There’s no shortage of money being thrown at digital currency Bitcoin. Last week, Bitcoin wallet startup Coinbase scored $5 million in funding. And this week, both Boost.VC and Liberty City Ventures allocated more funding for Bitcoin-focused startups.

Now relatively young Bitcoin startup BitPay has announced it has raised $2 million more in funding to lead the market in Bitcoin payment processing. This follows a $510,000 seed round it raised in January.

BitPay specializes in e-commerce, B2B, and enterprise solutions for Bitcoin, and it claims processing fees as low as 1 percent with no setup fees. It signed up more than 1,900 new merchants in April, and it claims to sign up about 100 new merchants per day at this point.

The new funding was led by Founders Fund, the fund behind the so-called “PayPal Mafia.”

“We were not looking to raise any capital until later this year, but we could not ignore the opportunity to have Founders Fund involved with BitPay,” BitPay CEO and cofounder Tony Gallippi said in a statement. “There’s no single investment firm we would rather have on our team right now than Founders Fund.”

Also on the round is Max Keiser’s fund Heisenberg Capital, a London-based fund targeting Bitcoin-focused companies.

Bitcoin artwork via Deviantart

The future is now. We have heads-up displays on our glasses, and we can buy things with virtual spacebucks.

Today, those spacebucks just got a little more real because the Humble Bundle revealed it will accept the Bitcoin digital currency as a payment option for its Double Fine collection. Humble Bundle is an organization that sells packages of games to consumers under a name-your-price model. The group then splits the funds with developers, charities, and nonprofits.

“Buying a bundle using Bitcoins is as easy as using our other payment processors, [like] PayPal, Amazon Payments, and Google Wallet,” Humble Bundle spokesperson Joshua Knoles wrote in a statement. “Simply name your price for a bundle and select ‘Pay with Bitcoin’ when checking out, and you’ll be well on your way to playing some truly double fine Double Fine games.”

Knoles said that some customers have long clamored for a Bitcoin payment option, so it’s working with financial-transfer company Coinbase to enable that to happen. Humble Bundle has answered some frequently asked questions about Bitcoin on its help page.

For those prefer their currency green and crinkly, Bitcoin is like virtual gold that some merchants accept in exchange for goods and services. According to Bitcoin trading house Mt.Gox, one Bitcoin is now worth $112.72. Each coin is also split up into smaller denominations for people to spend on things worth less than $112.67.

Some people prefer this virtual currency because it is completely anonymous and not controlled by any government. It works because it has a very strong encryption algorithm that verifies that all transactions are legit.

Still, Bitcoin has a long way to go before a person could live on it in the same way people use the U.S. dollar. The fact that you can buy games with it right now is a good start.

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Back in late February, top Bitcoin exchange Mt. Gox struck a deal to let Seattle startup CoinLab handle its U.S. operations. But now what looked like it would be a beautiful friendship has turned into an ugly mess.

CoinLab is suing Mt. Gox for $75 million over failure to give CoinLab exclusive access to Bitcoin account information and to maintain an exclusive partnership. “Defendants have breached the exclusivity provisions of the Agreement by directly servicing customers in the United States and Canada since the Agreement took effect,” the lawsuit says.

The original purpose of the partnership was to give Japan-based Mt. Gox better reach into the United States market. With backing from Silicon Valley Bank, CoinLab planned to give institutional investors and wealthy individuals a way to buy and sell large amounts of Bitcoin on a platform that was safer than any other.

CoinLab CEO Peter Vessenes said in an open letter that Bitcoin buyers have lost a lot of money due to Mt. Gox’s technical difficulties and other issues in the Bitcoin system. He’s been extremely frustrated and even told us a few weeks ago that technical stability couldn’t come to Mt. Gox “soon enough.”

While these technical difficulties have frustrated him, what forced his hand was that Mt. Gox had not delivered passwords, Yubikeys, administrative logins, and other security information that was needed to facilitate U.S.-based transactions. Vessenes writes in his letter:

When we spun up our initial alpha customers, they included companies that from one perspective could reasonably be deemed to be our competitors, some of the best companies in our space. We worked extremely hard to provide them great service, because I want to build our ecosystem; I want a robust economy and a broad base of service and product for everyone.

What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse; we were often left just apologizing to our alpha customers while their own businesses suffered. I’m just not willing to put any of our customers in that position — if we can’t do a good job for you, I won’t promise that we can.

What I hope is that Mt. Gox has this same interest in the good of Bitcoin, and Bitcoiners, and finds a way to work this out.

Check out the lawsuit documents below via Gawker.

