A computer-based, digital currency that has been gaining popularity around the world since it was first created in 2009 has made its way to Mobile.
Six local businesses are among the first in the area to accept bitcoin, said Michael Ray, owner of DixieBit, a local merchant payment processor for bitcoin transactions.
The Battleship Hotel is one of those local businesses that is now ready to accept the currency and Assistant Manager Brenda Rhames said the decision was a no-brainer for a couple of reasons. She said there’s no danger of chargebacks, like with credit cards, because it’s like cash. In addition it’s cheaper than accepting plastic.
“I really like the technology behind it,” she said. “It’s just neat.”
The bitcoin technology became available to the public when the mysterious creator of the currency — popularly known as Satoshi Nakamoto — published the source code online. The source code allowed operators know as “miners” to create bitcoins using powerful computers to solve complex algorithms, Ray said.
Anyone can download the program to begin mining bitcoin, but without powerful enough equipment it could take years to mine just one bitcoin, Ray said.
“There’s no way we could do it in a cost effective way” using personal computers, Ray said. “The group of computers that make up the bitcoin network is the largest supercomputer in the world.”
The currency is designed to never fall prey to inflation because there’s a limited amount of bitcoin. Ray said that only 21 million bitcoin will ever exist and the last year that bitcoin can be created is 2140.
“The coding works so that the currency is created at a diminishing rate,” Ray said.
When users began creating bitcoin five years ago, 50 bitcoin could be created every 10 minutes, but now only 25 can be created in that timeframe. That number will drop to 12 and a half and so forth, Ray said. But is it real money?
Bitcoin is meant to mimic real assets, like gold and silver, Ray said.
“In the 1890s, you could go with a shovel and pick axe … and could find gold …” he said. “As all the low-hanging fruit was picked, it became increasingly hard to find gold.”
The amount of bitcoin mined during a certain time is regulated through an open ledger that can be tracked online. To begin using bitcoin, one needs to have a computer, tablet or smartphone. Ray said bitcoins can be acquired in several ways. The easiest way is to link bank account information to a bitcoin exchange. The current exchange rate is $622 to one bitcoin.
Bitcoin can be traded for goods and bitcoin ATMs are slowing making their way to the United States, Ray said.
Bitcoin can be divided to its lowest denomination, which is called a Satoshi. The Satoshi is .00000001bitcoin.
Rhames said the Battleship Inn and the Captain’s Table restaurant are “ready” to accept bitcoin, but no customers have made bitcoin transactions as yet.
“We’re in the early days of it,” Ray said. “Few merchants are accepting it.”
Café 615, Serda Coffee, the Outdoor Exchange and Satori Coffee are the other Mobile businesses currently accepting bitcoin.
In addition, few staff members know how to use the program, as it’s not fully implemented at local establishments, Ray said.
Ray said he expects bitcoin use to grow and its value to increase and stabilize.
One main advantage to bitcoin, as opposed to other forms of currency is it can be sent anywhere in the world, Ray said.
“It’s cheaper than Western Union and you can do it from a computer or cell phone,” he said.
While the ease at which it can be sent globally could lead to greater use for criminal purposes, Ray believes cash would still be the preferred currency for those looking to break the law.
Ray said one of the largest misconceptions about bitcoin is that it’s anonymous — rather it’s pseudo-anonymous. He said an analysis can be done to determine who sent bitcoin where, so law enforcement officials could track it if need be.
“It’s complicated, but it can be done,” he said.
Another disadvantage to the digital currency is security. With no Federal Deposit Insurance Corporation, the bitcoin user will have to be more vigilant with keeping money secure.
“There will be a lot of companies offering security and ease-of-use technology in the future,” Ray said.
While growth for bitcoin is expected in the future, Ray believes there “will always be a place for gold and silver.
“There will always be competing currencies,” he said. There’s no reason to have one currency or another they each serve a purpose, there’s overlap.”