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updated 12:25 PM BST, Jul 29, 2014
Technology and life sciences news from the Cambridge cluster

Bitcoin buys you beer in Cambridge pubs

A till receipt with a QR code that was used to buy beer with bitcoinsOn the 3rd of June, Andrew Bower walked into the Haymakers pub on the High Street, Chesterton, he ordered a half pint of Milton Icarus, took out his phone to scan a barcode and in an instant became the first person to buy a beer in a Cambridge pub using Bitcoin.

Bitcoin is a virtual currency – it only exists digitally – but it can buy real world goods. The half pint cost £1.55 which worked out at 0.0202 Bitcoins (BTC), that's an exchange rate of almost £77 for a single Bitcoin. Two months ago it was worth twice that, six months ago just above half.

Other virtual currencies already exist, but what makes Bitcoin stand out is that it is decentralised, that is to say there is no single body controlling the currency like the UK controls sterling, or Facebook does its own credits. Bitcoin uses peer-to-peer computing, the underpinning code is all open sourced and transactions take place directly between individual holders and recipients of the Bitcoins, they don't have to go through a bank or other institution.

All Bitcoins in circulation are currently worth around $1 billion, that's a lot of money going into a system that seeks to bypass central authority in favour of the masses and which can be used in any country irrespective of its domestic currency.

Understandably this is generating a lot of media coverage and at the moment the price of Bitcoins is closely related to the amount of press it gets. The latest jump in price followed a swell of coverage linking a rise in Bitcoin's popularity in Cyprus to plans by the government there to plunder the country's bank accounts.

The wisdom of using a four year old currency whose value is highly volatile as an investment is questionable, but like many of the people who have bought Bitcoins, Bower's purchase was driven by curiosity.

"I think it is an interesting experiment in digital currencies and it was a bit of fun to be able to try out the system in a Cambridge pub," said Bower. "I don't have any particular interest in Bitcoins, I just spotted on the pub company's website that they were supported and thought it would be fun to try out the technology so got a small amount just for this purpose."

Bower says the process worked very smoothly, but added he doesn't think it is the most economical way to buy food and drink from the pub. "Bitcoin is very interesting from a technical point of view alone – it may indeed have no intrinsic value but it's a fascinating mechanism."

If, as seems likely, Bower's purchase was the first 'real world' transaction of any kind in Cambridge using Bitcoin, that the exchange took place in a pub is very much in keeping with a city whose pubs have always walked hand-in-hand with technology, whether it's the announcement of the discovery of DNA, the creation of any number of startups and innovations or the country's two leading home computer entrepreneurs swinging at each other.

That a director and co-founder of the company running The Haymakers is a former Cambridge University computer scientist also helps. Stephen Early decided to install the first Bitcoin system when he was covering for honeymooning management at another of the company's pubs, the White Lion in Norwich.

"I was a little bit bored and had been keeping my eye on Bitcoin for a few years. Doing something with it seemed like a great idea."

Early installed the system, and in testing it conducted what he believes was probably the first pub transaction using Bitcoin anywhere in the UK. The pub was listed on a web site tracking where people can spend Bitcoins, which piqued the interest of fans who quickly discovered that other pubs were owned by the same company, Individual Pubs Ltd, one of which was The Pembury Tavern in Hackney, London.

Close to London's Tech City, it wasn't long before Bitcoin was being spent there and excited fans have now made it the venue for the next London Bitcoin Meetup, that's an extra 30 customers the pub didn't have pre-Bitcoin.

While the Haymakers was the third of the company's pubs to see a Bitcoin transaction, Cambridge does have the distinction of at least two confirmed pubs accepting Bitcoin – Individual Pubs also owns The Devonshire Arms.

Early says there is more behind his use of the currency than simply the curiosity of a former computer scientist. One of the benefits of Bitcoin's decentralised system is that anybody can use it and install it as long as they have the appropriate software, there are no barriers to entry unlike bank cards which need costly service providers and specialist equipment.

It also plugs straight into the till system, allowing transactions to be performed in a single process, unlike card readers which require bar staff to type a confirmation code into the till that's taken from the card reader's receipt, a process ripe for human error.

Meanwhile, cash is even more of a problem because of the handling fees charged by banks, almost 90 pence for every £100. "That the payment system could be fully integrated allowed me to scratch that particular itch," said Early.

Early says he only expects Bitcoin to catch on slowly. At the moment, because it can't be spent in many places, most people just speculate, a fraught past-time when the price can double or triple in days and then fall just as fast.

Bower agrees. "I don't have any further use in mind for the digital currency," he says. "I also wouldn't describe it as an investment – people need to be very careful what they do – it's safest to view it as a global experiment."