Bitcoin screenshot via Duncan Elms/Vimeo

Prominent entrepreneur and Andreessen Horowitz investor Chris Dixon is known for being ahead of the curve, and he recently attracted headlines for investing in 3D-printing startup Shapeways. Another upcoming area he thinks will be big: Startups focused on the virtual currency Bitcoin.

“You had a first wave of Bitcoin startups,” Dixon said today on stage at TechCrunch Disrupt NY. “Now what we’re seeing is that some of the best startup guys are looking at it. There will be a second wave.”

Dixon likes Bitcoin so much because the virtual currency lowers the friction of payments, especially on an international scale. Another reason is that, in some regards, it philosophically matches the early promise of an anonymous Internet.

“You can pay someone without them trusting you,” Dixon said. “The exciting thing about these new currency schemes is you have an anonymous payment system grafted on to an anonymous network.”

The first wave of Bitcoin startups are companies like Coinbase, Coinlab, and Tradehill. These types of companies are focused on helping people trade Bitcoins and exchange them for cash.

Dixon has only been a partner at Andreessen Horowitz for five months, but it’s easy to imagine him and his firm investing in the next wave of Bitcoin startups.

“A lot of people in California are so excited about Bitcoin because there has been a lot of frustration around finance,” Dixon said. “You see what happens on Wall St. It’s very corrupt. … Finally something interesting is happening in financial tech stuff.”

Photo via Sean Ludwig/VentureBeat

Leading Bitcoin exchange Mt. Gox has been knocked offline in another distributed-denial-of-service (DDoS) attack just hours after the exchange re-opened following a huge Bitcoin price decline.

“We are experiencing a stronger than usual DDoS,” Mt. Gox wrote on its Facebook page. “We are working [on] it.”

Mt. Gox is vital to the Bitcoin ecosystem, but it is also currently the biggest hurdle to Bitcoin’s legitimacy. About 70 percent of Bitcoin trades are processed by Mt. Gox, and Bitcoin prices are mostly measured from Mt. Gox’s market price. More than 20,000 new accounts are now signing up for Mt. Gox accounts daily. Yet it has trouble processing trades during high-activity periods.

The exchange voluntarily shut down for 12 hours on Thursday after a particularly bad Wednesday, when the price of Bitcoin collapsed more than 40 percent in six hours. Mt. Gox said it would use this downtime to add more servers that would better handle traffic and reduce transaction lag time. It also wanted the downtime to serve as a period of “cool off” for investors who might have been panicked from the stunning price drops.

Mt. Gox has been the subject of crippling DDoS attacks before and just last week a DDoS attack took the site offline, which helped push prices downward. Bitcoin prices did eventually recover last week, but those gains were wiped out with Wednesday’s massive decline.

Hacker image via ollyy/Shutterstock

Interest in the virtual currency Bitcoin has surged in recent months, and the price has been rising rapidly to match the chatter. But yesterday, a trap door opened, and many Bitcoin investors fell through, with prices dropping more than 40 percent in just six hours.

Many Bitcoin holders blame the price drop on Mt. Gox, the largest Bitcoin exchange. Mt. Gox facilitates about 70 percent of trades for Bitcoin, and as such, it plays an important role in the market. But yesterday, Mt. Gox suffered serious lags in trading — as much as two hours could go by before it processed a trade — and the market collapsed from fear, miscommunication, and speculators looking to get out before the price went down too much. The price of one Bitcoin is now $120 on Mt. Gox, a galaxy away from yesterday’s high of $260.

Mt. Gox announced earlier today that it would halt trading for 12 hours, and the market should reopen at 7 p.m. Pacific tonight. During these 12 hours, the exchange said it would install additional servers to make trading more fluid and reduce lag time.

But let’s step back before today’s developments. Where the heck did Mt. Gox come from, how did it become so important, and why is it getting so much blame?

What is Mt. Gox?

Mt. Gox originally stood for “Magic: The Gathering Online eXchange,” and as you might guess, yes, Mt. Gox was first an online marketplace for the buying and selling of Magic: The Gathering cards. But that business didn’t last long, and it pivoted to a marketplace for buying and selling of Bitcoins in July 2010. Then, in March 2011, the founder sold the company to Japan’s Tibanne Co., which still operates Mt. Gox.

People sign up for accounts on Mt. Gox and move money from their bank accounts to the service. After the money goes through, they can use their credit on Gox to buy and sell Bitcoins. More than 20,000 new accounts are being created a day, and Mt. Gox said that in the past few days, the number of transactions it processes has “tripled.”

Tibanne has a data center in Japan that processes all Mt. Gox trades. The company is adding more servers as of this writing to give the trading platform more bandwidth.

