FOX 29 Explores Bitcoin, A New Trending Form Of Currency - FOX 29 News Philadelphia | WTXF-TV

FOX 29 Explores Bitcoin, A New Trending Form Of Currency

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There's been plenty of buzz lately about Bitcoin, a new digital currency.

Proponents are using it as a new alternative currency that can pay for goods and services, just like conventional currencies. But there are also some disadvantages to this new crypto-currency.

Check out the headlines:

'LIVING ON BITCOIN FOR A WEEK… AND I SURVIVED IT…"

'BITCOIN CLAMPDOWN'… 'JUDGE SAYS IT'S CURRENCY'

"NEWLYWEDS WILL LIVE ON BITCOIN FOR THREE MONTHS…"

These newlyweds are even chronicling their 90 days on you tube.

Bitcoins are all the rage in the techie community and gaining popularity fast. But what is Bitcoin?

Professor James Angel explains: "Bitcoins are a string of numbers…these numbers can be used to make payment."

It's digital currency, existing only online. You get them by "mining," or solving complicated math questions and algorithms.

Anthony Mongeluzo, president of Pro Computer Services, explains further: "Anyone could use Bitcoins. Primarily it's used as an online payment system, but it's a universal currency which means it's accepted in most countries."

The currency can be transferred person to person via the Internet, without a bank.

I've experimented with you know, buying things with it, using it to pay people back for a beer , that kind of stuff," says Ryan Findley.

Invented in 2009 by an anonymous programmer, Bitcoin rose to prominence earlier this year when the value of a Bitcoin soared from 22 dollars in February to a record 266 dollars in April. A growing number of businesses use it as an alternative currency.

"Its in the early stages right now but we're actually considering Bitcoin as one of the primary forms of payment," says Mike Taylor.

Mike Taylor is a film producer and owns two film production companies in Philadelphia. Taylor says Bitcoin could be a viable payment option in the near future

"I see a demand for it, like with my startup, bringing it towards just a direction. I'm branding it towards people that would use Bitcoin," he says.

Bitcoin is the first digital currency to capture the public's imagination. And acceptance is growing.

"So it's actually starting to get pretty limitless. It's not like you can go online yet and buy anything, but it's getting close to there and all you need is someone like Amazon or something like that to say accepted and all of a sudden you can accept literally on anything possible," says Joshua Davidson, CEO and founder of Chop Dawg.

Anthony Mongeluzo agrees: "You'll see it in a lot of Craigslist deals. I wouldn't be surprised one day if Ebay went to Bitcoin because, again, it's an online payment system," he says.

One NYC bar owner even let people use Bitcoin to get their drink on.

But Bitcoin has some disadvantages. Because Bitcoin is anonymous and not regulated by any government, the currency can be used for illegal transactions.

According to James Angel at the University of Pennsylvania: "that can be used by terrorists, drug smugglers human traffickers."

James Angel is a visiting Professor of Finance at the Wharton School. Professor Angel has written extensively on Bitcoins and wants to get them regulated.

"I see it as a fad. At first it sounds cool, like 'oooh, aaaah, modern technology,' but then you realize, 'hey am I really gonna use this stuff? Am I really going to have my paycheck put into a digital wallet?'" he says. "Do I really wanna have my paycheck sitting in this shadowy network that no government can police? What if somebody steals by Bitcoins? Uh oh, I'm in trouble.

Even proponents of the new digital currency admit that there are limitations.

"I would like to think that someday you could do things beyond what you can do with money. As of now, you're definitely limited to an extent. You can use it with stores, like I've heard of people buying hats, shoes, things like that with Bitcoin. But as far as everyone accepting that as a formal payment? No. You're definitely limited," says Mike Taylor.

"You wanna be paid in something that gives you plenty of opportunity to spend it on other stuff, not on a limited small number of items," says James Angel.

So despite the infatuation by some with this new digital currency, the dollar isn't doomed.

"Someone's gonna make a more secure algorithm, another better idea to put money into the economy," says Anthony Mongeluzo.

"It's a cool technological ideal, but it will probably be supplanted by something else which does the job better," says James Angel.

Bitcoin seems to be on the road to legitimacy. Earlier this month, a federal judge in Texas ruled that Bitcoin is currency or a form of money, after a man ran a ponzi scheme using Bitcoin. The man scammed 4.5 million dollars out of Bitcoin users.

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