Technology

After Hacks and Claims of Money Laundering, Bitcoin Returns to Life

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The chase and its aftermath were perhaps the most dramatic part of an insane year for the cryptocurrency, which has drawn worldwide attention and will be discussed this weekend at the fourth North American bitcoin conference at the Fillmore Miami Beach.

Bitcoin was designed to be a digital form of money -- balances are tracked only online; there are no bills or coins you can hold in your hand. It can be used almost anonymously, transferred around the world instantaneously, and moved free from the prying eyes of bankers, regulators, and law enforcement. It's been used for good -- sending funds to farmers in remote Africa via cell phone, for instance -- and evil, like money laundering and buying drugs online.

Thanks in large part to media hype that had been building around it, bitcoin peaked in November 2013 at $1,216.73, just a few weeks before last year's Miami conference was getting underway. But after a year in which several hacks, huge thefts, and bitcoin-related crimes illuminated the risks, the price of a bitcoin has fallen to $300. This year's conference takes place as two Miami men await trial for bitcoin-related money laundering and just days after a large Slovenian bitcoin exchange was hacked and $5 million worth of the currency stolen.

Still, Moe Levin, a geek-chic 26-year-old in black-frame Buddy Holly eyeglasses who organizes the Miami conference, says all of these problems have only made "bitcoin superstrong and resilient."

Born into an Orthodox Jewish family in Toronto, Levin was sent to study in Israel at age 18. That led to a scholarship in Austria, where he met a Dutch girl, whom he followed to his current home, Amsterdam. He says he's a clinical psychologist in Austria and speaks German, Dutch, Hebrew, and Arabic.

"Years ago," he explains, as though it has been eons, he got a job organizing supply-chain conferences in Europe. Execs from big companies like Starbucks would attend to scope out new technologies that might save them money.

To make something as simple as a paper cup, he explains, required multiple vendors. "Money was changing hands six or seven times, and at every step, the check or wire transfer had to clear. It was especially a problem in countries with shaky banking systems." At conferences, attendees began to talk about bitcoin as a way to speed things up. When Levin began researching it, he found there was "actually a huge community" of people using the currency.

He discovered that someone named Satoshi Nakamoto (but whose real identity remains uncertain) had proposed the idea of bitcoin in 2008 in an online technology forum. It was designed with open-source software, and all transactions were recorded online. Money was kept in online "wallets" like a SkyMiles account.

Among the first purchases came in 2010, when a programmer named Laszlo Hanyecz from Jacksonville, Florida, wanted to see if he could buy goods with bitcoin. He offered 10,000 of them in exchange for two pizzas. A computer user in England agreed, accepted the bitcoin, and had Papa John's deliver the pizzas to Hanyecz.

Levin read about all this and started organizing bitcoin conferences in Amsterdam, Chicago, and Miami. (Not because South Florida has a great tech scene but because "Miami in January is not a hard sell for most people in the world," and it's a gateway to lots of countries with "shaky regulatory or banking environments.")

The conference attendees, businesses that hoped to profit from the currency and entrepreneurs, exchanged knowledge and tips. It grew increasingly popular and drew visitors from as far away as Australia.

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Deirdra Funcheon