Mt. Gox has partners that will eventually take some of the server load. CoinLab, a Seattle-based startup, recently announced that it had struck a deal to be the largest North American partner for Mt. Gox and eventually would handle all U.S. transactions. CoinLab CEO Peter Vessenes told me that the initial plan was to have the transition completed in two years, but he “hopes” it will be sooner than that.

Why is Mt. Gox so important?

Mt. Gox is incredibly important to the Bitcoin economy because it serves as one of most reliable ways to buy and sell your Bitcoin holdings. It is also the most reliable place to look if you want to know the price of a single Bitcoin.

“Think of it as an interface for Bitcoin between the virtual world and the real world,” ConvergEx Group chief market strategist Nicholas Colas told me. “In many ways, Gox is the ATM of the Bitcoin system.”

Once people have Bitcoins, you can do a lot with them: digitally pay friends without fees that you’d find on PayPal, purchase illegal drugs, or buy pizza. Legitimate businesses including Reddit, Expensify, and Heyzap all recently added Bitcoin support, so there is promising movement to make Bitcoin more than an Internet fad.

That’s fine and dandy, but much of the Bitcoin market is about speculation. There are a finite amount of Bitcoins that will ever be created (21 million) by Bitcoin “miners,” so a lot of folks want to get hold of them and let the price rise. Some folks believe the price will continue to grow quite a bit over time, even with horrifying corrections like the one we saw yesterday.

So, for speculation to occur and for people to sell their holdings when they feel comfortable, there needs to be a stable place in which to do this. Mt. Gox has been that place for a while, but with the flurry of activity as of late, more people than ever want to buy in. Mt. Gox hasn’t been able to keep up.

Why is Mt. Gox to blame?

Because Mt. Gox is such an important player in the marketplace and presides over the majority of trades, it needs to be a stable instrument. Any electronic service in which people are trading money for goods is expected to have a relatively quick transaction time. But it’s been far from stable in recent weeks.

“The core architecture of Bitcoin has proved resilient,” Colas said. “That core works fine. The periphery is not so sound. Exchanges [like Mt. Gox] and wallets fall into that category.”

Mt. Gox has been subject to distributed-denial-of-service (DDoS) attacks recently, and these took the exchange down. And now today, trading has been suspended to add more bandwidth. Think about this: Could you imagine the Nasdaq exchange having “an outage?” It would make investors lose their minds.

CoinLab’s Vessenes said he understands the frustration and has had an “emotional” response to the latest bits of news. But he expects the servers being added today will provide an “incremental improvement” to trading and add more stability.

What now?

Mt. Gox said it would open trading back up at 7 p.m. Pacific. There’s no way to know if the price will continue dropping or if investors who believe in Bitcoin for the long term might jump in and drive the price back up.

But opening on time is critically important, and if Mt. Gox does not, confidence in Bitcoin will be shaken, Colas said.

Long term, Mt. Gox will likely continue to be the largest Bitcoin exchange. But it will need to make some changes if it wants to get rid of its reputation as the weakest link in the Bitcoin ecosystem.

Vessenes said Mt. Gox will “need a new trade architecture,” but he wouldn’t put a timeline on when that would be implemented. And at some point in the next two years, his company will handle all U.S.-based Mt. Gox transactions, which will take some of the strain off Mt. Gox’s servers.

When I asked directly when he expected the new trade architecture to be installed, Vessenes responded: “Not soon enough.”

Market exchange photo via SergeyP/Shutterstock
Bitcoin graphic via Duncan Elms/Vimeo
Other screenshots via Sean Ludwig/VentureBeat

Top Bitcoin exchange Mt. Gox, which facilitates more than 70 percent of trades of the currency, has halted trading for 12 hours following a gigantic decline in Bitcoin prices.

The price of a Bitcoin on Mt. Gox as of this report is $120, a dramatic drop from a high of $260 yesterday. On Wednesday, Bitcoin prices dropped from $260 to about $150 in a matter of a hours. The price rebounded briefly, but then dropped again this morning.

This has led Mt. Gox to take action, and it has halted trading for 12 hours. Trading will resume at 7 p.m. Pacific time. Mt. Gox writes in a short update:

Market Cooldown for 12 hours

Orders will not be accepted for the moment as we need to upgrade our database to accommodate the trading volume. However, you may still cancel your pending and open orders. Trading will resume at 11.00 am JST. Our apologies for the inconvenience caused and thank you for your patience while we work to resolve this issue.

Just before halting trades, Mt. Gox also issued an update outlining how popular the service has been the past few days. It said that the number of trades executed in the past 24 hours had tripled and the number of new accounts opened each day now sits at 20,000.

