I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

NOTE: I, Star Simpson, am not the author of this post.

Greetings, readers! I am introducing guest blogger Pseudonymous, who is writing a post about Bitcoins this week on the blog.

The post assumes some familiarity with the cryptocurrency known as Bitcoins, but if you haven’t encountered it yet and are curious, learn more at weusecoins.com

Insomne, poseído, casi feliz, pensé que nada hay menos material que el dinero

Some people claim that Bitcoin isn’t a “real currency,” that it is “imaginary,” or a Ponzi scheme — for a number of reasons, but perhaps mostly because there’s no obvious way to use them in most people’s daily lives. I have a different perspective because last week I paid for lunch with Bitcoins. Here’s how it happened.

First, someone sent me a Fortune article, “The Clock is Ticking on Bitcoin.” The article is mainly gloom and doom about Bitcoin’s future, but also happened to alert me to the existence of Meze Grill, a restaurant in midtown Manhattan, that accepts both U.S. dollars and Bitcoins as payment for food. Notably, even this was not enough to inspire the Fortune author’s confidence, on the grounds that nobody had yet spent a Bitcoin there.

Being in midtown Manhattan, I decided to hop over to Meze Grill for a bite to eat. The restaurant is a block or so from Columbus Circle and 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,” 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.

The owner responded so confidently, I felt as though I had asked if they took US dollars. What kind of a restaurant did I think this was — of course they accept Bitcoins!

“What kind of device do you have?”

I told him that I had a cell phone and a laptop. He instructed me to order from the guy behind the counter, have him ring it up as “cash”, and then tell the owner how much the total was. So I went back to the counter and ordered a hummus plate with olives, the cashier called out the total in dollars, and I wandered back over to the table where the owner was sitting.

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

I transferred this address onto my laptop and logged onto my Mt. Gox Bitcoin exchange market account. In the meantime, the owner took out his own phone, looked up the current exchange rates, and told me he wanted 0.52 Bitcoins for my lunch. I asked Mt. Gox to send 0.52 Bitcoins to 1MTbKpYWnzqmsLvCjdTtwrvuX81g3HCgC and about three minutes later the restaurateur received an e-mail on his phone indicating that the coins had arrived.

I asked whether I was the first person ever to pay in Bitcoins. “No,” he said, “about the fifth.” Maybe he didn’t have the laminated QR code for the first four, because Bitcoin transaction history browser Block Explorer shows my transaction as the first payment ever to Meze Grill’s current address.

Meanwhile, the owner and I talked about how much nicer it would be if I could send the transaction directly from my phone in a single step without using the laptop.

As if on cue, a young man I’d prefer to remember as wearing a trenchcoat, 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 Bitcoin blogger and Android app developer and he was hoping to make it easy to make a Bitcoin transaction from one’s phone without having to store the entire block history on the phone. (That requires some kind of intermediation because the block history has to be stored somewhere, but of course my own payment was intermediated because I used Mt. Gox to send it rather than keeping block history on my laptop. This is one point at which the tension between convenience and decentralization surfaces.)

He told his friends to place their orders and said he would pay for them. It appears that their orders cost BTC 0.75 and his own meal cost BTC 0.7 and nobody has bought anything with Bitcoins at the Meze Grill since then.

Feeling satisfied as I enjoyed my lunch, I remembered how many people I’ve heard continue to call Bitcoin imaginary, or a pyramid scheme. But I used it in a retail point-of-sale transaction and got a tasty meal, with nothing more than a cryptographic signature asking everyone whom it might concern to consider the Meze Grill the new owner of my half an imaginary coin.

Bitcoin is not really imaginary: no more imaginary than the bits the traders down on Wall Street are signing over to each other all day long, that encumber quantities of corn and wheat that haven’t even been grown yet. El dinero es abstracto, repetí, el dinero es tiempo futuro.

