Online currency Bitcoin moving more mainstream

Internet Currency's boosters like its decentralized nature

Los Angeles TimesMay 17, 2013 

Bitcoins Rise

Thirty-five-year-old software engineer Mike Caldwell mints physical versions of bitcoins at his shop in Sandy, Utah, cranking out homemade tokens with codes protected by tamper-proof holographic seals, a retro-futuristic kind of prepaid cash. The currency made its online debut only four years ago.

RICK BOWMER — ASSOCIATED PRESS

Not that long ago, the virtual currency Bitcoin was one of the Internet's great rebel causes, a digital form of money embraced by libertarians and anti-establishment types who saw it as a way to diminish the power of big governments and big corporations.

But Bitcoin's growing popularity and a recent surge in value has caught the eye of entrepreneurs and venture capitalists, including some who are convinced that Bitcoin could be the biggest thing on the Internet since, well, the Internet.

Now, Silicon Valley is performing its classic ritual to signify that a new technology, product or idea is ready to be taken seriously: It's holding a conference.

This weekend, about 1,000 representatives of the growing Bitcoin economy are gathering to discuss how far the currency has come, and what needs to happen next to fulfill what they see as its revolutionary promise. So far, Bitcoin has been used to buy games and virtual products from Internet merchants and in some instances, reportedly, to move money for illicit purposes. Online exchanges have also sprouted up to trade the currency.

"I think we're starting to see Bitcoin moving out of the shadows of the Internet into something that becomes more mainstream," said Jeremy Liew, a partner at Lightspeed Venture Partners. "We're starting to solve real problems for real people. And that's exciting."

That sense of optimism should be on display at the event, which began Friday night at the San Jose (Calif.) Convention Center. Among the topics being covered are security, financial regulations, business development and new opportunities.

It has a small dash of celebrity thanks to the presence of its keynote speakers: Internet entrepreneurs Cameron and Tyler Winklevoss, who have been buying bitcoins.

Although there have been Bitcoin gatherings in the past, many backers see this as the currency's coming-out party.

To the uninitiated, Bitcoin can be a mind-boggling concept. In 2009, a programmer using the pseudonym Satoshi Nakamoto created the basic software for the Bitcoin currency. It was released as an open source, meaning anyone could add to it or alter it, and Nakamoto later walked away from the project, leaving others to develop it.

Develop it they did. The Bitcoin system includes a series of protocols that run across a wide number of servers around the world for regulating the creation and trading of bitcoins. People can get bitcoins either by buying them with traditional currency or by "mining" them. The mining process involves solving complex computing puzzles that reward a person with bitcoins.

Confused? Here's the bottom line for Bitcoin boosters: They like it because it's a currency that's decentralized, not controlled by any government or company.

It is also mostly, though not completely, anonymous. And because there's no bank or credit card company running the system, there are basically no transaction costs.

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