It’s been a tumultuous month for the virtual currency bitcoin. Last week, Newsweek Magazine ran a cover story unmasking Bitcoin’s founder, Satoshi Nakamoto, only to have the subject of the article deny he’s the guy. And Mount Gox, formerly one of the largest bitcoin exchanges in the world, filed for US Bankruptcy Protection after losing millions of dollars worth of bitcoin.
Bitcoin is difficult to understand, and its worth is extremely volatile. Still, the number of people using it has grown exponentially in the last year, from 300,000 in early 2013 to over 2 million today.
Among those users is Michael Cargill, the owner of Central Texas Gunworks in Austin. The firearms shop started accepting bitcoin as payment in January, and about a month later, installed a bitcoin ATM machine. He says even though he’s only made about 5% of his sales using bitcoin, the attention he’s garnered has increased business by about 50% overall.
Cargill and others who are relatively new to the currency are called ‘small-change’ bitcoiners. They’re self-professed geeks, technologists and small business owners who got into it out of curiosity more than anything else. Small change bitcoiners make up the majority of bitcoin users, but they only hold a small sliver of the 12.5 million bitcoins currently in circulation.
“Now the vast majority of bitcoins are actually held by less than a thousand people,” says Michael Terpin, co-founder of BitAngels, which is an angel network for bitcoin investment, “These are the people who got in early, and haven’t sold.” A recent Forbes article said that over 90% of bitcoins are not liquid. But some economists predict that’s about to change. They think that as more people use bitcoin, and more bitcoin is created, its value will come back down to earth.
Central Texas Gunworks owner Mike Cargill encourages people to educate themselves on bitcoin, and the other forms of cryptocurrency out there: Litecoin, Dogecoin, Guncoin… there’s even Coinye West.
Big businesses are starting to catch on to the perks of using bitcoin. Overstock.com started accepting in in January. Fred Ehrsam, the co-founder of bitcoin startup Coinbase, says that he expects even more big merchants, like Target and WalMart to start accepting bitcoin by the middle of this year.