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17 Nov 2013
Having bought some Bitcoins, I figured I should try to buy something with them. Fortunately, the coffee shop in which the vending machine is located says you can pay with them. But I couldn't just walk over from the machine to the counter. First I needed to figure out how to use a wallet.
Bitcoins are stored in cryptographic wallets, which are just long numbers, consisting of a private and public cryptographic key. Wallets can be offline, like the one printed on the ticket I got from the vending machine, or online. If you want to buy anything, in practice you need an online wallet, since you need to be able to create and publish a transaction, another long number, that encodes a transfer from your wallet to the seller's.
I have a Nexus 7 Android tablet, which you can see me holding in the picture. When I got back to my hotel, after poking around online I set up an account at Blockchain and installed their Android app. This got me halfway there, since now I had an offline wallet with some Bitcoins in it and an online wallet without. After some futzing around with the tablet I managed to scan the QR code on the paper ticket to import the offline wallet into the app, then I sent my Bitcoins from that wallet to the main one for the account, minus a 0.0005 btc fee to encourage some Bitcoin miner to publish my transaction faster. (So much for friction-free commerce.) Now I was ready to go back and buy something.
A few days later we went back to the coffee shop. Waiting those days to spend the Bitcoins turned out to be quite profitable, since due to the ever-inflating Bitcoin bubble my Bitcoins, which had been worth about $18 when I bought them, were now worth about $26. I walked up to the counter, ordered a coffee and an espresso for about $5, and asked if I could pay with Bitcoins.
After pouring the coffee, the barista pulled out her tablet and poked at it for a minute to set up a transaction request, which it displayed as a QR code which you can see on the tablet in the background. I held the two tablets face to face, so mine could scan the code, but. for some reason that didn't work, probably too greasy fingerprints on my camera. Eventually I gave up and typed in their wallet number 1ACFc7Gv7RZbbmeBPxLS6rvDExo4uET6m3 and the amount, 0.015 btc plus the 0.0005 btc mining fee. To my surprise, I typed the whole thing correctly on the first try, a few seconds later her tablet beeped, and we agreed that I'd paid. By that time the cup of coffee had gotten cold, so she poured another one, then made my espresso.
If my tablet's camera had worked better and had scanned the QR code, it would have been pretty quick, not much slower than paying with a credit card and a PIN.
After we finished the coffee, I noted that I still had $21 of Bitcoins left. Since we were leaving Vancouver the next day and Bitcoin-friendly merchants at home are pretty sparse, I figured I'd sell $20 of them back to the machine. That didn't work so well, as we'll see in the next and final installment.
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