone. He bought lunch for his friends.
Feeling satisfied as I enjoyed my lunch, I remembered how many people I’ve heard continue to call Bitcoin an outright scam. I had just used it in a retail point-of-sale transaction and got a tasty meal, on the basis of nothing more than a cryptographic signature telling everyone on the Bitcoin network to consider the Meze Grill the new owner of my half of a virtual coin.
Bitcoins are not really imaginary, or at least no more so than the bits the traders down on Wall Street are signing over to each other all day long, the ones that encumber quantities of corn and wheat that haven’t been grown yet. Bitcoin is an experiment, which will probably fail at some point for reasons other people have already enumerated, and that’s fine. We’ll have learned an enormous amount from it.
All fiat currency gets its value from psychology and various institutional arrangements. That’s true of the currency in your wallet right now. There are tremendous resources that could be brought to bear to defend the value of the U.S. dollar. There isn't much to defend the value of a bitcoin once something goes awry, as it almost inevitably will. But I have no patience for theories that say that I couldn’t possibly have bought lunch with my half a bitcoin or that the restaurant was crazy to accept it. It was a delicious thrill; I suggest you go down to Columbus Circle and try it for yourself.
The most amazing part of the entire transaction at the Meze Grill was not the QR code or the military-grade cryptography, but the offhand composure of the restaurant owner when he said that of course his restaurant accepts bitcoins. Maybe the dividing line between a "real" currency and an "imaginary" one is how nervous you get asking if a business will accept it, and the eagerness of the business to say yes.
Adapted from a post on Star Simpson's blog.
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