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Cash, Credit or Bitcoin? City's Businesses Rush to Join Growing Trend

By Serena Solomon | January 13, 2014 7:00am
 Computer repair shop xCubicle and bar Old Man Hustle can accept Bitcoin.
Businesses Adopt Bitcoin
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LOWER EAST SIDE — When bar and standup comedy joint Old Man Hustle gets a little quiet, owner Mike Jarmuz likes to enlighten his customers on the virtues of Bitcoin.

The Essex Street bar recently started accepting the digital currency as payment for wine and beer, and a TV inside often shows a ticker with real-time ups and downs in the international Bitcoin market. 

"Cryptocurrencies [digital money like Bitcoin] are here to stay and that's that," said Jarmuz, 31. "Bitcoins are fun. They are revolutionary."

Old Man Hustle has joined a growing group of dozens of businesses across the city using Bitcoin, a decentralized currency with no physical form. Bitcoin has gained in popularity — and value — over the past year, with a single unit of the currency briefly trading for more than $1,200 cash in December.

"It is increasing exponentially," said Marco Santori, 31 a digital currency lawyer for the Midtown firm Nesenoff & Miltenberg.

New Yorkers can now get their backs adjusted by chiropractor Dr. Steven Schram in Kips Bay, eat at O-Crepes in DUMBO and guzzle a beer at EVR bar near Bryant Park, all by paying in Bitcoin.

Bitcoin transactions do not require a bank and are made person to person through phone or computer applications, such as BlockChain.info. Websites like CoinMap.org offer lists of businesses that accept the currency.

Santori, who is also the chairman of the Bitcoin Regulatory Affairs Committee with the Seattle-based Bitcoin Foundation, said he has conducted thousands of dollars in Bitcoin business with dozens of his clients, mostly tech firms.

"It's still a very young thing — it's a baby in its crib," he said.

One of the early adopters in New York was xCubicle, a computer repair shop at Essex and Hester streets, which started accepting the currency in mid-2012.

"It could literally change the world," said Pat Cheng, 32, co-owner of the shop. "It is mind-boggling what people are doing."

xCubicle, which specializes in repairing gaming consoles, has one or two customers each week who pay with Bitcoin, and they receive a 10-percent discount to encourage its use, Cheng said. Each sale brings in about one-tenth of a Bitcoin, equivalent to about $100, depending on the market.

xCubicle also runs a regular Bitcoin social hour where aficionados can share news and tips on using the currency. Many of the attendees work in finance, Cheng said.

The currency's origins are mysterious, with the invention credited to an anonymous person or group that uses the pseudonym Satoshi Nakamoto. Bitcoin has caught the attention of Congress, which held hearings on the currency last November, but it remains unregulated by governments or banks.

Despite the recent hype, some local business owners, like Jarmuz at Old Man Hustle and Schram, the chiropractor in Kips Bay, are still waiting on their first Bitcoin customer.

Schram compared the slow spread of Bitcoin to the dawn of the Internet era, when early email adopters had only a handful of potential correspondents.

"It is like there are [only] 20 people doing emails, so I don't have anyone to send to," said Schram, 62.

Bitcoin can also be tricky to fit into a business's bookkeeping.

The EVR bar near Bryant Park automatically exchanges its 10 or 15 Bitcoin sales each week into regular cash the business can use, according to owner Ian Magid.

And whenever xCubicle receives Bitcoin from a customer, Cheng adds the currency to his own collection and puts an equivalent amount of cash into the business.

"The accountant would get very confused," he said.