My Bitcoins have lost value since I bought them, but I’m not writing this to ask you to buy them from me. I’m completely content to be the greater fool. I’m writing this to emphasize that Bitcoin is an experiment, which is something very different from a Ponzi scheme. This experiment 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: how well can total strangers reach consensus about history without allowing anyone to rewrite it after the fact? How important is it to be able to reverse a payment transaction? What’s a limit order? What’s a depth chart? Should we think of every kind of ownership as a matter of appropriately formalized social convention? How hard is it to disrupt a P2P network? How easily can statistical inference pierce the anonymity of transactions? How much inertia do widely-implemented network protocols have against incompatible changes? Is mining in hashes’ input space better or worse ecologically than mining under hilltops? Are regular computers too insecure to use for anything important and irreversible? Just how good can phishing get, anyway?

I thought the most amazing part of the entire transaction at the Meze Grill was not the QR code and not the cryptography, but the complete composure with which the restaurant owner said that, of course, his restaurant accepts Bitcoins. Apart from whether there is a central bank somewhere to bid against George Soros, doesn’t the difference between a real currency and an imaginary currency lie in some sense in the composure with which a customer can ask if the currency is accepted here and in the composure with which a merchant can say yes?

It’s striking how polarizing the Bitcoin project has been, and particularly how little empathy Bitcoin’s enthusiasts and critics show toward one another.

There are amazing things about Bitcoin. When Rick Falkvinge madly put his life savings into Bitcoin a month ago, he described what “didn’t happen” in a Bitcoin transaction:

  • Nobody logged on to a bank of any kind.
  • No bank page for complicated foreign transactions was loaded into any browser.
  • No expensive foreign transfer fees were applied. In fact, no transfer fees were applied at all.
  • No banks were holding on to the money for a couple of days. My friend had the money instantly.
  • No bank holidays were relevant. I did this on a Sunday.
  • No governmental economic blacklist was consulted. He could be a criminal under New Zealand law for all I care, but what matters to me is that he is my friend.
  • Nobody got the chance to seize the money before my friend in New Zealand got it. Or afterwards.
  • An alternative to a bank transfer would have been to use Visa or MasterCard. They did not get a cut, either.
  • No tax authority saw the transaction or the money.

These properties are quite different from what you get with other ways of transferring money electronically. I find it incredible that people are so captivated by the notion of Bitcoin as Ponzi scheme that they would simply overlook the potential appeal of these properties: of cash that we can spend on-line.

Bitcoin’s proponents are often similarly lacking in empathy and dismissive of the value retail banks and central banks offer: the ability to reverse a fraudulent or disputed transaction; recourse when funds deposited with a bank are stolen or misappropriated; insurance for the value of your deposits; people out there making some kind of concerted attempt to maintain the value of your savings; and so on. I’ve personally used the dispute mechanism twice, and just knowing it was there has made me much more comfortable engaging in transactions, even if there are ways to work around its absence. I would be more than alarmed if the value of the dollars I own fluctuated as wildly as the value of my Bitcoins. I would be positively terrified if the price of a meal in the dollars my salary is paid in changed by an order of magnitude in a month.

The idea that a bank’s responsibility to its customers might sometimes be useful is becoming increasingly concrete in the Bitcoin world as the scandals about Bitcoin thefts unfold and we see that, much of the time, Bitcoins really do work like cash: if someone steals them from you, there’s a real chance that they’re just gone. Keeping thousands of coins under your digital mattress is a great thing for financial privacy, but it raises the possibility that your mattress might not be the safest place for them. Hence the prediction that many of the financial intermediaries we use with traditional currencies may get reinvented in some form for cryptocurrencies and may even get regulated the way the weary giants of flesh and steel did.

All fiat currency is imaginary sub specie (hee hee) aeternitatis and gets its value from psychology and various institutional arrangements. And that’s true of the currency in your wallet right now. It’s fair enough to point at the tremendous resources that might be brought to bear to defend the value of the U.S. dollar. Not much will defend the value of a Bitcoin once anything at all goes awry, and as Adam Smith might have said, there is a great deal of ruin in a currency. 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 while we watch to see what else this experiment has to teach us.

