U.S. Senate informational panels deemed it legitimate. Detractors dismiss it as unstable and a vehicle for criminal trade. China has banned new deposits on its largest exchange.
Bitcoin, the international digital payment system and currency and one of the hottest technology and finance topics this past year, could become a widespread vehicle for trade, believe the leaders of a Miami group. To further that view, Miami International Bitcoin will be partcipating in the North American Bitcoin Conference slated for Miami Beach in January.
“The thing that’s really exciting about Bitcoin is that, here in South Florida, we have a half billion people to the south of us who do not have access to a banking system that works well, capital markets, credit — things that we take for granted,” said Charles Evans, business professor at Florida Atlantic University and one of the founders of Miami International Bitcoin.
“I fully expect that Miami could become the ‘Silicon Valley’ of small-scale international finance,” Evans, who will speak at the conference, said. “I defy anybody to do business in South Florida without doing international business.”
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Bitcoin began in 2009 as an electronic payment system and currency allowing for peer-to-peer payments and financial exchanges without financial regulation or a third party, such as a bank. Users establish an online wallet using their local currency and exchange with other Bitcoin owners. As a payment system, it functions much like PayPal, but there are no charge fees and no credit cards are required. As a currency, Bitcoin allows for a nearly universal system as units can be converted to local currencies, usually without fees.
The 2014 conference will take place Jan. 24-26, and is expected to draw over 500 members of the Bitcoin community. It hopes to build on the success of past conferences like Bitcoin 2013, held in May in San Jose, Calif., by bringing together technology professionals, business people and policy makers to discuss the future of Bitcoin.
The Clevelander hotel will even allow conference goers to pay for their rooms, food and drinks with Bitcoin through conference sponsor BitPay. The hotel joins other businesses in South Florida that are accepting Bitcoin as payment like Vanity Cosmetic Center in Miami and Planet Linux Caffe in Coral Gables. And internationally, Bitcoin is gaining acceptance for various kinds of purchases like gift cards and even for Black Friday shopping last month.
Daniel Mery, owner of Planet Linux in Coral Gables, said customers can easily walk up and use their phones to purchase coffee, pastries and sandwiches in the cafe with Bitcoin.
“We want to promote Bitcoin like we promote new technologies,” Mery said. “Bitcoin is a universal currency, it’s a currency that no government controls.” He wants to encourage other local store owners — not just those appealing to techies — to follow his lead.
Bitcoin proponents like Evans see Bitcoin as a potential payment solution that facilitates international trade without requiring currency exchange, especially in regions regions like the Caribbean and the Americas where cell phone and technology usage is increasing. In Venezuela, for example, there are 30.5 million cell users, a number that tops the country’s actual population, according to National Telecommunications Commission data.
Since Bitcoin can be transferred via smart phones, Carlos Parra, an economics professor at Florida International University, believes there’s a chance to impact impoverished and under-served residents in countries like Venezuela.
“If it turns out that bitcoins end up having less volatility than the national currency, then people at the bottom of the pyramid in Venezuela, for them it would be easier to use bitcoins,” Parra said. “Bitcoins would be very useful for international transfers. Most of the remittances to the Caribbean come from Miami and they are making a lot of inroads with mobile money.”
But understanding the currency and overcoming skepticism remain potential challenges for international expansion and acceptance. “There’s the connotation that it’s used for black markets and illegal purposes. From the public affairs side of things, a company wouldn’t want to be exposed to that, even if it’s an indirect relationship,” said Parra.
Recently, Bitcoin took a hit in value when BTC China, the largest Bitcoin exchange in China, said it would stop accepting deposits for Bitcoin in the local currencies, renminbi and yuan. Bitcoin’s exchange rate dropped from a peak of more than $1,000 to as low as about $300 before settling in the $500 and $600 range. Monday it traded at $641 for 1 bitcoin.
“The run-up we saw over the last month or so was unsustainable,” Evans said. “It was based on high expectations that people in China would be able to use Bitcoin in a way that is not the case.”
And as other international marketplaces are revealed as hoaxes or simply disappear, there’s still skepticism about Bitcoin becoming a rival to the dollar or euro — or even holding its value as an investment.
For individuals who have already invested, Bitcoin advocates want to also let people know the currency is still highly vulnerable to hacking.
Sean Emmanuel co-founded Bot Revolt, a sort-of Bitcoin “antivirus,” to help educate people about Bitcoin if they invest. Subscribers pay monthly or annually to have Bot Revolt monitor their Bitcoin exchanges to prevent illicit activity and hacking.
“Pushing out the word and getting people to understand that there are better ways to protect your Bitcoin is one of the tougher things in the world,” Emmanuel said.
Emmanuel and his team, which is based in Pompano Beach, also plan to launch the beta version of the website Bitcoin Intel in January, to track price movements. As the value continues to rise, Evans warns that new converts to Bitcoin should remain cognizant of trends, like the recent and ongoing crackdowns in China.
“We’re talking about something that’s new, and very few people understand it, and they hear about it from their friends and get involved in it,” Evans said. “I wouldn’t count on [its exchange rate] doubling every day forever, so you’re going to have to watch the price movements and wait for things to calm down a little bit before you get too giddy.”
As with any investment, people have to know how to balance spending and saving, because the currency is vulnerable.
“I’ve personally invested money into Bitcoin, so it’s definitely a cause for concern,” Emmanuel said. “You can have Bitcoin that you store, and I have a set of Bitcoin that I use to exchange goods and services between my colleagues.”
Evans thinks that beyond investing in Bitcoin, individuals should think of creating personal business opportunities like Emmanuel did. Or like Kenneth Metral created with his online marketplace Coingig.
Metral is CEO of the Coingig site and works in South Miami with international partners. He said that he wants his site to become the “Amazon” of Bitcoin and avoid the fates of marketplaces that sold illegal goods or duped users out of their bitcoins.
“We do a small verification process with each seller to make sure they’re real,” Metral said. “When a buyer purchases a product they pay us first, we wait until the buyer receives the product and then we release the payment to the seller.”
Coingig’s homepage is refreshed in real time to reflect the current price of Bitcoin and translates a customer’s local currency into the Bitcoin equivalent. Metral says the site is getting customers every day, because people are attracted to the idea of shopping without giving up their personal information: “It’s kind of changing the way we think about money and currency.”
And even if Bitcoin plummets in value again (even before you finish reading this), Evans thinks it has already made an impact.
“This is the future with a capital t and a capital F,” said Evans.