Want to make some cash disappear?
Trade U.S. dollars for bitcoins at mtgox.com or any number of other exchanges. Better yet, arrange to meet a bitcoin trader in person to make the swap so your bank account number never gets involved.
Your online bitcoin account, or wallet, doesnt have your name, Social Security number or any other personal information attached to it. Bitcoins can be transferred or cashed out anywhere in the world that has access to the Internet.
Bitcoin is best known for shadowy business, most famously for its use as the tender for Silk Road, the online marketplace that allowed sellers and buyers to make drug sales anonymously. On Oct. 1, the FBI arrested the alleged mastermind of the site, who borrowed his handle, Dread Pirate Roberts, from The Princess Bride. In the indictment of Ross Ulbricht, authorities claim that Silk Road brought in $1.2 billion in sales since the sites 2011 birth. After some difficulty, FBI agents hacked into a virtual wallet containing more than $28 million in bitcoins they say were some of Ulbrichts $80 million commissions from Silk Road sales.
But bitcoin is more than just a criminals PayPal.
Its a form of payment for goods and services accepted by more than 10,000 vendors worldwide.
Its a commodity with a value that rises and falls.
It also solves charge-back problems that go with credit cards and could be used to transfer funds without paying a wiring service.
Its a regulators headache, and its gaining traction.
IS BITCOIN MONEY?
Bitcoin meets several criteria for being considered money, but its not quite there, says Peter Crabb, who teaches the theory of money at Northwest Nazarene University.
Its only money if its well-accepted, Crabb said. I cant go to Wal-Mart and buy something with bitcoin. I cant go to NNU and get a degree with bitcoin. To me, bitcoin isnt money right now.
A growing number of people and businesses disagree.
BitPay, which processes online bitcoin purchases similarly to how PayPal handles credit cards, grew from a client list of 1,000 vendors in 2012 to 10,000 vendors this September, about half located in North America.
BitPay reported that it processed 10,000 merchant transactions in August worth more than $6.4 million globally.
Thats pretty small potatoes, but its an exponential rise for the currency, which was valued at less than a penny when it was first released in 2009 and stayed flat until 2011. Bitcoin was valued at $212.84 per coin at 5 p.m. Friday.
BitPay doesnt have vendor statistics for Idaho, or even the U.S. At least one Idaho business accepts bitcoin: A set of Rexburg apartment buildings for Brigham Young University-Idaho students takes bitcoins as rent payment.
While bitcoin hasnt caught on in the Idaho business world and may never an increasing number of Idahoans are acquiring, trading and buying goods with bitcoins. Localbitcoins.com and other forums provide a vehicle for bitcoin users in Boise or any other city to arrange transactions.
Adam McKinney is a tech support analyst for the University of Idaho who works remotely from Pocatello and is a bitcoin enthusiast. He said Idaho is well-represented in online bitcoin forums.
Its surprising how many people in Idaho are found on (forums) he said. I dont know how tech savvy the rest of the country sees us, but Idaho is surprisingly more tech savvy than they realize.
Technology may blend bitcoins and dollars in ways that make them interchangeable. BitPay recently partnered with Gyft, a gift card app for Android smartphones. Gyft users will be able to load bitcoins onto their accounts and spend them as dollars at more than 50,000 brick-and-mortar storefronts in the U.S., including Gap, Lowes, Nike and Burger King, said Jan Jahosky, BitPay spokesman.
Crabb said the U.S. government protects its currency monopoly, and bitcoin wont be real money until its accepted as a tax payment or as a means of settlement in court disputes.
But a recent decision in a Texas U.S. District Court indicates the government sees bitcoins as legitimate.
The U.S. Security Exchange Commission sued the owner of Texas-based Bitcoin Savings and Trust for operating a Ponzi scheme. Trenden Shavers raised more than 700,000 bitcoins valued Friday at nearly $150 million by allegedly using new investor money to cover funds owed to longer-tenured investors.
Shavers attorney argued the court lacked jurisdiction in the case because bitcoins arent real money. The judge disagreed, ruling that bitcoin met the definition of investment contract, and as such, are securities.
INVEST IN BITCOINS, NOT PIZZA
In 2010, a Jacksonville man paid 10,000 bitcoins for two large pizzas. He reported the purchase to a bitcoin chat forum. Bitcoins were less than a quarter of a cent at the time. Today, those bitcoins would be worth more than $2 million.
The story is famous in bitcoin circles. Whether or not its true, the pizza story underscores a fact: Anybody who bought bitcoins in 2010 and held them made a lucrative investment.
McKinney wishes hed started stockpiling bitcoins back then.
He has about 10 bitcoins, and though he occasionally orders products online through Bitmint.com and other cyber vendors, he plans to hold on to some as an investment.
I see this as a long-term thing, McKinney said. I see them in five years being worth $1,000-plus, and I want to have a few of them. I wish I could have been somebody who had 10,000 bitcoins like the guy who bought the pizzas three years ago. That foresight would be nice.
Most bitcoin users fall somewhere in two groups: techies and Libertarians.
McKinney falls in the middle: a card-carrying Libertarian and professed geek. He said bitcoin is a discussion topic in the university tech offices but few other places. But the chatter has increased in recent months, especially after Silk Roads closure, he said.
Bitcoin could get to the point where most people are aware of it, especially if a major online market such as Amazon began accepting it, McKinney said. It would also take interest from college students, he said.
College students will be the ones, he said. I have a teenage daughter, and her generation will definitely be the ones to make bitcoin mainstream. I dont know if bitcoin will ever be great as a daily use currency as much as a way to send money to someone or for relatively instantaneous verification to buy a house.
McKinney and many bloggers say the end of Silk Road illicit uses could help bitcoin gain mainstream acceptance.
Until a year ago, Silk Road was really the only outlet for bitcoin, McKinney said. I dont think it would have survived (the end of Silk Road) even nine months ago. This time, it came back in a matter of hours or days. That shows staying power.
Floyd Noel, a Boise State University junior, has read voraciously about bitcoin since last Christmas. As president of the on-campus Libertarian club Students for Liberty, Noel loves the fact that the U.S. Federal Reserve cant monkey with bitcoins value. As a computer science student, Noel appreciates the elegance of bitcoins design and its built-in defenses against inflation. And as an economics student, he tosses around names such as Friedrich Hayek and Milton Friedman when he talks about bitcoins merits as a stable international currency.
Noel plans to write an editorial about bitcoin in the campus newspaper, the Arbiter, and possibly create YouTube videos explaining bitcoin in hopes to bring more students on board.
Yet even to Noel, bitcoin is more of a concept and a possibility than a tool. Hes mined (bitcoin lingo for acquiring) a few coins but doesnt use bitcoin regularly.
Right now, there just arent many uses for it, Noel said. Its still the early days. Think about the Internet in the 1990s and how much more developed it was by about 2002. People were emailing all the time. There was Myspace, and Facebook was catching on. Its a pretty big jump in usability. But even today, some people dont use the Internet, so bitcoin may never get penetration, even if it becomes very common.
Zach Kyle: 377-6464