A digital currency is getting traction with New Hampshire residents looking for an alternative to the dollar.
What is Bitcoin?
On the front door of the Pao Café in downtown Newmarket, there’s a familiar collage of credit card stickers - Amex, Discover, Visa - and one that’s not so familiar. It reads: ‘Bitcoin accepted here.'
The owner, Matthew Carrano, says only a few people seem to notice it. But for those who do, they can buy a cup of his Brazilian coffee for about .03 Bitcoins. And they can do it with their smartphone:
“You might have seen it but over here, in front of the register, I’ve got a QR code and you would just scan that with whatever app you’re using to keep Bitcoin directly to my Bitcoin wallet.”
A QR code is one of those black and white squares you can scan on your phone. It sounds straightforward enough. But most people still ask: What is Bitcoin?
“Bitcoin is the first decentralized digital currency. Bitcoins are digital coins that you can send through the internet. Bitcoins are transferred directly, person-to-person via the net without going through a bank or clearing house.”
That’s from an online promotional video. But there’s a little more to it than that.
Bitcoin isn’t tied to a company and it’s not a payment service like PayPal. You don’t need to link a bank account or even a real name to your Bitcoin wallet. All you need is an internet connection and an e-mail address. There are lots of websites where you can set up a Bitcoin account, or what’s called a wallet.
Bitcoin first appeared in 2009, born out of an open-source software project. The currency was designed chiefly with anonymity and ease-of-use in mind.
A Bitcoin ATM
“You’re so used to seeing money as something you hold in your hand, or a credit card at least..."
That’s Zach Harvey, one of the co-founders of Lamassu, a Manchester company that’s trying to make it easier to use Bitcoin:
“Our first item is the Bitcoin machine, which is kind of like a reverse ATM for Bitcoin but not an ATM like you would expect.”
The machine is an orange cube with a bill-feed slot, a screen, and a small camera. To use it, you scan a QR code for your Bitcoin account and deposit cash, which is then exchanged into Bitcoins and transferred into your account.
“It’s really exciting. A lot of people really love the idea of Bitcoin and they love the idea of having more control over their money.”
Harvey and his partners are hoping to sell the device to bars, restaurants, and retailers in New Hampshire and beyond.
Harvey identifies as a member of the Free State Project, and the digital currency is gaining traction with the liberty-oriented group.
At this year’s annual Liberty Forum, organizers held a panel to discuss the applications of Bitcoin. One of the speakers, Roger Ver, says it’s virtually impossible for governments to shut down Bitcoin:
“Anybody that thinks you should have full control of your money, Bitcoin is what you’ve been waiting for. There’s a limited supply, no one controls it, there’s no central office, so even if governments decide they don’t like it, there’s no server to unplug, there’s no offices to raid.”
Problems With Digital Cash
While its supporters tout the freedom of the currency, some elements of Bitcoin have come under scrutiny.
Tim Lee writes about technology policy for the technology blog Ars Technica and says that Bitcoin has some downsides:
“Bitcoin is different in that its payments are irreversible. Once the money is transferred from one address to another, there’s no way to reverse that process. What that means for an average consumer is that if their account gets hacked, they lose the value of their cash.”
In the past year alone, several Bitcoin currency exchanges have been hacked, the thieves making off with thousands of dollars in Bitcoins. Because of the anonymous transactions, it’s extremely difficult to track down the hackers. And that makes it attractive to use on illicit online marketplaces like the Silk Road, or online casinos.
But more and more reputable online establishments have started to accept Bitcoin. Social media site Reddit accepts the digital currency, as does the blog service WordPress.
Back at the Pao Cafe in Newmarket, Matthew Carrano says he’s more than happy when his customers pay in Bitcoin:
“I believe in Bitcoin as a long term money supply. I don’t know if you’ve seen it, but Bitcoin has gone up in value versus the dollar quite a lot. I don’t have a lot of Bitcoin customers but when I do I’m content to hold on to the Bitcoin.”
Right now a single Bitcoin is worth around $45.