53 thoughts on “I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

  1. Great article. Its true, bitcoin is an experiment but it is proving to be one of the most interesting worldwide experiments there has been. Who knows where it will end up…

    Once again thanks for your thoughtful and interesting article(If you sign up to youtipit I’ll give you a bitcoin tip to pay for your next burger :-)).

  2. Well said, the fact that something may not pan out is no reason not to try it. The very fact that so many people outside the criminal classes are strongly interested in a decentralised, (peusdo) anonymous currency shows that they aren’t getting what they want from existing systems.

    Even if bitcoin isn’t what eventually corrects this, it’s given a lot of insights into what people want, what works and what still needs improving.

  3. just wanted to leave a quick note that the address you sent your Bitcoin to at the Meze Grill is probably regenerated on every payment (this is the default behaviour of the bitcoin wallet client), so watching the address you paid to on Block Explorer isn’t likely to reveal much about the financial state of that business.

  4. You all mised the point.

    Bitcoin is VERY WRONG, non-green non-solution, because, unlike classic money, it doesn’t just mirror value of some unit of goods IT HAS ITS OWN PRODUCTION COST THAT IS (simply speaking) EQUAL TO ITS VALUE !

    So now, if you wan’t to by $10 worth of goods with Bitcoin, FIRST YOU HAVE TO SPEND $10 ( OR MORE) WORTH OF ELECTRICITY TO GET BITCOINS!

    I don’t have anything against crypto money, but Bitcoin ain’t done right !

  5. [quote]
    So now, if you wan’t to by $10 worth of goods with Bitcoin, FIRST YOU HAVE TO SPEND $10 ( OR MORE) WORTH OF ELECTRICITY TO GET BITCOINS!
    [/quote]

    Totally incorrect, you just have to wait until the exchanges (ala bitcoin banks) mess up, which is pretty much guaranteed given they are written by pretty much same folk that turn out Joomla sites on a daily basis. Its decentralized as much as we put of trust in the bed mattress, looks at mxgov joke for a little bedtime laugh

  6. @ Branko: Mining for real minerals, as well as using real materials to print paper money both consume tremendous amounts of energy and resources to produce, package, ship, store, etc. Just from a rough guess it seems the electricity required to generate and store BitCoins is on an order of magnitude much less than the real-world alternative.

    @ Matt: BitCoin is similar to Fiat but not entirely the same. The permanently restricted supply is something no other fiat currency in existence shares.

  7. C’mon. Bitcoin creates more problems than it solves. Your being able to get a plate of olives doesn’t negate in any way whatsoever what Bitcoins definitely really is – a pyramid scheme for a few early users who are frantically trying to pump up interest… and a wonderful tool for money laundering.

  8. What bothers me the most about this story is that you go to a grill and you order hummus? What’s up with that? Were they out of meat?

  9. Using the same code over and over could be a problem when you are expecting more than one payment.

    Perhaps they have multiple QR Codes, enough to be able to keep track of the different orders.

  10. @Haburgate:

    So, if we were to adopt bitcoins as our only currency, we would need to pay for electricity bill as steep as the WHOLE VALUE OF EVERYTHING OWNED IN THE WORLD ?!?

    Get real. Printing costs of $100 bill are FAR lower than $100.

    Beides that they don’t depend directly on the declared monetary value of the bill itself.

    So printing costs for $50 bill are around the costs for $1 one…

  11. Good story. Hope more of such story spread around.

    Proof of concept is over. Now is the time to enhance the ecosystem and secure the Bitcoin economy. I am sure it will succeed given time and space.

  12. @Branko Badrljica:

    Electricity usage has nothing to do with the value of a bitcoin. Most people using bitcoin have no need to use any more electricity than they already have been. Also, Don’t conflate production cost with usage cost.

    This misconception comes up when people do a poor job of explaining mining. The only people who would be using any large amounts of electricity related to bitcoin are miners and overall they form a very small portion of the economy. Even then, the value does not correspond to the electricity cost. The value, like any other commodity is a product of supply and demand. People would not mine if the value of a bitcoin became less than or equal to the electricity cost to mine it.

  13. I like this post a lot, thanks for sharing your experiences! However, i’m impressed by the contractedness of some posters.

