Sophie Brown pays for her drink with bitcoins on her phone at the Old Fitzroy. Photo: Wolter Peeters
Six years ago it was a figment of a geek's imagination. Now the bitcoin is on the cusp of mainstream use, with a growing number of shops accepting it as easily as cards and cash.
Last September, Garry Pasfield ushered in a new digital era at the Old Fitzroy pub in Woolloomooloo, when he began accepting the virtual currency.
"There was a group of geeks in my pub, and I overheard them talking about bitcoins. I was intrigued, looked into it, and thought I'd give it a go," he said.
Since then, there has been a bitcoin payment every two days. Any punter with a bitcoin wallet on their phone can pay for beers by snapping a QR code generated at the till.
It has pulled dozens of new customers through the century-old pub's doors, especially fans from the United States and Canada.
The prospect of boosting trade has been a key motive for recent adopters, including Adeva Beauty Salon in Blacktown, the Owl House restaurant in Darlinghurst and Chem-Dry Randwick carpet cleaning.
They are among 1000 bitcoin-enabled businesses in Australia, according to figures from the Tax Office, which on Wednesday ruled that bitcoins are property and not money for tax purposes.
The unregulated, wildly fluctuating currency has been linked with money laundering, tax evasion and cybercrime. But it has been a trouble-free and cost-saving journey for Mr Pasfield.
"I've had people hand me a credit card, build up a tab of $150 and walk out. The biggest bad debt is in credit cards, but a debt in bitcoins does not exist," he said.
Jason Williams of BitPOS, the Visa equivalent of the bitcoin world, said merchants could save hundreds of dollars in fees using bitcoins.
"We take a flat 1 per cent on the transaction. But there are no banking fees, monthly charges, sign-up costs, terminal rental costs, and it's instant. There's no wait for the money to come through."
Ron Tucker from the Australian Digital Currency Commerce Association said Bitcoin had surpassed Western Union in terms of daily volume of transactions and was nipping at the heels of PayPal.
When he launched an exchange service in April last year, his research showed only two out of 10 people had heard about bitcoin. Now it was nine out of 10.
"We expect to see mass adoption of bitcoins by consumers and businesses in the next two to three years based on the penetration rates of other digital technologies across established industries like the post, film and music industries," he said.
Amir Halpert, owner of the Owl House restaurant, said some weeks bitcoins accounted for a tenth of revenue. "It's the currency of the future, this is the way we're heading. Near or far, it will happen."
Chem-dry Randwick operator James McKeon began accepting bitcoins in June. He was quick to concede it was a gimmick - for now. "I'll take payment in anything, I'm happy to have cash, cheque, card, bitcoins! I'm not expecting to convert customers, I'm wanting to see new customers."
BIG NUMBERS
$US509 - the current value of a bitcoin
$US2000 - average worth of a bitcoin transaction worldwide
70,000 - the number of daily bitcoin transactions
$US250 million - the worth of daily bitcoin transactions
Bitcoin virtual currency can be used to pay for coffee, beer and facials