Stavropoulus, owner of The Diner restaurant in the
trendy Adams Morgan section of Washington, D.C.,
decided recently to have the national capital's
first bitcoin ATM machine installed in his eatery.
— As customers ate lunch at a popular restaurant in
Washington’s Adams Morgan neighborhood, few had any
inkling they were on the front lines of an international
monetary war that’s featured FBI raids, the Deep Web,
allegations of money laundering and millions vanishing
in a nanosecond.
to mention predictions of the demise of cash.
Diner, as the Adams Morgan eatery is aptly named,
recently installed Washington’s first ATM for bitcoin,
a controversial digital currency with fierce advocates
and ferocious critics.
fans, who tend to have a libertarian bent, say it’s a
revolutionary way to move money quickly and anonymously
from one point to another — whether around the corner
or across international borders — with no middlemen,
no fees, no central banks, little regulation, no
collection of personal data and almost impenetrable
Republican Rep. Ron Paul, who first ran for president in
1988 as a Libertarian Party candidate, said the bitcoin
was a welcome newcomer in "the terrible monetary
system" that held sway in the United States.
have a government that purposely counterfeits and
debases the currencies, and I believe that the
alternative would be a competition," Paul told the
Quora online-interview website last spring.
"Anything that wants to substitute for the American
dollar should be permitted. There should be no
prohibitions; there should not be a monopoly and a
cartel running our monetary system because it so often
benefits the privileged few. … Bitcoin is an
introduction to that."
bitcoin is an encrypted "cryptocurrency," with
each transaction tied to a unique 32-digit code of
randomly generated numbers and letters, it can’t be
stolen from a gas pump the way thieves use a simple
device to lift credit card account numbers.
"core developers" — some of the world’s
best software engineers — oversee the bitcoin’s
international network, tied to 100,000 computers.
by hundreds of anonymous "miners," they
maintain a public "blockchain," a digital
ledger that records every bitcoin transaction with a
32-digit code. Each public code, in turn, is linked to a
32-digit private code known only to the bitcoin owner.
The miners use mathematical equations and algorithms
that bounce around the globe instantaneously to verify
the authenticity of each transaction.
I got into bitcoin in July 2010, I thought it was
impossible," Jeff Garzik, an Atlanta-based software
engineer who’s one of the core developers, told
McClatchy. "They proved me wrong."
to its enigmatic status, the bitcoin’s origins are
shrouded in mystery.
2008, someone using the alias Satoshi Nakamoto posted a
white paper outlining the bitcoin in concept to an
e-group of computer geeks. The following year, the
anonymous genius uploaded open-source software to the
Internet to implement it.
and the other core developers emailed with Nakamoto for
two years as they expanded the digital currency Nakamoto
had invented and learned how to run it. Despite their
skill at tracking all things digital, however, they
never learned Nakamoto’s real name, gender,
nationality or location. Then, circa 2011, Nakamoto went
silent. No one has heard from him or her since.
he signed off a few years ago," Garzik said.
the kind of understatement brilliant software engineers
are prone to employ, Garzik added: "He was above
average at protecting his anonymity. He didn’t leave
any data points."
now, bitcoin has attracted an intense, if limited,
tell you why the bitcoin is one of the best things ever
invented," Andy Mahoney, an ATM scout who finds
merchants willing to accept the machines, told
McClatchy. "For the first time, a person can send
another person money anywhere on the planet
instantaneously with virtually no costs. It’s
completely safe and secure and encrypted, which means
you’re sending your money anonymously."
counter that these purported strengths of the bitcoin,
which is currently trading for about $298 apiece — it
varies slightly on different exchanges — are really
underlying technology has great potential, but I’m
skeptical of the raw, unregulated, anonymous form of
bitcoin," said Mark Williams, a former Federal
Reserve examiner who teaches finance at Boston
University. "It avoids the controls that have been
created by our banking system, and it’s void of
consumer protections. If your ‘bitcoin wallet’ gets
picked digitally, there’s no way to trace it back to
the culprit. You’ve lost everything."
has earned the ire of bitcoin enthusiasts, who’ve
taken to superimposing pictures of Dr. Evil on his
Internet photos. He delivered critical testimony to
Congress last year and made a skeptical presentation to
the World Bank. He also went toe-to-toe with Netscape
founder Marc Andreessen, a big bitcoin investor, in
dueling opinion columns.
call these bitcoin ATMs ‘automatic betting machines,’"
Williams quipped to McClatchy. "It’s the only
machine where you can put in real money and get out fake
people who use a BTM — insider lingo for a bitcoin ATM
— have an app-like "bitcoin wallet"
downloaded to their smartphones, which has an embedded
bar code that they hold up to the BTM screen during an
or digital fractions of them, flow into or out of the
virtual wallet depending on whether they’re being
bought or sold. Ninety percent of the transactions at
the 310 or so BTMs worldwide, with about 60 in the
United States, involve people exchanging dollars for
thought to be about $4 billion worth of bitcoin in
circulation, but only a portion of that is being used
— partly because speculators are hoarding it, partly
because few merchants accept it.
bitcoin transactions don’t involve BTMs or purchases,
but are instead direct person-to-person transfers. Want
to send your college daughter some money? Open your
phone’s bitcoin wallet, enter the amount and punch in
her wallet’s unique code. She’ll have the money
moments after you hit the SEND icon.
and other critics, however, think the bitcoin is
tailor-made for Internet pornography, gambling, money
laundering and other illicit activities because it’s
hard to trace and operates outside long-standing fiscal
one bust, on Oct. 21, 2013, FBI agents raided the San
Francisco offices of the Silk Road, a bitcoin-based
online black market. They shut down its operations and
arrested its proprietor, Ross William Ulbricht.
the pseudonym Dread Pirate Roberts, Ulbricht is accused
of selling illegal drugs via a hidden Internet service
called Tor on what’s called the Deep Web, or Deepnet,
because it’s configured to elude standard search
engines. His trial begins Jan. 13.