    @that-takes-a-lot-of-energy folks: Are you kidding me? Bitcoin requires some energy for generating and keeping the cash flow up (read: trade). This is energy from some computers that run quite efficient GPU and CPU. As an example: right now, the Bitcoin network is operating with 10TH/s (terahashes per second). With GPU mining, that translates to about 5MW of power (about 33k GPU units with 150W and 300MH/s each). 5MW is laughable, compared with energy and resources wasted at *any country* of this world to print money, managing it, trading and cashflow. 5MW is the amount of energy consumed by two corporate datacenters. Banks and Exchanges maintain by far more than two datacenters. Costs for infrastructure and non-tech working for cash not included.

    @the-its-a-pyramid-game-foks: Yes – you’re right. Early adopters profit from stuff that hits well. Same for people that bought Apple stocks in 2002, people that invested in Facebook at the beginning, people that start successful companies… we’re talking about a few million Dollar, that’s much for the average Joe but not really much to get back for a great invention. And getting people less dependent on banks.

    I’d like to encourage everyone to get the facts about Bitcoin and especially the technical stuff. That helps understanding why Bitcoin is nothing to be afraid of (for consumers). Even the aspect of outragous “mining” is covered by limiting the amount of money that can be generated. By adding a difficulty factor which depends on the computing power, people won’t get too much benefit just by adding some hardware

  14. Well what’s about reliability? I mean, no central banks, no authority, runs on private machines, no regulations, no trade-stop on major events, pretty non-professional right now…

    It hyped, price got to $32 and fell to sub-$10 – it recovered. Stable at 15-17$ for some time now.

    Biggest Exchange got hacked and shut down for a few days – it’s still there.

    Constant DDoS attacks on mining pools, exchanges – it’s still there.

    Massive FUD attack by mainstream media and politicians – it’s still there.

    I’m very impressed by the amount of resilience this system bears. To be honest, i’d be more worried if i had to use USD ;-)

  15. Traditional currencies like the dollar are wasteful because they require banks, the Fed, transaction fees, etc. Bitcoin removes the middle man and centralization. People are tired of the govt bailing out banks and Wallstreet and rewarding them for taking risks. Bitcoin makes it fair and transaction fees are near zero. Paypal, credit cards, etc. charge 1-3% for a single transaction. This overhead can be removed with bitcoin. The banking industry could fall because of bitcoin.

  16. This is absolutely awesome and just the kind of thing we’re trying to help establish at Bitcoin Venture Capital. We need more companies who are willing to accept Bitcoin as a legitimate medium of exchange so we can do away with outrageous transactions fees associated with other electronic forms of payment. We applaud this restaurant for their efforts to embrace this cutting edge technology!

  17. I have little patientce for the guy who says bitcoin is a pyramid scheme and for only money laundering.It is no more a pyramid scheme than getting into the California gold rush in it’s early stages was or buying google stock when it first came out.Don’t you get it dude? Of course those who take more risk deserve higher returns.It won’t take a rocket scientist to buy and save bitcoins when they cost $1000 each (which they will in less than 3 years in my view) The only thing that i can see that in the long run will cause bitcoins to go down in value is various Govts making their use illegal and that will just be a temporary downward spike.Do the math there are only about 7 million bitcoins and trillions that could be exchanged for it.If just 10 billion gets exchanged into bitcoins they will be worth $1400 each. A couple of Arab shieks could do that. As for it being used for money laundering. Lots of people don’t believe in money laundering? what the hell is money laundering?So what if criminals hide their cash or move it around or disguise it or spend it?You think any Govt can ever stop that??? the arabs already have a system to do that called howala or something like that.Money laundering is the term one crook (Govt) with a lot of coercive power uses to describe the actions of those who resist being robbed by the big crook. Bitcoins are no different than cash and I suppose your a collectivist who would love to ban cash and bring us to a totalitarian world a cashless society ,in fact that is the NWO plan but thanks to bitcoin a whole new alternative economy is starting where people can spend their whole life ONLY dealing in bitcoins.Think of it >work for bitcoins spend only bitcoins etc.Trust me in a year or two it will be possible to bypass the bankster cartel completely and when that days comes like Martin Luther King I will praise God because we will be free, free at last.
    Martin

  18. If you want to buy some bitcoins, I recommend http://www.TradeHill.com, which has lower fees and than MtGox, and seems more professional to me. I have a code that will get you 10% off your fees there if anybody wants to buy or sell bitcoins on TradeHill.com: TH-R1168

  19. “No tax authority saw the transaction or the money.”

