Bitcoin

Bitcoin VIP: The Internet Had a Shady Start, Too

Bitcoin VIP: The Internet Had a Shady Start, Too

Bitcoins

Image credit: Zach Copley | Flickr

Without dealings in the "grey areas" of the global economy, bitcoin might not have grown to be worth the $3 billion it is today, according to Gavin Andresen, the closest thing the digital currency has to a CEO. 

Andresen, a self-confessed "all-around geek", is chief scientist at the Bitcoin Foundation, a non-profit group he helped set up three years ago to support and promote the digital currency.

The original "cryptocurrency", bitcoin is increasingly accepted as payment for goods and services over the Internet. But detractors are concerned about how bitcoin makes it easier for users to make purchases anonymously.

Andresen acknowledged it has been used in the United States for online gambling, which was effectively outlawed there until December 2011, with banks barred from transmitting bets.

It also played an important role in the function of the Silk Road online marketplace, which sold drugs and other illegal or contraband goods until it was closed in 2013.

"Without those uses maybe it would have taken longer (for bitcoin to get to where it is)," he told Reuters over coffee at a conference organized by the Bitcoin Foundation in London, where a push into financial technology is making the city a hub for the virtual currency..

In its early days, "the Internet was for porn. That was the story," said Andresen, who graduated from Princeton with a degree in computer science in 1988 and took a job in a 3D graphics company in California's Silicon Valley.

"If you look at a lot of technologies, they start in the shadows – in the grey areas, the black areas – and then eventually they become mainstream. I think bitcoin has seen the same evolution."

Andresen took over the bitcoin empire in 2011 from Satoshi Nakamoto, an elusive figure credited with founding bitcoin in 2009. Some "bitcoiners" have suggested Andresen and "Satoshi", as he is widely known, are in fact the same person, and some have said Satoshi may in fact be a team of developers.

Andresen denies he is Satoshi, and says he has never met him.

"There are some questions I'm sick of giving answers to. Don't ask me if I'm Satoshi," Andresen said at the conference, which took place on the site of the old Royal Mint where Britain's coinage was produced for 200 years.

Andresen said he was chosen via an email in which Satoshi said he was moving on and leaving Bitcoin "in the good hands of Gavin and everyone". He then changed the contact on the Bitcoin website from his email address to Andresen's.

Bitcoin has come a long way since 2010, when it was first used to make a payment -- 10,000 bitcoins for pizza. One bitcoin is currently worth around $220.

Leading companies, including International Business Machines and governments, are showing growing interest in the technology that underlies it.

The currency is not backed by any government or central bank and floats freely, fluctuating according to user demand. Like many bitcoiners, Andresen sees the lack of centralised oversight liberating users of the digital currency.

"My vision is really to give people more control over their money in the financial world," he said.

One advantage of bitcoin often cited is the ability to send money instantaneously and cheaply to other users anywhere in the world. All a user needs is an Internet connection, whether or not they have a bank account, credit card or even an address.

Andresen's ambition is for bitcoin to reach a billion people, with the developing world -- where many have smartphones but not bank accounts -- seen as ripe for greater use.

"If the goal is just the 10,000 richest people in the world using bitcoin, frankly I'm not interested."

Bitcoin's value has been highly volatile, having peaked at over $1,200 in late 2013 before crashing in the wake of a $500 million hacking attack on Tokyo-based bitcoin exchange Mt. Gox in early 2014.

Such an attack could happen again, Andresen says, and warns against investing too much in bitcoin for now.

"I hate hearing people who say they invested their life savings in bitcoin. Don't do that. And I have not done that personally," he said. "Bitcoin is an experiment."

So how many bitcoins does bitcoin's chief architect have? Andresen preferred not to give that away.

"Fewer than many people think," he said.

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