Perhaps it’s no surprise then that the Aberdeenshire-based brewery is also among the first to accept cryptocurrencies as a form of payment.
When the company’s bar at Canary Wharf in London opened last year, it accepted Bitcoin and Bitcoin Cash as forms of payment for beer, pizza and other delicacies. Then, in July this year, the firm revealed that investors would be able to buy shares in the business in cryptocurrency when it extended the latest round of its Equity for Punks scheme until April next year.
The brewer even produced a beer to mark the occasion – which has been named Cryptonite West Coast India Pale Ale – with each shareholder who pays with a cryptocurrency receiving six cans.
Currencies accepted as payment in the Equity for Punks programme range from the well-known Bitcoin and its Bitcoin Cash and Bitcoin SV incarnations through to the rather more exotic-sounding Ethereum, Litecoin, OmiseGO, Qtum, Augur, XRP and 0x.
It’s all a long way from the firm’s original brewery in a workshop in Fraserburgh.
For the utterly uninitiated, cryptocurrencies are digital forms of payment that are not linked to any kind of physical coin or note. Pull up a bar stool to find out more…
Cryptocurrencies are kept in digital wallets online, computers, smartphones or on other devices and are used to pay for products and services on the internet or, as BrewDog illustrates, a growing array of options in the physical world. They can also be transferred directly between users instead of passing through a central bank or other authority.
The advantage is that they don’t necessarily attract transaction fees. The downside is that they’re not regulated, controlled or backed-up by a central bank or government body, so if they’re stolen there is no safety net for recovering the money that’s been lost.
As the name suggests, cryptocurrencies use very secure forms of cryptography to record who owns bitcoins and for making payments between users. Transactions are recorded on a public log or “distributed ledger” – like a giant online spreadsheet.
The ledger is known as a blockchain because transactions are grouped together into blocks and then linked to each other in long chains, with each block containing a reference to the previous block. It’s very hard to tamper with a distributed ledger like this – it makes such a system secure, but also expensive because of the computing power involved.
There are thousands of cryptocurrencies available on the internet, but the first and still the best known is Bitcoin. Bitcoins are created using a technique known as “mining”, in which participants or “miners” are paid using bitcoins for validating the transactions by solving complicated mathematical puzzles using powerful computers.
BrewDog isn’t the only real-world entity to start taking cryptocurrencies seriously. Earlier this year,
global accountancy firm PwC launched software for auditing such technology.
“It is important as companies continue to digitise that we, as auditors, keep up with technology changes in the market, continue to develop audit tools that meet the needs of emerging technologies and serve the changing and developing demands of our stakeholders,” says James Chalmers, global assurance leader at PwC.
HM Revenue & Customs (HMRC) has also issued guidance over how cryptocurrencies need to be treated for income tax, capital gains tax and inheritance tax.
While HMRC does not view them as money, it pointed out that “the tax treatment of all types of tokens is dependent on the nature and use of the token and not the definition of the token”.
The taxman and accountancy firms have turned their attention to online currencies because many people are using them as investments. Yet cryptocurrencies have proved to be unpredictable.
The Bank of England has likened the movements of Bitcoin to a “rollercoaster”. The value of one bitcoin hit a record high of £16,639.47 in December 2017, but now sits at around half that value.
Its price can be hit by anything from media hype through to proposed government regulations of cryptocurrencies.
In January this year, South Korea’s justice minister warned his administration might ban cryptocurrency trading on its domestic exchanges, which sent Bitcoin’s price falling by almost $2,000 in a single day.
The Bank of England illustrated Bitcoin’s volatility by comparing its 65 per cent one-day rise and 25 per cent single-day fall to the pound, which fell by 7 per cent on the day after the Brexit referendum, and to the price of oil, which hasn’t fluctuated by more than 10 per cent in a single day.
Nevertheless, Stephen Ingledew, chief executive of FinTech Scotland, thinks that cryptocurrencies are here to stay. “A lot of the heat and the frothiness has gone and we are going back to the real debate about whether there is a better way to have that exchange of value,” he says. “It’s about designing a different future, and cryptocurrency has a part to play – but it’s not clear exactly what that is yet.”
Cryptocurrencies continue to be in governments’ sights; last month, French finance minister Bruno Le Maire revealed plans to ban Facebook’s Libra currency over concerns that it “poses a threat to the sovereignty of national currencies”. Politicians worry that the social network – which has some two billion users worldwide – has too much influence to control an online currency.
“It’s important to remember that this isn’t the first time Facebook has tried to enter the financial space; in fact, they’ve had numerous failed attempts before,” says Danny Scott, chief executive at CoinCorner, which provides digital wallets for cryptocurrencies.
“Unfortunately, it just so happens that this time they’ve launched into an emerging industry that receives global attention and the result is that they’ve managed to gain momentum with this project.
“We understand that it can be confusing to the public as to why a cryptocurrency concept such as Libra can be banned, whereas it would be much harder to ban an actual cryptocurrency, like Bitcoin. It’s important to remember the difference between the two; Libra is completely controlled by a single entity – Facebook – and Bitcoin is not, as the control lies with the everyday people using it.
“This is called decentralisation and is one of the fundamental features of Bitcoin that make it unique. We expect to see this ban having somewhat of a domino effect, with more countries following suit to ban Libra over the coming months.”