U.S. Senate informational panels deemed it legitimate. Detractors dismiss it as unstable and a vehicle for criminal trade. China has banned new deposits on its largest exchange.
Bitcoin, the international digital payment system and currency and one of the hottest technology and finance topics this past year, could become a widespread vehicle for trade, believe the leaders of a Miami group. To further that view, Miami International Bitcoin will be participating in the North American Bitcoin Conference slated for Miami Beach in January.
“The thing that’s really exciting about bitcoin is that, here in South Florida, we have a half billion people to the south of us who do not have access to a banking system that works well, capital markets, credit – things that we take for granted,” said Charles Evans, business professor at Florida Atlantic University and one of the founders of Miami International Bitcoin.
“I fully expect that Miami could become the ‘Silicon Valley’ of small-scale international finance,” said Evans, who will speak at the conference. “I defy anybody to do business in South Florida without doing international business.”
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Bitcoin began in 2009 as an electronic payment system and currency allowing for peer-to-peer payments and financial exchanges without financial regulation or a third party, such as a bank. Users establish an online wallet using their local currency and exchange with other bitcoin owners.
The 2014 conference will take place Jan. 24-26, and is expected to draw more than 500 members of the bitcoin community.
Proponents like Evans see bitcoin as a potential payment solution that facilitates international trade without requiring currency exchange, especially in regions like the Caribbean and the Americas where cellphone and technology usage is increasing. In Venezuela, for example, there are 30.5 million cell users, a number that tops the country’s actual population, according to National Telecommunications Commission data.
Because bitcoin can be transferred via smartphones, Carlos Parra, an economics professor at Florida International University, believes there’s a chance to impact impoverished and underserved residents in countries like Venezuela.
“If it turns out that bitcoins end up having less volatility than the national currency, then people at the bottom of the pyramid in Venezuela, for them it would be easier to use bitcoins,” Parra said. “Bitcoins would be very useful for international transfers. Most of the remittances to the Caribbean come from Miami and they are making a lot of inroads with mobile money.”
But understanding the currency and overcoming skepticism remain potential challenges for international expansion and acceptance. “There’s the connotation that it’s used for black markets and illegal purposes. From the public affairs side of things, a company wouldn’t want to be exposed to that, even if it’s an indirect relationship,” Parra said.
Recently, bitcoin took a hit in value when BTC China, the largest bitcoin exchange in China, said it would stop accepting deposits for bitcoin in the local currencies, renminbi and yuan. Bitcoin’s exchange rate dropped from more than $1,000 to as low as $300, and then rose again to more than $600, all in a matter of days.
“The run-up we saw over the last month or so was unsustainable,” Evans said. “It was based on high expectations that people in China would be able to use bitcoin in a way that is not the case.”
Such instability creates yet another hurdle for bitcoin advocates – and a huge risk for those who are thinking of investing in bitcoin or related enterprises.
For individuals who have already invested, bitcoin advocates want to also let people know the currency is still highly vulnerable to hacking.
Sean Emmanuel co-founded Bot Revolt, a sort-of bitcoin “antivirus,” to help educate people about bitcoin if they invest. Subscribers pay monthly or annually to have Bot Revolt monitor their bitcoin exchanges to prevent illicit activity and hacking.
“Pushing out the word and getting people to understand that there are better ways to protect your bitcoin is one of the tougher things in the world,” Emmanuel said.
Emmanuel and his team, which is based in Pompano Beach, plan to launch the beta version of the website bitcoin Intel in January, to track price movements. As the value continues to rise, Evans warns that new converts to bitcoin should remain cognizant of trends, like the recent and ongoing crackdowns in China.