SAGINAW, MI (WNEM) –
The online currency known as bitcoin has a checkered past, often being used by drug dealers or to buy illegal items on the now shutdown website Silk Road.
But despite its controversial history, bitcoins are gaining popularity across the globe.
Andrew Coutts is a recent Central Michigan University graduate and considers himself a Bitcoin enthusiast.
“Bitcoin facilitates its own transactions. It’s both the blood and the vein is what a lot of people say,” says Coutts.
Coutts is referring to bitcoin. So, what is bitcoin?
As TV5 discovered, bitcoin is a sort of an underground economy. A so-called decentralized form of virtual currency. They can be transferred online from person to person in what’s called a virtual wallet and it can be done in a matter of seconds and without banks.
“You can send someone a billion dollars across the world… and it would be instant with no fees,” says Coutts.
In an instant, you can send bitcoin to anyone, anywhere with no banking requirements.
So how do you earn them? Well, you can flat out pay cash for them or you can work for them.
Bitcoin users, like Coutts, can lend the bitcoin network the processing speed from his computer. The more processing speed one can lend, the more bitcoins he can earn. This concept is known as bitcoin mining.
The Bitcoin network keeps what’s called a block chain of transactions that is open source code. Everyone on the network is able to see this code.
“I had some bitcoins saved up and I decided to sell those for some cash,” says Coutts.
Here in Michigan, it’s hard to spend a bitcoin without exchanging them for cash because only a handful of establishments have decided to gamble with the online currency.
Leonard Mazzola is the owner of Bronx Deli in Farmington Hills. He says customers are driving very long distances to spend their bitcoins at his restaurant.
‘At first I didn’t understand it… but when I did… I thought it was amazing,” Mazzola said.
When Coutts learned the Bronx Deli accepted bitcoin, he decided to drive nearly 40 miles from downtown Detroit to grab some lunch.
“I’m excited… now I have somewhere to spend them… and they have a Bitcoin ATM, which is amazing,” Coutts added.
Mazola hopes bitcoin transactions become an even bigger part of his business. He currently has the only bitcoin ATM in the entire state.
“I’d love to at some point cut out Visa & Mastercard all together. It’s a lot of money they take,” says Mazola.
Could bitcoin really replace the need to carry a wallet around full of credit cards or cash? Some experts don’t think so.
Dr. Tim Nash is an economics professor at Northwood University. He says bitcoins have a lot to prove as a currency.
Just last year, the price of a bitcoin was about $200. The price today – more than $600. Nash says the return may be high now but so is the risk.
“I am not willing to invest right now,” Nash said.
Despite the constant criticism the currency has attracted, companies like Dell, Overstock.com and even the electric car company Tesla Motors have decided to accept bitcoins.
This year, Tesla became the first automaker to sell a car using bitcoin as the form of payment.
The Sacramento Kings became the first professional sports team to accept the digital currency.
While more and more companies seem to be interested, so is the government. In the past month or so, the U.S. Senate held special hearings on bitcoins.
The Michigan Attorney General’s office issued a statement warning consumers to educate themselves about the currency before using them to buy and sell items.
But for bitcoin enthusiasts like Coutts and Mazola, they say they’ve done their homework. They understand the risks and say they are looking forward to the day everyone has a bitcoin in a virtual wallet.
There are more than 13 million bitcoin currently in circulation. Based on an algorithmic calculation, it has been determined that only 21 million can be made produced.