Bitcoin Currency Gains in Popularity

More people using online money, but security risks remain

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    NEWSLETTERS

    8/5/14: More and more people are using Bitcoin online money, but security risks remain. Tammy Leitner reports for NBC 5 Investigates. (Published Tuesday, Aug 5, 2014)

    Bitcoin, a mysterious currency that first appeared five years ago, is widely accepted as more people embrace the digital money. But it is not without controversy.

    "I started getting more into it when a poker site I was playing announced they would have cash-outs in Bitcoins," said Chicago resident Jason Lademan.

    As a financial analyst, Lademan specializes in U.S. currency. But he believes Bitcoins are the currency of the future.

    "I figure if people aren't using it then it doesn't have value," said Lademan. "And people are starting to use it a lot more."

    Bitcoins are digital cash sent through the internet. They are bought and sold at online currency exchanges. Bitcoins are kept in a digital wallet, which is stored on a computer or phone. Bitcoins are then transferred online from person to person.

    "Right now you can buy a lot of stuff with Bitcoins," said Laderman.

    Bitcoins are accepted at restaurants and stores throughout the United States. They can also be used to buy airline tickets, computers, NBA basketball tickets, a Subway sandwich, a house, London theater tickets, flowers and believe it or not they can even be used on dating sites.

    "Just like you were buying on Amazon or Best Buy," said Charles Allen, the CEO of Bitcoinshop.us, an online store with 140,000 items.

    "I think there's a big opportunity in the international markets where there are countries that don't have products that are offered. For instance, in Argentina you may not be able to get certain products that you can get in the United States. And a big reason is the retailer in the U.S. won't ship to or won't accept someone's credit card from Argentina."

    Bitcoin has gained acceptance and popularity, but it also comes with risks.

    "Bitcoin has proven it can scale to a level that no one imagines," said Andreas Antonopoulos, who is regarded as one of the most publicly recognized security experts in the field of crypto currency.

    But there is no central bank or agency regulating the currency.

    And that means there are still questions as to whether Bitcoin transactions are secure.

    "The underlying network is extremely secure," he said. "The wallets where you control your own money - those are pretty vulnerable. And the reason they are vulnerable, we put them on devices that are not designed to carry money -- your smart phones, pcs and laptops."

    Antonopoulos is a fervent advocate of Bitcoins. But he admits this roughly $6-$8 billion dollar industry is not yet where it needs to be in terms of security.

    "It's going to take a while until Bitcoin wallets and the systems that average users use, are easy enough to secure and use for day to day activity."

    Bitcoin Security experts recommend that you don't store your Bitcoin wallet on a phone or laptop. Instead they suggest keeping it in an offline storage device.

    In the meantime, people like Jason Lademan say he will continue to take a gamble on what some are calling the currency of the future.

    "I feel like Bitcoin or some other kind of crypto currency is here to stay," he said. "It's just too good of a technology to not exist."
     

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