Businesses in Berlin open arms to digital currency

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Businesses in Berlin open arms to digital currency
12:42 AM
19
June
2013

Cassandra Wintgens ceremoniously affixed the blue sticker with the thick, yellow “B” to the pane in the front door of her guesthouse-cum-cafe. “Bitcoin accepted here,” it read.

The establishment, playfully called Lekkerurlaub Notaufnahme, which translates roughly as “Yummy Holiday Emergency Admission,” thereby became the seventh business in the Graefe neighbourhood of the multicultural Berlin district of Kreuzberg, to accept the digital currency — whether for an overnight stay or a cup of coffee in the cafe.

A night in Lekkerurlaub Notaufnahme cost about 0.4 Bitcoins per person, the equivalent of about $53, at the start. Only one customer, Wintgens said, had so far paid for a meal with Bitcoins.

“I think it’s exciting,” she remarked. “We don’t need banks for Bitcoins. They just muck us about anyway and don’t do anything for small-scale businesspeople.”

The Bitcoin concept was created in 2009. Each of the some 11mn “coins” now in circulation is represented by a unique online registration number. Produced — or “mined” — by people using computers to solve mathematical problems of increasing complexity, they are transferred directly — “peer-to-peer” — from buyer to seller and can be purchased with conventional money at online marketplaces.

Wintgens was persuaded to adopt Bitcoin payments by Joerg Platzer, proprietor of Room 77, a restaurant and bar a few doors down on Graefe Street that has been using Bitcoins for two years. “It’s convenient for me as a businessman, because it’s fast and doesn’t cost anything,” said Platzer, who spared himself the fees for credit-card payments.

Room 77 accommodates nearly 100 people, as many as 10% of whom pay their tabs in Bitcoins. Smartphones serve as wallets: an app scans a QR code (a square black-and-white barcode) on the bill, which contains the payee’s Bitcoin address and sometimes the current Bitcoin market rate, then presses “send.”

All Bitcoin users can see the payment online, but the users themselves remain anonymous. There is a 21-mn cap on the number of Bitcoins, whose value can fluctuate greatly depending on demand. In early April, the exchange rate plunged from $266 per Bitcoin to less than 80 in the space of two days.

Unlike national currencies, Bitcoin is not backed by a central bank that can steady rates by controlling the money supply. Platzer said he was unconcerned by the fluctuations in value, arguing that people who were worried could always convert their Bitcoins back into euros. He predicted that more businesses in the Graefe neighbourhood would soon join Bitcoin, declaring, “Bitcoins are the money of the future.”

Raul Roja, a professor of artifical intelligence at the Free University of Berlin who has studied digital currencies for more than a decade, is less sanguine about Bitcoin’s prospects.

“Bitcoins are still the exception when it comes to genuine products. They’re used in niches, not on a large scale,” noted Roja, adding that instability was the currency’s chief drawback. – DPA

 

 



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