Reflections on Bitcoin – 9

Posted by John Patrick on

Bitcoins in a Jar

Bitcoin continues to gain momentum. There are different estimates of how many merchants accept BTC, but there are thousands. Coindesk said that innovative merchants have been installing bitcoin payment-processing services in their stores and integrating it into their POS and ordering systems. Coindesk points out that bitcoin is a great way for merchants to appeal to tech-savvy customers. Some recent and notable additions to the merchant list include DISH, 1-800-flowers.com,  Newegg, Expedia (for hotels), New York Holiday Inn, Digital River, and 1000bulbs.com. Although no commitments were made, eBay CEO John Donahoe said that PayPal “will have to integrate digital currencies”.

On the government front, the U.S. Marshals Service conducted an auction of 30,000 bitcoins that were seized in a raid of Silk Road, an illegal drug operation. The value of BTC was lower the week prior to the auction, perhaps in anticipation that “dumping” 30,000 BTC would depress the price. I did not think so, because there are nearly 13 million BTC in circulation. As suspected the auction went off without a hitch and the price of BTC then rose more than ten percent. Venture capitalist Tim Draper was reported to be the sole winner of the auction. In partnership with a startup named Vaurum, Draper plans to use the BGT as a source for new trading platforms in emerging markets. This should further cement the global role of BTC in countries with unstable currencies. Since the supply of BTC is limited by the bitcoin algorithm, expanded use of BTC should mean the value of BTC will increase.

On the exchange and software front, Coinbase announced that they will be offering bitcoin vaults. Bitcoin wallets are great for day-to-day spending, but storing more significant amount of bitcoin you may be holding as an investment is more suited to the Coinbase Vault, which will add an extra layer of security. I look forward to adding a vault to my Coinbase account.

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