    But only because no tax authority is looking into the public(!) anonymized transaction logs. It would be pretty easy to correlate tax offenders that use bitcoin, once it is worth the effort.

  20. Bitcoin is not going to last because the US Govt. will not allow a competing currency, and for the exact reasons the author listed in the article concerning “what didn’t happen”. the only question is WHICH agency is going to hit bitcoin first? DOJ? Treasury? Fed Reserve? SEC?

  21. I also don’t understand all the “IT’S A PYRAMID SCHEME OMG!!” talk. It generally seems to be from people who haven’t read much about it and have made a snap judgment. Sure, it rewards early adopters (it used to be a lot easier to mine for coins) just like any other technology that takes off, but the difference is it doesn’t rely on “later suckers” to keep coming in to keep it valuable. It holds its value simply as a medium of exchange. Even if no one were mining coins any more (say we hit the cap already) the Bitcoin system would still work perfectly well as a medium of transferring value between private parties.

    @Branko Badrljica, you really should read more about it before writing it off. It would be a poor judgment call to mistake an early adoption reward (think of buying a stock before it becomes popular) with a pyramid scheme.

  22. @ Dave
    It doesn’t really matter if the US govt declares it illegal, this is a worldwide system/currency/store of value. It would take every sovereign nation to put it down. And now we have an exchange being built in Atlanta, GA of all places that looks like it has promise. http://testnet.campbx.com/
    Infrastructure will make or break bitcoin.

  23. @Todd: “So the cost of my hummus plate changes constantly based on the current exchange rate?”

    It does now, even in dollars. Einstein would tell you it’s all relative. But Europeans can complain that the price of hummus is fluctuating in Euros too. And really, as the dollar decreases in value by the day, it’s fluctuating as well. It might not look like to you (just as it doesn’t feel like you are moving when standing still on the Earth), but it is.

  24. Matt Freeman, in what way is Bitcoin a fiat currency? Fiat money is money by decree or, as some would have it, has value by decree. Nobody has decreed Bitcoin to be money. Nobody has decreed that Bitcoin has value. Bitcoins are not Bitcoins by decree, they are accepted as Bitcoins by a majority opinion of the network’s processing power working to an open-source algorith. Bitcoins are much more like gold than they are like a fiat currency. You can’t decree something to be gold or a Bitcoin but you can decree anything to be a dollar.

  25. You can do so now using any mobile phone and the e-mail address of the restaurant owner via Karsha Movbile Payment Interface for Bitcoin accounts.
    There is no need to install any software on your mobile phone. Also there is no need to remember long and complicated Bitcoin addresses or to use QR codes. Just remember their e-mail address.
    Just point your mobile browser to http://m.karsha.biz and “Sign Up” for a free Karsha Bitcoin account or “Login” to your existing account.
    By opening a Karsha Bitcoin account, you’ll also get a standard Bitcoin address. So, your account acts just like any other Bitcoin account, beside other users can transfer Bitcoins to your account using your e-mail address in Karsha Mobile Payment Interface.
    Also you can transfer BTCs to any normal Bitcoin account using its Bitcoin address, or to Karsha Bitcoin accounts using its e-mail address.
    There is a secure and easy to use Shopping Cart Interface (https://karsha.biz/?do=sci) to accept Bitcoins from your customers using their mobile phones.

  26. “Should we think of every kind of ownership as a matter of appropriately formalized social convention? ”

    Frankly, yes.

    And on the “real or not” argument of bitcoins, I don’t think the majority of people will think of them as real until they can pay their rent with them.

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