A startup called PizzaForCoins now allows users to pay for the delivery of Domino’s pizza with bitcoins, with Pizza Hut and Papa John’s soon to follow.
Bitcoins is a decentralized experimental digital currency that can be exchanged between computers or through physical banknotes and coins. Their distribution relies on a transaction log that timestamps, records and verifies transactions to prevent double spending.
These transaction verification activities also award bitcoins to the bitcoin nodes, or bitcoin miners, who run software to verify peer-to-peer transactions, because it requires intensive computing effort and electricity. The total current value of circulating bitcoins is $275 million.
The bitcoin currency was originally implemented by an individual or group known as Satoshi Nakamoto. In 2008 Nakamoto published a paper arguing that money is an arbitrary object accepted as payment for goods and services. This coincided with the American financial crisis. In 2010 Nakamoto designed and implemented the original bitcoin protocol. Nakamoto ceased contributions to the bitcoin movement soon after.
Despite the years since bitcoins were introduced, bitcoin use is still far from mainstream, since few are willing to devote the computing power required to process transactions, it’s not recognized as a currency by the World Bank, and governments haven’t figured out how to tax it yet. Since it is difficult to associate bitcoin addresses with real-life identities, bitcoins have become the medium of exchange on several online marketplaces, most notably the Silk Road, which sells both legitimate and illegal products, ranging from apparel and books to pornography, machine guns, and drugs.
By itself, using bitcoins to pay for pizza is neither novel nor practical. In 2010, a pizza was purchased using 10000 bitcoins. Today, 0.72 bitcoins – or $16 US – buys one large Domino’s pizza with two toppings, but for $16 you could instead buy two medium double-topping pizzas with tax and delivery fee included on Dominos.com. Either way, the premium for secrecy is pretty redundant since an address needs to be provided to PizzaForCoins in order to receive the pizza. Is there really room for bitcoins in the pizza market? What kinds of munchies are so demonized and reviled they require the utmost secrecy to satisfy? Unless you’re the president of Pizza Nova scouting out the competition or regularly prank call Dominos, using bitcoins for privacy is a little bit paranoid.
Furthermore, PizzaForCoins is not the only service to accept bitcoins as payment. WikiLeaks, LaCie, and the Electronic Frontier Foundation have all accepted bitcoins for donations at one point. Kim Dotcom’s filesharing service Mega accepts payment in bitcoin. Over 1000 merchants support bitcoin usage under the BitPay payment processing service. Financial firms such as Morgan Stanley and Goldman Sachs are reported to have visited bitcoin exchanges up to 30 times a day.
PizzaForCoins makes it easier to exchange bitcoins for real-world goods, but doesn’t make it significantly easier to acquire bitcoins or receive pizza deliveries. The startup’s founders hope that they will later be able to acquire the volume of sales required to get discounts on the giftcards PizzaForCoins uses to buy pizza and pass those discounts on the customer.
Until then, you’re better off getting pizza without the middleman.
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