Switchyard Brewing Co. will be the first Indiana brewery to accept cryptocurrency

Starting Monday, Switchyard Brewing Co. will accept a new form of payment — Bitcoin cryptocurrency — for its beer and food.

While Kurtis Cummings, chief executive officer for the bar at 419 N. Walnut St., doesn't expect many people to pay using cryptocurrency, he is excited about being the first Indiana brewery to offer the option of Bitcoin transactions.

Both Cummings and his newly appointed "chief crypto officer" Michael McClung have been working to add cryptocurrency to the list of payment options at the brewery. McClung began using cryptocurrency soon after it was introduced and helped develop the blueprint for how to add it to the payment options at Switchyard Brewing.

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Adding cryptocurrency is just the latest unconventional and innovative addition at the brewery, which also no longer accepts tips for its workers. Instead, it raised prices last summer to cover paying employees a living wage.

One of the benefits of accepting Bitcoin, Cummings believes, is taking the middleman out of 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 of the brewery's transactions have been with credit or debit cards.

"This is peer-to-peer," Cummings said. "If I want to send you money, I send it directly. With cryptocurrency, it's like freedom of the people to exchange finances without any oversight or anyone taking their cut."

Switchyard Brewing is launching its own self-hosted cryptocurrency node from the BTCPay Server, which provides a secure, censorship-resistant payment processor. That 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 be provided with a receipt after the transaction.

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While Cummings has not had a customer ask to pay with cryptocurrency, he's hopeful there will soon be some transactions, with people in an Indianapolis Bitcoin group reacting positively to the addition.

"It's a little more cumbersome right now," he said. "But the more that brick-and-mortar companies accept this technology, it will become much easier."

As the popularity of cryptocurrency increases, Cummings said they may be able to help other small businesses add Bitcoin payments at their stores. It's something Cummings believes will happen, especially after watching advertisements for cryptocurrency exchanges at recent Indiana University basketball games.

"We're always looking to be on the forefront with business and technology," Cummings said. "This is just an example of that."

Thoughts about Bitcoin and business

The first transaction using Bitcoin was to purchase pizza, something that may happen at Switchyard Brewing Co.

That first pizza purchase happened in 2009 by someone named Laszlo for two pies in exchange for 10,000 Bitcoins. At that time, that exchange was valued at about $40, according to Russell Rhoads, associate clinical professor of financial management with Indiana University's Kelley School of Business.

Those 10,000 Bitcoins were worth about $400 million — on Wednesday afternoon.

Because of the volatile nature of cryptocurrency, the value of Bitcoin fluctuates. That's the biggest drawback to accepting Bitcoin at the brewery, in Rhoades' view. Switchyard Brewing is accepting .0031 Bitcoin for a four-pack of beer. Wednesday afternoon, that was worth about $13. But if Bitcoin value drops to where it was a couple days earlier, that same amount of Bitcoin would be worth about $9.

"I think it's wonderful that they are moving in that direction," Rhoades said, "but (the volatility) would be my primary concern. If they are going to have a way to guard against those big moves, it would put my mind at ease a bit more."

While the value of Bitcoin sometimes drops, Rhoades noted it also increases.

What is cryptocurrency?

Cryptocurrency, which includes Bitcoin, is not the same as digital currency. There is no transaction of dollar bills — only a value secured by encryption on an online ledger that is decentralized and unregulated by a bank or government.

Instead, the cryptocurrency can be viewed on the online ledger by anyone at any time. That ledger which may be thought of as a giant spreadsheet, is constantly being updated by a whole network of people on computers around the world. Every transaction is recorded and checked on that network.

While money in the form of dollars or currency that moves 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 started adopting cryptocurrency, it could become its own accepted currency.

"Having more and more entities accepting it will help with that," he said.

In Bloomington, that begins with people purchasing pizzas and beer at Switchyard Brewing Co.

Contact Carol Kugler at ckugler@heraldt.com, 812-331-4359 or @ckugler on Twitter.

This article originally appeared on The Herald-Times: Bitcoin cryptocurrency to be accepted at Switchyard Brewing Co.