Local Durham bakery accepts bitcoin despite shaky future of currency
Posted February 26, 2014 7:24 p.m. EST
Updated February 26, 2014 11:50 p.m. EST
Durham, N.C. — The high-profile collapse of bitcoin exchange Mt. Gox on Tuesday has some people wondering if the experimental currency is already dead, but one Durham business said it's still committed to bitcoin.
Rise Bakery, at 8200 Renaissance Parkway, started accepting the virtual currency as payment last week after owner Tom Ferguson said he got tired of paying credit card fees to banks.
"We just recently raised the minimum wage here to $10.10 an hour, so if we can lower what we're paying in fees, we're winning," he said.
Bitcoin is currency used via smartphones, tablets or computers and is neither issued by a bank nor regulated by the United States government.
Jameson Lopp uses bitcoin and said the lack of third-party oversight is what makes the currency great because users set the value themselves.
"People say bitcoins have value, and they then transfer them amongst each other in exchange for other goods and services," he said.
But the value of bitcoin has been volatile. In December, one bitcoin was worth about $1,200. When Tokyo-based Mt. Gox, one of the largest bitcoin exchanges that existed, closed on Tuesday because of a system hack, the currency was worth only about half that much.
Now, just under 750,000 bitcoins - with a value at some $375 million - are missing, meaning the people who held them have no recourse.
But Lopp says this story is more about Mt. Gox as a company than bitcoin as a currency.
"We're basically letting this incompetent company fail and better companies are going to replace it," he said.
Despite the unclear future of bitcoin as it struggles to become a viable currency, Ferguson said he's trying to do his part to keep the currency alive and thriving. He said more than 20 people have used bitcoin to purchase items from Rise since Friday.
For those interested in getting into bitcoin, it can be complicated. Lopp said potential users need to learn about it before taking the plunge. To find more information about bitcoin in the area, a group called the Triangle Bitcoin Meet-up holds meetings teaches people about it.
Bitcoin Crash Course:
- The currency, which is basically lines of computer code that are digitally signed each time they travel from one owner to the next, was launched in 2009 by anonymous person or group of people.
- Bitcoin operates outside of traditional banking systems, allowing users to set their own price and make purchases directly without a middle man. Initially, the virtual currency was traded back-and-forth, but when the market strengthened, the value of each bitcoin increased.
- A network of tech-savvy users called miners keep the system honest by pouring their computing power into what's called a "blockchain." The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts the occasional bitcoin gift. As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.
- An exact number of bitcoin users is unknown, but it's estimated that about 60,000 to 70,000 bitcoin transactions happened in the past year.
- Creating a bitcoin wallet, a website or program that stores a person's bitcoin, allows users to make transactions. After a wallet is made, people can ususally buy bitcoin directly with any other currency.