Bitcoins Hacker News

One of the biggest stories in April was bitcoin’s explosion into mainstream consciousness. The digital, peer-to-peer currency made headlines with celebrity investors and giant swings in value. Last week, some bitcoin exchanges suffered from cyberattacks, while others closed down and took users’ money with them.

As techies, libertarians and economists debate the value of bitcoins, one question is often forgotten: Is it a viable currency for the layperson? How does the average consumer obtain and spend bitcoins?

When IBTimes learned of a gastro pub in New York that accepts bitcoins, we determined to find out via a quest to buy beers with them.

Buying Bitcoins

Acquiring your first bitcoins isn’t the easiest process. You can't just buy them with a credit card or PayPal, and some of the major exchanges, such as Mt. Gox, have been unreliable due to hacker attacks. You have to do a bank transfer, trade physically or use a third-party system such as BitInstant. A handy Bitcoin Wiki shows some of the options available.

We went with BitInstant, but first had to create an account with Mt. Gox. We then gave the relevant information to BitInstant and requested a purchase of $50 worth of bitcoins.

This is where things got a bit odd. To convert U.S. dollars, or USD, into bitcoins, or BTC (a comparatively new currency for the digital age), we had print out a piece of paper (a relatively old medium) and track down a MoneyGram phone.

After visiting four Duane Reade stores in Manhattan’s Financial District -- where the printout instructed us to go to -- we finally located a MoneyGram phone in the Trump Building at 40 Wall St. Believe it or not, there was a line to use the MoneyGram phone, but we were eventually able to turn $50 of cash into 0.49 BTC. Now, it was time to head to the bar.

Spending The Bitcoins

EVR is a new, swanky gastro lounge on 39th Street in Midtown Manhattan. Co-owner Alex Likhtenstein said that when he first heard about bitcoins, he immediately thought about how to use them in the world. His partner, Charlie Shrem, showed him how to do it, and EVR began accepting bitcoins this month. It helps that Shrem is also the CEO of BitInstant.

“[Bitcoin] is better than credit cards, and a fraction of the fees,” Likhtenstein told IBTimes. He added that because bitcoins lead to cash from such a transaction being deposited in EVR’s account the next business day, it’s a great currency for small businesses. It works just like paying with cash, so a customer can’t dispute a charge he or she doesn’t remember after having a few too many drinks.

When a customer requests to pay with bitcoins, the bartender or server inputs the receipt into a tablet app. The app converts the USD amount into the current price of BTC and generates a quick response code, or QR code. The customer then scans the code using a bitcoin wallet, and the transaction takes place instantly.

By the time we ordered, bitcoin had increased in value by about $20 -- to $118 from $98, according to Mt. Gox -- so we were able to score a round of drinks and appetizers, while still having a bit left over.

Before we paid, we had to transfer the bitcoins from the Mt. Gox account to a Blockchain wallet. As first-time users, we found this was not as easy as we thought it would be. With that sorted out, the next step was to download the Blockchain wallet iPhone app and synch it with the account. Unfortunately, this needs to be done from a desktop computer, which almost led our quest to end in failure. However, a lucky iPad saved the day.

Once everything was synched, we were finally able to pay our tab, and it really was as easy as scanning the QR code and tapping “Send Payment.” The #Beer4Bitcoin quest ended in success.

Considering all the hoops we had to jump through just to acquire and use the bitcoins, it doesn’t make sense for most consumers to convert money only to spend at a bar. On this point, Likhtenstein said that most customers who pay with bitcoins already have them, are visiting from foreign countries and looking to avoid currency-exchange fees, or are trying to keep their spending habits secret.

If this currency continues to grow, the entire process will undoubtedly become easier. For now, though, you’re probably better off just using an ATM.

Follow Ryan W. Neal on Twitter