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To continue reading this article, please exit incognito mode or log in. Visitors are allowed 3 free articles per month without a subscription , and private browsing prevents us from counting how many stories you've read. We hope you understand, and consider subscribing for unlimited online access. Stella by Starlight, a hip, quirky restaurant loved by locals, is one of the dozens of businesses in Arnhem, the Netherlands, that accept Bitcoin, as this sign in the window attests.
Arnhem is a typical Dutch city: It also may be one of the easiest places in the world to use Bitcoin. Minutes later, its Twitter feed lit up with a photo of the transaction. Bitcoin evangelist Patrick van der Meijde helps a young onlooker download a mobile Bitcoin wallet on his phone.
My stomach sinking, I head to reception to pay my bill. For the vast majority of Bitcoin holders—and the billions of people who have never even heard of the digital currency— such fluctuations may not seem like a big problem. But for me, sitting in the Hotel Modez, it was very real: As I waited, and the exchange worked against me, my bill had grown increasingly expensive. Such is the state of affairs in the volatile world of cryptocurrencies—where regulation is a distant concept and large market swings are commonplace.
Homes have been purchased with Bitcoin, which leans heavily on cryptography and a public ledger system called the blockchain. So has a hoped-for trip to space. A rising number of people report or anticipate transacting in Bitcoin, and advocates see great potential in the currency for lowering the transaction cost of payments while increasing their security. But for Bitcoin to survive as a functional currency, it has to be widely accepted and useful in the way cash and credit cards are today.
Can Bitcoin pass that test? To find out, I had come to Arnhem, a place with one of the highest concentration of merchants accepting Bitcoin anywhere in the world. Could a journalist plan a weekend escape paid for entirely with Bitcoin?
Further, could he not only survive but perhaps even enjoy himself? Van der Meijde heard about Bitcoin a few years ago. Finding the concept intellectually interesting, and figuring that the traditional banking system could use competition, he decided to buy some.
So, with two partners, he set up a payment system local vendors could run—on their phones or any other connected device, like a laptop or tablet—allowing the owners to accept Bitcoin but be paid in euros. Van der Meijde has now convinced 45 businesses to accept Bitcoin, including a hotel and a major franchise grocery store.
So eight days before I set out for Arnhem, I opened an account with a Boston-based startup called Circle that would let me buy bitcoins with a credit card. Next, I logged onto CheapAir. At the payment page I chose the option to display a Bitcoin address—a tocharacter string of letters and numbers—to which I could send my payment. I then logged into Circle again to buy enough bitcoins to cover the ticket, but the transaction was immediately denied. After a call to my bank to explain that the charge indeed was not fraudulent, I tried again.
The transaction went through instantly. Was this a scam? It felt like the intuitive thing to do—but it was wrong. I started making calls. Charlie at Circle, stumped, suggested a do-over. About an hour later, I received an e-mail confirmation for my flight. Bitshock A part of me expected Arnhem, about an hour from Amsterdam by train, to feel like a high-tech hub.
But instead it resembled any typical European city. It had a few churches, a central pedestrian area filled with shops, and a handful of antique Dutch windmills.
Payment itself was seamless: Later we repeated the process as I transferred Bitcoin directly to van der Meijde to cover my drinks. A befuddled kid at the bar, of around university age, wanted to know what we were doing. At dinner I ate a massive pile of ribs and learned that tips in Bitcoin are handled much like tips using a credit card, with waiters paid out from the register.
At Mimint, a natural-foods bodega, I bought chocolate and toothpaste. In only a few places did I encounter obstacles. At a souvenir shop I had to wait a few minutes for the owner to arrive, since he was the only one who knew how to accept Bitcoin.
And at another shop I had some momentary Wi-Fi problems. Maybe the previous owners did? A few of the people there were equal parts skeptical and excited by the idea of cryptocurrencies. Two of them discussed theoretical—but exceedingly unlikely—exploits that would let them rip off the point-of-sale application van der Meijde had helped design. The Indian delivery order they were eating had been paid for with Bitcoin, and as they split the bill, some were paying the purchaser back in Bitcoin, too.
Ex post crypto Though I mostly enjoyed the weekend, the getaway to Arnhem at times felt like a chore. Having exhausted most of the possible Bitcoin-ready diversions in town, I spent the last few hours of my visit, on a rainy Sunday, walking along the waterfront and through a park.
I pined for a museum, or a bowling alley, or a film in a warm theater. Spending bitcoins had been easy, and ultimately—despite the snafu paying for the hotel—not that expensive. But the options had run out quickly. And there was one exceedingly important thing I could not do: The only way to travel between Arnhem and the airport using Bitcoin was to rent a car or hire a taxi—a multi-hundred-euro expense. By contrast, the train ticket to the same place, which was not payable by Bitcoin, cost only Even the very staunchest Bitcoin enthusiast would be unlikely to pay that kind of premium.
Knowing this, I had come to town with 18 euros in my pocket. Catch up with our coverage of the event. As technology-driven payment ideas give cash a run for its money, the big winners could be established banks and credit card companies.
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