The substantial increase in Bitcoin trading has put a spotlight on Mt. Gox because it controls so much of the day-to-day Bitcoin trades. The service has been subject to much criticism for not being prepared for the influx of new traders and for increasing lag time on trades. It also has faced distributed-denial-of-service (DDoS) attacks from people looking to destabilize the market and buy Bitcoins for cheap.

Check out the crazy fluctuation of Bitcoin prices over the past few days in the chart below.

Bitcoin image via zcopley/Flickr

Virtual currency Bitcoin has seen a massive rise in prices in the past few week, but today that growth halted with a precipitous price decline of more than $100.

Bitcoin is a decentralized digital currency that has seen a lot of momentum over several months, most of which is likely due to price speculation rather than actual use of Bitcoins. (If you want to know more about the basics of Bitcoin, check out this video.)

Bitcoin prices soared this past week and hit a high of about $260 early this morning. As of this writing, a single Bitcoin is now worth about $150 on the Mt. Gox exchange, an astounding decline.

The cause of the decline isn’t attributable to a single event, but many believe this was an inevitable “downward correction” that stemmed from the price rising too quickly. Too many speculators aiming to sell at the first sign of a large price drop was a perfect combination for what has happened today.

Some Reddit users are also claiming that Mt. Gox is suffering from significant lag time and potential distributed denial of service (DDoS) attacks, which has led to a destabilization of the market.

Check out the chart below to see Bitcoin’s fall today versus its rise this past week:

Bitcoin image via *carbonism/Devinantart
Chart via Clark Moody

The virtual currency Bitcoin is hot. In the past week, the price of a single Bitcoin has more than doubled and currently sits at about $240 on Mt. Gox, the largest Bitcoin exchange.

If you’re new to Bitcoin, you’ve probably got a lot of questions. How does it work? Who controls it? Where do I buy Bitcoins? Is it safe?

Luckily, the 3.5 minute video above is a great place to start. While the video doesn’t go into much detail on how to create Bitcoins through “mining” or how to store Bitcoins in a digital wallet, it at least offers a handy overview.

If you’re still hungry for more after watching the video, here are a few other resources to help you get in the know:

• 15-part video series on Bitcoin from CBT Nuggets
• Short video introduction to mining Bitcoins

The price of Bitcoin has been on a tear, with prices surging from $100 a few days ago to $147 earlier today. But an outage of the largest Bitcoin market and an unrelated Bitcoin hacking incident have knocked the price back down to $115.

Bitcoin is a virtual, decentralized currency that isn’t regulated by any government body. But the nature of the currency means that it is subject to wild price swings when confidence declines.

Today, an outage knocked out Mt. Gox, the largest market where Bitcoin is traded. The incident was not one related to hacking but most likely happened because of unusually high trading volume.

But an attack did happen today: the hacking of Bitcoin wallet service Instawallet, which has suspended service “indefinitely.” The company said it will need to develop an alternative architecture that isn’t susceptible to hacking if it wants to relaunch.

Check out today’s price fluctuations on Mt. Gox in the chart below.

Bitcoin photo via zcopley/Flickr
Bitcoin chart via BitcoinCharts

Updated at 12:57 p.m. with more detail about current Bitcoin prices.

Bitcoins are a hot commodity now, but are your Bitcoins actually safe? Bitcoin wallet company Instawallet has suspended its service “indefinitely” after being hacked.

Bitcoin is a virtual, decentralized currency that no government or central bank controls. Several companies, including Reddit and Expensify, have recently added Bitcoin support, helping the value bubble up. The value of Bitcoin surpassed $100 per coin just two days ago, and early today it reached as high as $145. Now the price reportedly sits below $117.

Instawallet provided a way to easily set up a Bitcoin wallet that can be used to store your Bitcoins and associated data. But the company had its database “fraudulently accessed,” so it has decided to close down until it can develop a new architecture that is safe from hacking attacks.

Instawallet writes on its homepage:

INSTAWALLET SERVICE NOTICE

The Instawallet service is suspended indefinitely until we are able to develop an alternative architecture.

Our database was fraudulently accessed, due to the very nature of Instawallet it is impossible to reopen the service as-is.

In the next few days we are going to open the claim process for Instawallet balance holders to claim the funds they had stored before the service interruption.

Important information on claims submission:

For the first 90 days we will accept claims for individual Instawallets. Your wallet’s URL and key will be used to pre-populate a form to file the claim.

After 90 days, if no other claim has been received for the same url, your Instawallet balance under 50 BTC will be refunded. If several claims have been filed for the same url, we will process those claims on a case by case basis, under the presumption that the claim we received first belongs to the legitimate balance holder.

