Bitcoins gaining popularity in drug trade and online transactions
Mon, 08 Jul 2013 21:39:13 GMT —
A Charleston man has reportedly become the first person in the U.S. to have Bitcoins, or virtual currency, seized in a drug investigation, according to a website that tracks the digital currency.
Bitcoins have been gaining attention of late as a hot investment item, but they're also popular with drug dealers.
A Bitcoin is sort of like Internet cash that users say can be purchased on a currency exchange using real U.S. cash or a bank transfer.
Mike Schroll does digital forensics work in Myrtle Beach and while he's never been paid in Bitcoins, he says he would accept the virtual currency for his services, if someone wanted to pay him that way.
He thinks other businesses will start accepting Bitcoins, too, once business people see the advantage of using them over, say, credit cards.
"Bitcoins being an independent system, there are no transaction fees, so from the perspective of a business accepting Bitcoins, they get a larger percentage of the money from their end user," Schroll said.
Bitcoins are not regulated by any government. Schroll says that makes the digital currency useful to people dealing drugs or trading in an underground economy.
"Due to the more anonymous nature of Bitcoins as electronic payment method, versus using a credit card for instance, it can be attractive to those who don't want to be tracked," Schroll said.
But Coastal Carolina University economist Rob Salvino says the fact that drug dealers use them isn't necessarily a knock on Bitcoins.
"The U.S. dollar is used in illegal trade all the time, as any other currency is," Salvino said.
Though they're primarily used for online purchases, Salvino can foresee a day when Bitcoins will be used for more conventional transactions, like Bitcoin ATM's.
"There might be stores that will exchange merchandise for Bitcoins and I would imagine it would be in larger cities where new things catch on first, that type of thing."
Salvino says traders have engaged in massive speculation of Bitcoins this year, leading to wild swings in their value, from less than $20 per Bitcoin up to more than $200 and back down again in a matter of months.