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at adventure and an independent movie career. They embarked on a road trip in
the United States and abroad, during which they not only introduced a number of
people to the fledging currency but eventually even persuaded them to use it. After
scouring Provo, UT, they found one grocery store, LoLo's Fresh Food Warehouse,
that would accept the currency. They also found one auto insurance company that
would take bitcoin. The single hardest thing to get regularly was someone who
would accept bitcoins for gasoline.
Mr. Craig's employer agreed to pay him in bitcoin. The couple found travel agen-
cies in Germany that accepted bitcoin and, through them, arranged their hotels and
flights for the world tour. They rented a car with bitcoin from Five Star Auto Direct
in Orem, UT, which also helped sponsor the film. At every stop, they found at least
one bitcoiner willing to help so that the Craigs managed to live on bitcoin for over 3
months engaging in their bitcoin-affirming adventure (Vigna, 2013).
There has been sufficient interest in the currency that it is now being discussed
in investing conferences. There are even international conferences that focus on
bitcoin and virtual currencies. Table 10.3 provides a partial list of such conferences
for the year 2014 alone.
The fame or notoriety of bitcoin is usually measured by the news about Tokyo-
based Mt. Gox, the most publicized of bitcoin failures. In
The Wall Street Journal
,
Galston (2014) describes the failure as a virtual-wallet bankruptcy. Users store their
bitcoins in virtual wallets that can reside in exchanges like Mt. Gox. If such exchanges
are to be successful, they must be able to avoid the following: fund seizures by govern-
ments and regulatory agencies, the malfunctioning of poor payment processors, and
weather the storm of technical accounting incongruities. Mt. Gox's failure was not
unique, and it will not be the last one. Other bitcoin exchanges may be likely to fail
unless operational problems such as the prevalence of gray-market processing, possi-
ble government seizures of funds because of the unclear regulatory environment, and
the lack of ring-fencing around customer deposits are eliminated. This was evident in
the hacking of Mt. Gox, which occurred before the bankruptcy. The hacking caused
it to lose a substantial amount of bitcoin owned by its customers (Galston, 2014).
Bitcoin's value, when expressed in U.S. dollars, has been subjected to wild
swings. This prevents bitcoin from being widely accepted as money even though
using virtual electronic currency can be easier than carrying cash and more secure
than using a debit or credit card. Because most people still cannot grasp the deri-
vation of bitcoin from complex algorithms mined by computers, most ordinary
people do not partake in its derivation and use. Without a large base of users, vir-
tual currency values will continue to be subjected to unpredictable swings in value.
Therefore, it cannot be reliably counted on as a store of value, a means of deferred
payment, a unit of account for the valuation of goods and services, and a medium
of exchange—the four functions of money referred to previously.
The volatility of bitcoin's value will continue as long as its acceptance remains
very limited because relatively small events can trigger a big change in its value.
Over time, as the usefulness of virtual currency becomes more widely accepted,
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