The country's first bakery to accept bitcoins completed its first transaction yesterday in Dublin with a former director of the Central Bank of Ireland and the European head of an internet financial company backed by billionaire American venture capitalists.

Krüst Bakery, which was co-founded by Garret Flower and Rob Kramer, made its first digital currency sale of cronuts and coffee yesterday to Peter Oakes, the CBI's ex-director of enforcement and financial crime and Garrett Cassidy, managing director of Circle in Europe.

"Digital currencies are still in their early days but they are becoming more and more mainstream," said Mr Cassidy, a former senior banker in Bank of Ireland. "Consumers will be using digital currencies more and more to buy goods and services. That's what our business hopes to do by setting up our European headquarters in Dublin," he added.

Mr Cassidy is the first employee of Circle in Europe but he said his business was hiring as it geared up to expand as consumers did more transactions using digital currencies. His firm is backed by $26 million in venture funding from Breyer Capital, Accel Partners, General Catalyst Partners, and Oak Investment Partners. Accel Partners was Facebook's biggest shareholder after Mark Zuckerberg at the time of its flotation.

Regulatory issues

“Bitcoin is not alchemy,” said Mr Oakes, who stepped down as a director of the CBI in May last year. “Yes, there still are regulatory issues, but the functionality of digital currency means they are here to stay. As consumers use them more and more, politicians and regulators will adapt to them.”

Mr Flower said Krüst had decided to start offering Bitcoins as a means of payment because of the number of start-ups and students in the area of his business on Aungier Street in Dublin 2. He said Mr Oakes, who now works as a consultant, had first suggested the idea to him as a regular customer.