Global Observer

Bitcoin takes off in Berlin

Bitcoin takes off in Berlin

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BERLIN -- Germany is famous for fine cars, excellent beers ... and the largest Bitcoin economy in the world.

BERLIN -- If you visit a bar, cafe or restaurant off the beaten tourist path in Germany's capital city, it's usually best not to count on your credit card.

Business owners in Berlin offer various explanations as to why they accept cash only: Some cite fees as the problem, others worry about fraud, and a few surprisingly honest souls admit they would simply rather not be taxed.

But if you visit Room 77 in the district of Kreuzberg for a meal and some live music, you don't need cash or a credit card. In fact, you don't even need euros -- if you own Bitcoin, that is.

"I believe in honest money -- gold, silver and Bitcoin," reads a sign behind Joerg Platzer's bar. Here you can pay your tab with the virtual currency, created in 2009 as a decentralized alternative to dollars, euros and other government-backed tender. All you have to do is enter your total into a Bitcoin wallet on your smartphone and scan a code on the bar's machine.

Platzer began accepting Bitcoin at Room 77 in his heavily gentrified Graefekiez neighborhood two years ago as a sociopolitical critique of government and the banking industry. It wasn't long before word spread, and other bars, shops, cafes and restaurants on the block followed suit. Today, some 25 to 30 participating businesses in the area accept the digital currency, constituting the largest local Bitcoin economy in the world -- and even attracting Bitcoin tourism. The phenomenon is one of several real-world manifestations of the Bitcoin economy in Berlin, aimed at making the world's fastest-growing currency more accessible to non-hackers or finance gurus.

"To show most people that Bitcoin is a valid alternative, you need projects that demonstrate how you can pay for dinner, how this works person-to-person," Platzer -- who even has a consultancy dedicated to spreading Bitcoin -- told SmartPlanet.

"Through this value creation chain people suddenly realize, 'aha, no fees', 'aha, no administrative costs!' These are the kinds of things we're trying to bring to the forefront."

Though Platzer's alternative neighborhood was quick on the uptake, Bitcoin, which is actively used by as many as 70,000 people worldwide, still remains a controversial investment in most parts of the world. Critics say the anonymity Bitcoin affords makes it especially attractive for illegal business dealings, such as drug trafficking. What's more, the volatility of the currency's value -- which has fluctuated by as much as $100 in a single day -- continues to hack at the core of its credibility.

But across the Spree River on Berlin's north side, Aaron Koenig dons a bowler cap as he welcomes guests to an industrial co-working space for the second Bitcoin Exchange Berlin (BXB) -- a monthly event he founded to allow buyers and sellers to meet face to face and exchange Bitcoins for euros, dollars or otherwise. Both June and July's exchanges drew a fluid crowd of about 50 people, with plans to expand the event into a maker's market where visitors can spend their Bitcoins right after purchasing them.

Koenig said growing problems with the euro mean the benefits of Bitcoin are beginning to outweigh the risks.

"Most people with a fixed salary in euros think they're OK -- especially in Germany," Koenig told SmartPlanet. "But just looking at government debt, at the structure of the economy, at banks and how little owned capital they have -- this will all collapse, and many people will suffer."

Around the room at BXB, Bitcoin sellers can be picked out in bowler hats and by the mini-chalkboards displaying their asking price in euros. They huddle over tables, explaining the ins and outs of the currency to potential buyers. Anna, who declined to share her last name, said she attended the BXB last month and bought Bitcoin then. Though she is only observing today, she said she sees positive real-world advantages in the currency:

"I think it's great that you can transfer Bitcoins internationally for free without waiting for days. I've invested, and now I'm really interested to see what it does."

A general sponsor of BXB's is Localbitcoins.com, a Finnish platform for buying and selling Bitcoins locally for cash or online payment. The founder, Jeramias Kangas, has come from Helsinki as a special guest.

"Money can be a boring topic," he said of turning the public over to Bitcoins. "You don't want to talk about it everyday: You want to use it, you want to do transactions as quickly as possible."

"This [exchange] is also great market research because you see exactly where the problem points with wallets are. I'm a programmer and a nerd, so it's easy for me to use, but its good to learn what other people don't know."

Back in his Bitcoin neighborhood, Joerg Platzer sits in front of Room 77, cringing as a slow logjam of parents, children and their bicycles form on the sidewalk. All are seemingly unconcerned with either Bitcoin or the euro crisis, but Platzer has few doubts about the role the currency will play in shaping the future of money and everything it touches.

"You're talking to someone who believes that this will change society in a very short period of time," he said. "In ways for which we don't even have vocabulary yet."

PHOTOS: Anastasya Stolyarov / BXB / zcopley/Flickr

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Shannon Smith

Correspondent (Berlin)

Shannon N. Smith has written for WNYC's The Takeaway and TheLocal.de. She holds a degree from the University of Texas at Austin. She is based in Berlin, Germany. Follow her on Twitter. Disclosure