Bitcoin is blowing up, both in the successful and not-so-successful sense.
The currency is as volatile as a Texas summer is miserably hot. But the volatility’s not stopping Austin movers and shakers from capitalizing on the craze.
Last week, a Bitcoin startup that will help grow the online currency popped up in Austin. But some Austin Bitcoin’ers are trying to moving the currency offline and into the real world.
But first: What exactly is Bitcoin? In a nutshell, it’s a peer-to-peer, decentralized currency that can be traded outside traditional outlets like banks. Bitcoins are created by computers running “mining” programs; the idea is that mining programs keep Bitcoins’ value stable by increasing the computing difficulty of mining operations with each coin that’s minted. View a video overview here.
UT student Michael Goldstein is an Austin Bitcoin consultant. He says the mercurial nature of the currency is problematic.
“It’s obvious that it is a volatile market, so people are very confused by Bitcoin and [it] does scare people,” Goldstein says.
Goldstein’s one and only client is Brave New Books, the alternative bookstore near UT campus. Goldstein says the bookstore’s the only vendor in town he knows of accepting the currency.
Owner Harlan Dietrich says the web-based currency is more than a “cute Libertarian idea floating around the Internet.”
Dietrich says that the decentralized, person-to-person nature of the currency is in keeping with the store’s Libertarian idealism – but people are still holding onto their greenbacks. Only two customers have used Bitcoin so far.
“People are really holding onto their coins here,” Dietrich says. “That’s going to be how Bitcoin lives or dies –whether or not businesses like [mine] accept it and take it on. We certainly hope do because that means that it makes it more of a legitimate currency.”
Pierre Rochard, another Bitcoin consultant and UT grad student, says the volatility of bitcoining trading prices is a result of speculation from investors outside of the Bitcoin community.
“I have one client who purchased a six-figure amount in a private transaction,” Rochard says. ”That was absolutely speculative on his part, and he was very well aware of the sort of risk he was taking on.”
Even though some speculative investors could jeopardize the currency’s future, both Goldstein and Rochard emphasize the importance of person-to-person transactions to save the Bitcoin bubble from bursting.
Goldstein says he hopes the currency catches on here in Austin, adding it could help smaller businesses like Brave New Books save on troublesome credit transactions.
“We have a lot of food trucks in Austin and I imagine that credit card transactions can get pretty pricey for them,” Goldstein says. “So I imagine that Bitcoin could be a pretty good way for them to accept money. [It would] be cheaper and easier for them.”
Goldstein hasn't seen an influx in clients and expects other Bitcoin consultants in the Austin area haven't either. But he says he's not in it for the money.
“It’s very much like a philanthropic venture on my part,” Goldstein says. "I don’t expect to become a tycoon doing this. I just hope to show people that this exists.”