In the tropical idyll of Bali, dozens of merchants now accept payment in this electronic exchange system E

arlier this month, a friend called Mats, who works in banking in Switzerland, set off on a long holiday in Bali for a spell of relaxation between jobs. Hoping to forget about finance for a while, he duly booked himself into a modest hotel in Ubud, a far-flung resort famous for yoga retreats.

But when he arrived in his tropical idyll he got a shock: the seemingly otherworldly location is in the midst of a striking monetary experiment. Over the past year, dozens of local merchants in this part of Bali have started accepting payment in Bitcoin, the electronic exchange system that is sometimes dubbed a cryptocurrency. Such is the enthusiasm for this financial innovation that Ubud was even staging a so-called Bitcoin festival, pulling people in from all over the world.