Imagine going to the pub and buying half a pint – not so difficult.
Now imagine finding out a few years later that with the same money you paid for that half-pint, you could now buy almost a hundred.
That’s what happened to one man in Cambridge.
In 2013 Andrew Bower bought half a pint of Milton Brewery’s Icarus at The Haymakers in Cambridge for £1.55.
But he didn’t get out the change in his pocket; he paid for the beer in Bitcoin, the digital ‘cryptocurrency’ that allows people to make instant electronic transactions without the need for a central bank.
Bitcoin first appeared after the financial crisis in 2008 and the concept quickly caught on with investors.
Since the beginning of 2017 alone its price has skyrocketed by around 1,000 per cent. This month the price of one bitcoin rose to a new high of over $11,300 (£8,388).
Mr Bower paid 0.0202 Bitcoin for the beer back in 2013 – then the equivalent of £1.55.
At the time, he tweeted: “Is this the first half pint bought in Cambridge with Bitcoin?”
Little did he know that he should have kept hold of his digital cash.
At the time of writing (November 30 2017), the same amount of Bitcoin would be worth about £150, or roughly 83 half-pints of Icarus according to bar staff at The Haymakers.
Cambridge University academic and Milton Brewery beer fan Edward Anderson tweeted a picture of Mr Bower’s receipt with the message: “This is crazy. In 2013 a bloke spent 0.0202 Bitcoin on half a pint of beer in a Cambridge pub. The same Bitcoin today is worth £156.67.”
Individual Pubs Ltd, which owns The Haymakers, was one of the first businesses in Cambridge to accept Bitcoin.
But the group stopped using the cyber-currency earlier this year after transaction fees became too high.
How Bitcoin works
To use the currency you need to install a “Bitcoin wallet” on your computer or mobile. This will give you an “address” that you can use to pay people and be paid in Bitcoin.
Once you’re registered with the wallet, you can convert paper notes into the digital currency and spend it online or at retailers that accept it.
A shop (or pub) will produce a QR code, which the customer scans with their device to complete the transaction.
“Bitcoin is now unusable for in-person transactions,” said Stephen Early, director of Individual Pubs Ltd.
“Fees went up to the point that they were greater than the amount actually spent – and since fees have to be paid twice – once by the customer sending Bitcoin to me, and again by me when I send the Bitcoin to an exchange to convert back to pounds – it would be a losing proposition to accept it.
“To make things worse, even with high fees transactions are now very unreliable because the blocks being produced are full – there isn’t room for all the transactions people want to make.
“If it’s unlikely that a payment from a customer will ever reach me, I’m not going to take it.”
The electronic currency has proved extremely popular in recent years, rising exponentially in value as the story of Mr Bower and his half pint shows.
But it is also very volatile. At one point yesterday (November 29) Bitcoin was trading for around £8,170 and then in six hours plummeted to about £7,130.
Justin Drake, a cryptocurrency entrepreneur based in Cambridge, was an early advocate of Bitcoin in Cambridge.
He founded the online Cambridge Bitcoin Meetup group and helped launch the first Bitcoin ATM at St John’s Innovation Centre.
But he said the ATM was taken down last year because people weren’t using it enough.
“Bitcoin was never a really big thing in Cambridge,” said Mr Drake.
“I tried myself to make an ecosystem around it but there was never enough interest.”
But Mr Drake said another cryptocurrency called Ethereum had been “growing like wildfire” over the last couple of years.
He said: “It’s becoming more popular in Cambridge. Bitcoin had a lot of potential but it didn’t really live up to it. Ethereum is what Bitcoin was meant to be.”