Last week, I was having a cappuccino at Brew Urban Café in Fort Lauderdale's Victoria Park when an acquaintance I knew only as Brian, who is about 40 and was wearing a bright-orange jersey, said hello. His tattooed friend plopped down at the table across from us. The friend opened his laptop and lit a cigarette. I noticed the two guys didn't have any coffee.
They were there to buy Bitcoin.
"It's cryptocurrency," Brian began to explain but was interrupted when their guest strode up -- a slick, 20-something guy wearing jeans, white flip-flops, and a black tank top exposing his buff arms. Let's call him Neo.
I could overhear as the three gentlemen began to talk business. They each slowly shared snippets of personal information, but not enough to reveal their identities. It was like a game of cat-and-mouse as they bantered back and forth.
"What do you do?" Neo asked Brian.
"I was in the dot-com industry and got out in time. "
Neo said he was selling Bitcoins for $700-plus per coin, plus an 8 percent commission fee. Brian shook Neo's hand and passed him a folded stack of $800 in cash. (U.S. dollars, that is. There are no tangible bitcoins.) Neo fiddled with his smartphone, and the tattooed dude, eyeing his laptop, said the transfer had begun.
Neo, sporting dark sunglasses, explained that he bought 700 Bitcoins a year ago and almost forgot he had them in his virtual wallet. Now, however, as interest in this digital currency has grown, he intends to sell them off and profit $100,000. Neo didn't say how much he'd paid for them, but a year ago, Bitcoins were selling for about $15 apiece.
Bitcoin is said to have been created by an anonymous computer programmer (or programmers) called Satoshi Nakamoto. This pseudonym is a male Japanese name, but it's never been traced to a real person and no one knows for sure if one or many individuals created the electronic currency, which operates via open-source software and is shared through peer-to-peer networks. It was released through the internet in January 2009.
Any time multiple people agree that an item -- be it gold, silver, livestock, or an encrypted electronic signal -- has value, it can be traded as currency. Ever since the United States moved off the gold standard in 1933, there's not been anything tangible to back up ours; our dollars have value only because billions of people agree that they do and accept them for trade. Bitcoin likewise will stabilize if and when more people believe it is valuable and more retailers accept bitcoin in exchange for goods. Overstock.com began accepting it at the turn of 2014. Vegas casinos began accepting bitcoin this week. Some South Florida businesses are now accepting it as well. The North American Bitcoin Conference takes place this Saturday and Sunday in Miami Beach. (Visit btcmiami.com).
Bitcoin is traded online -- outside of any established system, independent of banks, beyond any central authority, and unregulated by any government. This makes the currency easy to transfer yet harder for anyone to control. Proponents say this is a good thing because it can unite the world on one currency and work independently of corrupt banks. But Bitcoin was also used by people buying and selling drugs on an internet site called Silk Road, and there is potential for it to be used for money laundering. China has banned banks from trading in bitcoins. Some predict that it could replace gold or the U.S. dollar and have unknown effects on world financial systems. Others say it's a bubble that will crash. Because of all these concerns, the currency has a bit of an outlaw air.
Neo seemed nervous as he noticed me listening in. "Oh, who are you?" he asked. Brian assured him I was cool. To be friendly, I asked Neo where he lived.
"Around," he responded.
Soon after, he walked off.
Brian and his tattooed friend explained they had met Neo on an online bitcoin forum. "How do you know you can trust that guy?" I asked.
"We don't know. That's why I just bought one [coin]," says Brian.
"The transfer is pending right now, but if this one goes through, we'll call him tomorrow and buy ten more," Brian said. Bitcoins can also be bought in fractions -- you can get just $20 worth.
Dr. Charles Evans -- bitcoin advocate, Fort Lauderdale resident, and a finance and economic instructor with Florida Atlantic University -- explains the beast that is bitcoin. He is an organizer of Miami International Bitcoin, a business networking group that serves 400 people from around the world.
"I was involved in e-currency in the 1990s, and then our industry dried up," Evans says. "I've been teaching finance and economics the past ten years. When I first heard about bitcoin, I was skeptical at first, and some people told me that it was for real. And it became clear to me that it could become the currency of the developing world."
He explains, "Eighty-three percent of the world population lives outside the [Organisation for Economic Co-operation and Development; i.e., outside of wealthy nations]. The vast majority of them don't have bank accounts. And a huge portion of them own smartphones. So they don't have bank accounts, but they do have smartphones, which means I can send bitcoin to anyone who has a smartphone -- in the world. That includes, for example, a small-scale coffee grower in Guatemala that is too small to deal directly with Publix or Costco. Multiply that by 100 million and the world will be a better place."
Evans predicts South Florida businesses will begin accepting bitcoin this year because of visitors coming in from other countries who have bitcoin.
"This is not make-believe," he insists.
In Miami, Latin House Grill accepts bitcoin, as does Planet Linux Caffe in Coral Gables. Vanity Cosmetic Surgery in Hialeah is getting a ton of buzz -- it will sell fake boobs for bitcoins! Barker Animation at Gulfstream Park in Hallandale sells artwork in exchange for bitcoin, and you can buy flowers in bitcoin at Wellington Florist. Miami Beach-based Advantaged Yacht claims to be working on the first boat ever bought with bitcoin right now. A Southwest Florida-based app called CoinScout helps users locate bitcoin-friendly retailers.
"Most of the transactions that I'm aware of are either speculators or people who are using bitcoin to send money to family in Latin America," Evans says. The currency is growing especially in Argentina, Venezuela, and Brazil.
His wife, Angelina, has started a business, Bitcountant, that focuses on bitcoin accounting and compliance, "because there's a lot of regulation with bitcoin," Evans says. So far, her clientele is mostly from California and Nevada.
"If I pay you with bitcoin, I have to pay taxes. We have to look at tax obligations, and most people are unaware of 'the rules of barter,'" he explained.
Anyone looking to buy bitcoin need not meet clandestinely in coffee shops, Evans says; they can go to an online outlet like CoinBase, a San Francisco-based seller. "Bitcoin sells for $820 at the moment for a whole unit," Evans says.
Bitcoin has gained more traction than other prior attempts to create electronic currencies because, Evans explains, there is "basically a huge spreadsheet out there that's transparent called the blockchain [online at blockchain.info]. Everybody has access to every transaction that happens. This is what keeps it honest, and this is what keeps its power: its transparency, and it is secured with military-grade encryption."
Also, because there is a finite number of bitcoin, its value goes up as demand puts pressure on supply. "It's scarce because there are only so many," Evans says. Ever since the U.S. went off the gold standard, the U.S. Treasury manages the number of dollars in circulation by printing more money or taking it out of circulation. But with bitcoins, "there's a fixed quantity. Going back three years or so, the early adopters sat around and decided what it was worth -- and they bought and sold it, and the market discovered its price. The price is based on what one is willing to accept," Evans explains.
"The best way to think of this metaphorically -- 'What is this?' -- is to imagine I had a box full of poker chips, and you and I were convinced that you cannot counterfeit the poker chips, and it turns out I can spend these things from my smartphone from anywhere around the world. And the transaction record is available for everybody to see, so I can't cook the books," he says. "And this industry is creating new jobs."
He's not surprised that sunglass-clad men are meeting up to deal bitcoin because "where there's money, there are colorful characters." Even when transactions are sold under the table, he explains, when the electronic transfer occurs, the blockchain notes that coin is being moved from one virtual wallet to another, even if the users' real names are anonymous. The government has ways to track bitcoin users, he says -- that's how Silk Road got busted.
"It's not as secretive as people think."
-- Andrea Richard
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