More bumps in the road are probably in store for Bitcoin. The virtual currency has seen some massive swings in value over the last several weeks, but that volatility is not likely to end soon, its lead developer suggested on Saturday.
“We’ve been on a roller coaster ride,” said Gavin Andresen, chief scientist at the Bitcoin Foundation, which provides much of the core backend development for the currency.
“I expect for the next few years we’re going to remain on a roller coaster ride,” he said, speaking in front of a packed room of developers, enthusiasts, venture capitalists and other industry players at Bitcoin 2013, the first conference in Silicon Valley to be held on the topic.
Bitcoin is a digital currency that is managed and traded on a peer-to-peer computer network. Often referred to as a form of “crypto-currency,” it is intended to be a decentralized form of payment not regulated by any financial institution or governmental body. A variety of online retailers and a growing number of brick-and-mortar stores are now accepting Bitcoins, which can either be purchased through exchanges on the Internet or “mined” by using specialized hardware.
Hitting some bumps
But the growing attention the currency has experienced has come with numerous setbacks as well, in the form of hacks, the shutdown of various exchanges, seizure of accounts and huge selloffs in Bitcoin.
In March, Bitcoins were trading for roughly US$30. Then for a brief period in April its price on the Tokyo-based exchange Mt. Gox skyrocketed to over $230. A couple of days later, its value plummeted to roughly $120 as a massive sell off forced Mt. Gox to temporarily shut down.
This past week, Mt. Gox received a seizure order of its funds by the Department of Homeland Security, triggered by an alleged failure to comply with U.S. financial regulations.
Despite the challenges, Bitcoin’s Andresen is not deterred. “We have to be reliable and resilient,” he said. The foundation, which currently just has two full-time staff, is looking to hire a Washington lawyer this year to engage with politicians and to help support the currency’s growth.
Hundreds of attendees are at the Bitcoin conference, with roughly 20 exhibitors offering a range of Bitcoin-related products such as digital wallets, specialized trading services, and analytical tools.
“Star power” has even been provided by Tyler and Cameron Winklevoss , the brothers claiming ownership of the idea for Facebook, who delivered the opening keynote on Friday night.