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Thursday, April 10, 2014

Abney and Associates Tech Research: Bitcoin gets easier to buy and spend

It's getting easier for consumers to buy and spend bitcoin, the cybercurrency that has captured much of the tech world.

With each passing month, Bay Area entrepreneurs are rolling out new technology for consumers to buy and store bitcoin, shop online with the virtual currency and send it to friends. Last week, a bitcoin ATM was unveiled in Mountain View -- put in a few hundred bucks, out comes a bitcoin. And more retailers -- from consumer electronics to coffee roasters and pizza delivery -- are accepting bitcoin, making it easier for consumers to choose the Internet currency over dollars.

"It's all about to change over the next 12 to 24 months," said Marshall Hayner, a San Francisco entrepreneur who this month will launch bitcoin app QuickCoin. "We are going to see all kinds of people adopt it. It's going to power transactions on the Internet."

Bitcoin is a cybercurrency and payments network created in 2009 by a mathematical formula as an alternative to banks and government-controlled currency systems. Bitcoins are added one at a time to the network by computer programmers around the world, and most bitcoin is bought and traded on global Internet exchanges.

The Bay Area bitcoin community is filled with entrepreneurs and investors pouring millions of dollars into their projects. But for the rest of us, still buying with cash and plastic, bitcoin is a bit of a mystery.

"You've got people out there who are software engineers who don't understand it," said Vinny Lingham, co-founder of Gyft, a San Francisco digital gift card app that accepts bitcoin. "It's far too complicated out there for the average consumer to understand. But that will change."

Cary Peters is hoping to uncomplicated bitcoin for consumers with the ATM he unveiled at Hacker Dojo, a nonprofit shared tech space in Mountain View. His is the first bitcoin ATM in California, and anyone can use it by setting up an account with a phone number, ID, and face and palm scan, which is used to run a background check to rule out potential fraud.

"Regulation has to be implemented," Peters said, a position rarely heard in the libertarian bitcoin community, but one that experts say is necessary to gain the trust of consumers. After about five minutes, the machine sends a text message that the user can start buying and selling bitcoin. Many bitcoin websites take about four or more days for transactions, and that delay doesn't work for everyone.

"Something you decide you want to do today you may not want to do in four days," said Hami Lerner, a Sunnyvale resident who works in tech and visited the ATM on Tuesday. Bitcoin valuation can fluctuate wildly on any day; in February, it fell more than 85 percent in less than two hours. Recently valuation has ranged between about $450 and $500, about half its all-time high of more than $1,200 in November.

Read full article at Mercury News


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