BU’s Williams, the bitcoin’s wildly fluctuating
value — which spiked to almost $1,200 a year ago but
has dropped to its current rate of about $298 — makes
it much riskier than standard currency and even gold or
its current form, the bitcoin is extremely
dangerous," Williams said. "It needs to be
amply tested before it’s allowed to be unleashed in
our global economy."
acknowledges that Andreessen, venture capitalist Tim
Draper and other Silicon Valley heavyweights are
investing heavily in bitcoin-related firms.
have a lot of smart money behind bitcoins, but smart
money can make bad decisions," Williams said.
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Garzik, as big a bitcoin booster as they come and more
knowledgeable about it than virtually anyone else on the
planet, said its future might not be as a widely used
currency but rather one that saw its technology adapted
toward other useful and profitable ends.
foresees the day when the underlying software and
related technology will be used to move other things of
value securely among people, almost instantaneously and
with full transparency.
are various projects to try to use that technology not
for currency purposes but to repurpose it to track
ownership of stocks, cars and houses," he said.
"You could take one-thousandth of a penny worth of
bitcoin and attach it to a property deed, a car contract
or a stock certificate and transfer ownership using the
blockchain. In that case, the bitcoin itself would be
just a token. Its monetary value would be functionally
those lines, Cameron and Tyler Winklevoss, 2008 U.S.
Olympic rowers who’ve become major Internet
entrepreneurs, place the value of the overall bitcoin
system at $400 billion — 100 times greater than the
value of all the bitcoins in circulation.
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its eventual fate, bitcoin as currency has relatively
few users so far — whether consumers or merchants —
except for some hotspots in Portland, Ore., New York,
Las Vegas, British Columbia, Canada, Europe, Hong Kong
and a handful of other locales.
month, financial services regulators in New York, the
first state to craft rules for digital currencies, said
start-ups and other small business that wanted to use
bitcoin could get two-year BitLicenses.
The Hague, the Dutch seat of government, which aspires
to become the bitcoin capital of the world, 100 BTMs are
being installed in the central district. In March, nine
restaurants and an art gallery on two facing canal
streets began accepting bitcoins as payment on what they
pegged Bitcoin Boulevard.
Rose is the chief executive officer of Genesis Coin in
San Diego. His firm wrote the software used on the BTM
in the Adams Morgan diner and in scores of other bitcoin
ATMs elsewhere in the world.
Rose is uncertain whether bitcoins will become widely
used currency, he thinks that more consumers are
spending them now than meets the eye.
online firm called coinforcoffee.com, for example,
allows Starbucks drinkers to use bitcoins by converting
them into digital Starbucks cards. More broadly,
gyft.com converts bitcoins in selling virtual smartphone
gift cards to dozens of the country’s biggest retail
are a lot of third-party services that integrate
bitcoins with merchants," Rose said.
"Starbucks, Best Buy, Wal-Mart and other stores may
be accepting bitcoins without knowing it."
going to wait and see’
bitcoin’s slowly growing popularity, Germany is the
only country known to have classified it as a currency.
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nations place heavy restrictions on bitcoin’s use,
while China and Russia are among those that have
outlawed it as legal tender.
U.S. government regulated bitcoin commerce for several
years through the Financial Crimes Enforcement Network
at the Treasury Department — not exactly a show of
confidence in the digital currency.
years ago, Mahoney convinced Constantine Stavropoulos,
owner of The Diner, to put an ATM in the restaurant.
Earlier this year he persuaded the Greek-American
entrepreneur, who has six eateries and coffeehouses in
Washington, to host a BTM.
BTM, near The Diner’s entrance, has done 74
transactions since it was installed Nov. 24.
McKee, who owns and operates both machines, had to jump
through endless regulatory hoops to install his BTM. It
took eight months of wrangling before officials with the
Department of Insurance, Securities and Banking in the
District of Columbia signed off on the plan.
had a lot of questions," McKee recalled. "It
wasn’t on their priority list; let’s put it that
way. This is a new technology. The lawyers were trying
to figure it out, the regulators were trying to figure
it out, everyone was trying to figure it out. There were
a lot of hands in the pot trying to make a yes-or-no
must carry tens of thousands of dollars in cash as he
restocks dozens of traditional ATMS in the greater
Washington region. By contrast, the BTM at The Diner,
his first and only so far, requires only a few thousand
dollars because it’s seeing less action.
of the reason may be Stavropoulos himself, whose
contradictory approach to bitcoin symbolizes the broader
debate around the digital currency.
being excited about hosting the city’s first BTM,
Stavropoulosdoesn’t accept bitcoin for payment at his
are going to discover whether or not this thing is going
to be the wave of the future or just a fad,"
Stavropoulos said recently as he nursed a cup of coffee
at The Diner’s counter. "We’re going to wait
and see. If it turns out that a lot of people use
bitcoins in the city, we would probably considering
is an encrypted "cryptocurrency," with each
transaction tied to a unique 32-digit code of randomly
generated numbers and letters.
"core developers" oversee the bitcoin’s
international network. Helped by hundreds of anonymous
"miners," they maintain a public "blockchain,"
a digital ledger that records every bitcoin transaction
with a 32-digit code. Each public code, in turn, is
linked to a 32-digit private code known only to the
miners use mathematical equations and algorithms that
bounce around the globe instantaneously to verify the
authenticity of each transaction.