How it Works: Bitcoin Vending Machine Purchase |
On Feb. 18, a machine debuted in Albuquerque that changes greenbacks into Bitcoins, and Bitcoin ATMs are scheduled to appear in Austin, Texas, and Seattle.
Despite their popularity, Bitcoins still face some hurdles. First, hackers. Second, volatility. Third, regulatory restrictions.
In November 2013, hackers got $1.2 million from one Bitcoin exchange, bringing questions about security of its encryption. And as the demand -- or lack thereof -- fluctuates, the value of one Bitcoin has fluctuated as well, ranging from a low of $13 to a high of $1,000. And third, Bitcoin is under scrutiny because of its potential for use by criminals in money laundering or drug sales.
In November, virtual currencies were the subject of a U.S. Senate hearing. Testimony as to their innovations and benefits in an increasingly digital society were matched by concerns such as who runs the exchanges and under what regulatory framework.
Bitcoin operates without a central bank and users are anonymous -- and businesses love it, because while credit card companies charge hefty transaction fees, Bitcoin fees are tiny. The Senate hearing was most likely the first step in a long process of coming to terms with digital exchange.