While Kurtis Cummings, general manager of the bar at 419 N. Walnut St., doesn’t expect many people to pay using cryptocurrency, he’s thrilled to be Indiana’s first brewery to offer the option of bitcoin transactions.
Cummings and his new “head of crypto” Michael McClung have been working to add cryptocurrency to the brewery’s list of payment options. McClung started using cryptocurrency shortly after its introduction and helped develop the master plan to add it to payment options at Switchyard Brewing.
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The addition of cryptocurrency is just the latest unconventional and innovative addition to the brewery, which also no longer accepts tips for its employees. Instead, it raised prices last summer to cover paying employees a living wage.
According to Cummings, one of the benefits of accepting Bitcoin is removing the middleman from a transaction since Bitcoin will be transferred from a customer directly to the brewery. With credit card and debit card purchases, a processor must transfer the money and takes between 2.5% and 3.5% of the payment. Since the pandemic, most transactions at the brewery have been done with credit or debit cards.
“It’s peer-to-peer,” Cummings said. “If I want to send you money, I send it directly. With cryptocurrency, it’s like the freedom of people to exchange finances without any control or anyone taking their share.”
Switchyard Brewing is launching its own self-hosted cryptocurrency node from the BTCPay server, which provides a secure and censorship-resistant payment processor. This allows customers to direct funds to Switchyard’s digital “wallet”. Anyone who wants to pay their bills with their digital wallet can scan a QR code. The customer will receive a receipt after the transaction.
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Although Cummings did not ask a customer to pay with cryptocurrency, he hopes there will be transactions soon, with members of an Indianapolis Bitcoin group reacting positively to the addition.
“It’s a little heavier right now,” he said. “But the more physical businesses accept this technology, the much easier it will become.”
As the popularity of cryptocurrency grows, Cummings said they may be able to help other small businesses add bitcoin payments to their stores. This is something Cummings thinks will happen, especially after watching ads for cryptocurrency exchanges at recent Indiana University basketball games.
“We always seek to be on the cutting edge of business and technology,” Cummings said. “This is just one example of that.”
Thoughts on Bitcoin and Business
The first transaction using Bitcoin was to buy pizza, which can happen at Switchyard Brewing Co.
This first purchase of pizza was in 2009 by someone named Laszlo for two pies in exchange for 10,000 Bitcoins. At that time, that exchange was valued at around $40, according to Russell Rhoads, associate clinical professor of financial management at Indiana University’s Kelley School of Business.
Those 10,000 Bitcoins were worth around $400 million – Wednesday afternoon.
Due to the volatile nature of cryptocurrency, the value of Bitcoin fluctuates. This is the biggest downside to accepting Bitcoin at the brewery, according to Rhoades. Switchyard Brewing accepts .0031 Bitcoin for a pack of four beers. Wednesday afternoon was about $13. But if the value of Bitcoin drops to what it was a few days earlier, that same amount of Bitcoin would be worth around $9.
“I think it’s wonderful that they’re moving in that direction,” Rhoades said, “but (volatility) would be my main concern. If they’re going to have a way to hedge against those big moves, that would put me in the lead relieves a little more.”
While Bitcoin’s value sometimes drops, Rhoades noted that it also rises.
What is Cryptocurrency?
Cryptocurrency, which includes Bitcoin, is not the same as digital currency. There is no transaction of dollar bills – only value secured by encryption on a decentralized online ledger and not regulated by any bank or government.
Instead, the cryptocurrency can be viewed on the online ledger by anyone at any time. This register, which can be considered a giant spreadsheet, is constantly updated by a whole network of people on computers all over the world. Every transaction is recorded and verified on this network.
While money in the form of dollars or currencies moving from a person to a bank has a stable price structure, cryptocurrency rates fluctuate and are considered more volatile.
IU’s Rhoades said that if everyone starts embracing cryptocurrency, it could become its own accepted currency.
“Having more and more entities accept it will help with that,” he said.
In Bloomington, it starts with people buying pizza and beer at Switchyard Brewing Co.
Contact Carol Kugler at [email protected], 812-331-4359 or @ckugler on Twitter.