A handful of Maine businesses are delving into the strange new world of virtual currency by allowing their customers to pay for goods and services with bitcoin.

The increasingly popular but little understood currency has yet to catch on as a regular means of payment at bricks-and-mortar retailers in Maine, but the few merchants who do offer bitcoin transactions say they are looking ahead to the future.

The Great Lost Bear restaurant and bar in Portland began allowing users to pay with bitcoins in October, said its media marketing manager, Dave Foster.

Foster said people who have bitcoins can download a mobile phone app called Coinbase, a “virtual wallet” that lets them carry and spend the digital currency.

Instead of paying with cash or a credit card, customers can use the app to send their bitcoin payment to a designated email address created by the restaurant.

There are Web-based exchanges that will then convert those bitcoins into dollars, but so far the restaurant hasn’t had much need for them.

“We’ve only had two transactions that have come through,” Foster said.

While most retailers in Maine have yet to adopt bitcoin and other “alternative payment technology” such as Apple Pay, many are keeping a close eye on such technologies to see how they develop, said Curtis Picard, executive director of the Retail Association of Maine.

“It’s something we see as kind of emerging,” he said.

A key benefit of alternative payment methods is that they are less expensive for the retailer than traditional credit and debit card processing, which costs retailers about 3 percent of their sales revenue on average, Picard said.

Another benefit is customer convenience, he said. Nearly all consumers have smartphones, and some may consider apps that let them buy goods and services using their phones to be more convenient than pulling out their wallets or digging into their purses.

But many retailers also have concerns about bitcoin and its ilk, Picard said. They include the price volatility of bitcoins and uncertainty about the security of such payment methods, he said.

ALTERNATIVE CURRENCY

Bitcoin and other digital currencies differ from traditional money in a number of ways. The value of physical currency is determined by the issuer, usually a government entity. Here in the United States, it’s the U.S. Treasury. Because its value is set by government decree, traditional currency also is referred to as fiat currency.

Invented in 2008, the bitcoin was designed to be a software-based currency for which no central banking system or regulator is required. Instead, the Bitcoin system is maintained by users via sophisticated programs running on their computers, all of which are linked together by a peer-to-peer network over the Internet.

The value of a bitcoin is determined by the economic principle of supply and demand. Supply is predictable and stable – only a certain number of the virtual coins will exist. The number of bitcoins in circulation will slowly increase at regular and diminishing intervals until it reaches a cap of 21 million.

As a result of large swings in demand, the value of a bitcoin can be extremely volatile. The value of a single bitcoin has ranged from as little as 5 cents to as much as $1,242. As of Monday, the value of a bitcoin was about $275.

Cryptographic software running on bitcoin users’ computers is constantly verifying and recording bitcoin transactions into a publicly distributed ledger known as the block chain. The distributed bookkeeping system compares multiple user transaction records over the network to keep the block chain accurate and makes cheating or counterfeiting difficult.

As a reward for keeping the block chain up to date, users on the network are occasionally rewarded with a new bitcoin. The process is referred to as mining. As more bitcoins are created, the mining process by design becomes increasingly difficult and requires more computing power.

Bitcoin transaction records are anonymous, which has made it the go-to currency for websites that deal in illicit products and services. However, thousands of legitimate businesses around the world also accept bitcoins, and their number is growing. The list of bitcoin-friendly stores now includes major chains such as Target, Subway, Victoria’s Secret and CVS.

Like The Great Lost Bear, most independent Maine businesses that allow bitcoin transactions do so because an owner or manager thinks bitcoins are cool. As of yet, there doesn’t seem to be a compelling business case for adding bitcoin payments.

“It’s more for the novelty than anything else,” said Mike Demers, warehouse manager at Seacoast Hardwood in Sanford. “I’m kind of interested in it … .”

The lumber wholesaler began offering payment by bitcoin about six months ago, Demers said. So far, not a single customer has used that option, he said.

The same is true at Sparrows Consignment in Waterville, owner Leah Hartigan said.

“No, actually we’ve had zero” in the year Hartigan’s clothing and accessories store has been offering bitcoin payments, she said.

Hartigan said it was her fiance’s idea to add bitcoin as a payment option. Hartigan liked the idea because it gives her business added exposure via websites such as coinmap.org, which maps and indexes bricks-and-mortar businesses that allow bitcoin payments.

Still, the entire bitcoin concept remains a bit of a mystery to Hartigan.

“To be perfectly honest, I don’t really understand very well how bitcoin works,” she said. “It’s difficult to explain if you’re not very familiar with technology.”

This story was updated at 10:10 a.m., Jan. 6 to correct the name of the website, coinmap.org.