AUSTIN – Bitcoin -- the virtual currency that has ignited the imagination of techies, investors and investigators -- has come to Texas.
On Thursday, organizers unveiled one of the USA's first Bitcoin ATMs in the back room of a downtown Austin bar. Other Bitcoin machines have sprouted in Boston and Albuquerque, but those offer only Bitcoins for cash -- not cash for Bitcoins. The Austin ATM would be the first of its kind in the USA to dispense cash.
The Austin ATMs are being rolled out in time for SXSW, the three-week interactive/film/music conference that begins March 7.
DAILY CHAT: Would you use a Bitcoin ATM?
Launched in 2009, Bitcoin is a decentralized digital currency that is traded mostly online and person to person rather than through banks. Started by programmers whose identity remains anonymous, the unregulated cyber currency has been gaining popularity in the USA and accepted as payment at scores of businesses.
The first Bitcoin ATM was set up at a Vancouver coffeehouse last year. Austin, known for its vibrant tech community as well as scores of music clubs, was a natural spot to launch one of the first U.S. Bitcoin ATMs, said Jordan Kelley, chief executive of Robocoin, the Las Vegas company that makes the machines.
"We're really excited about the community and culture Austin has," he said. "And it's a fantastically central location. It's right on the 50-yard-line of the U.S."
The ATM is at the Handlebar, a hipster hangout on East Fifth Street in Austin. The machine will scan a user's palm print and government-issued ID to verify identity, then allow the user to add money to a virtual Bitcoin "wallet" or withdraw the currency to a mobile phone app, Kelley said.
The machine will also perform a one-time face recognition scan to verify identity. "All you need is your phone, your ID, your palm and your face – all the things people carry with them on a daily basis," he said.
Bitcoin, which could be used to buy anything from a steak dinner to sporting event tickets, has had its share of controversy.
Bitcoin, a form of currency not regulated by the Federal Reserve, is growing in popularity. While those who invested early are pleased with the growth, some admit the concept is a little confusing. VPC
Federal agents charged a Bitcoin dealer last month with money laundering for allegedly selling more than $1 million worth of the cyber currency to people on a black market website that deals iin drugs and illicit goods.
And last week hackers forced the shutdown of Bitcoin's largest exchange service, Bitstamp, for several days. But the popularity of the virtual currency continues to climb, trading at more than $600 per Bitcoin, according to Bitcoin websites.
Use of Bitcoin's will only continue to surge, said Antonis Polemitis, manager partner of Ledra Capital LLC, a New York venture capital firm investing in Bitcoin-based companies. Bitcoin today is at the level where the Internet was in 1994 or 1995, with 20 years of application in its future, he said.
"It really allows people to interact with each other to exchange value – whether it's currency or other types of assets – without a central party in the middle," Polemitis said. "It's mind-blowing."
Reza Piri, an Austin web developer and entrepreneur, met with Kelley last month while on his bachelor party in Las Vegas. After a morning meeting, he was buying two of the $25,000 machines and bringing them back to Austin. He plans to showcase one at SXSW, when more than 30,000 tech enthusiasts and industry leaders are expected to descend on the city.
"Austin is perfect for this," Piri said. "We want to make (Bitcoin) mainstream and bring it to the people."