Claims for wallets that hold a balance greater than 50 BTC will be processed on a case by case and best efforts basis.

The Instawallet incident highlights that Bitcoin still has serious issues with security. While transfers between Bitcoin holders are secure and instantaneous, the software used to actually store Bitcoins may not be up to snuff in many cases.

Bitcoin prices have often faltered in the past after hacking incidents, and a security breach in June 2011 is thought to have triggered a massive sell-off in Bitcoins. We’ll see if something like this happens again with today’s incident.

Popular expense report startup Expensify now lets employers reimburse international workers with virtual currency Bitcoin, another step that shows Bitcoin’s influence is growing.

Expensify was founded in May 2008 with the promise of offering “expense reports that don’t suck.” It makes the expense report and reimbursement process easier for companies with simple-to-use iOS, Android, and web apps. The company has attracted 1.4 million users across more than 200,000 companies to date.

But one of the company’s biggest issues is with reimbursement for international employees — PayPal and wire transfers to employees outside of the United States can entail fees of 4 percent or more. Bitcoin — a completely virtual currency that is decentralized — can solve that problem because it doesn’t cost anything to make transfers.

“Bitcoin is perfect for international transfers,” Expensify CEO David Barrett told VentureBeat. “It’s secure, instantaneous, and totally free. We support PayPal, but it is expensive. A four percent charge on a large reimbursement can really add up.”

Bitcoin support and prices have surged in the past few months, with several major newly-announced business deals giving it a boost. Mt. Gox, the largest Bitcoin exchange, struck a deal to let Seattle startup CoinLab handle its U.S. operations to give Bitocin a bigger foothold with institutional investors. On top of that, news-sharing site Reddit started accepting Bitcoin as payment, the Internet Archive began accepting Bitcoin donations, and Bitcoin startup Coinbase announced it is selling more than $1 million in Bitcoins per month.

Barrett said Bitcoin might not be well known just yet, but he doesn’t mind being on the forefront.

“Hardly any Expensify users know what Bitcoin is, but we believe this is a really great option for them,” Barrett said. “Bitcoin is clearly on the rise.”

San Francisco-based Expensify has raised $6.7 million in funding to date from investors including Hillsven Capital, Baseline Ventures, SV Angel, and Travis Kalanick.

Top graphic via Expensify

Why does this stuff always come up right before the weekend?

Finnish firm SC5, specializing in HTML5 development for cross-platform app delivery, is starting to give its employees a new salary option: Bitcoins.

Because, well, why the heck not? Plus, the shop also employs Bitcoin’s co-founder.

“We are doing this just out of curiosity to try out new things,” writes Martti Malmi, the self-proclaimed “youngest guy” at SC5′s offices and one of the Bitcoin founders. When Malmi joined the team earlier this year, he had the idea that he was just gonna be working on server-side stuff, front-end stuff, responsive design stuff. But it looks like promoting and implementing Bitcoin stuff has crept into his job description, as well.

For now, SC5 will only offer partial salary-to-Bitcoin replacement and will use the daily exchange rate on each payday to determine how many Bitcoins are doled out.

The peer-to-peer currency, Malmi said, “fits our vision of the world quite well. It allows for open source development, competition and innovation in the field of payments and Internet commerce. Based on cryptography, it is secure and deterministic as we require for digital services.”

In fact, he continues, it’s more secure than credit cards.

What do y’all think? Would you ever pay someone — or want to be paid — in Bitcoins?

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Virtual currency Bitcoin has hit new highs in value after Mt. Gox, the largest Bitcoin exchange, struck a deal to let startup CoinLab handle its U.S. operations.

Japan’s Mt. Gox is the largest exchange in the world for Bitcoin, but it had been having trouble making headway in the United States. So it will move operations to a U.S. company that might be able to attract more Americans. Seattle-based CoinLab has a partnership with Silicon Valley Bank and is backed by $500,000 in VC funds, which will help lend credibility to the service.

“There are two major difficulties Bitcoin exchange customers have traditionally faced: banking troubles for the underlying exchange, and security of their coins,” CoinLab CEO Peter Vessenes said in a post announcing the move. “Since we believe in Bitcoin, we’d like to solve these problems.”

As of early Wednesday evening, Bitcoin was trading above $32, a new record for the currency. Just a few days ago it hit new highs by trading above $31.

Other recent events might have helped the currency boom as well. News-sharing site Reddit started accepting Bitcoin as payment, the Internet Archive began accepting Bitcoin donations, and Bitcoin startup Coinbase announced it is now selling more than $1 million Bitcoins per month.

Check out Bitcoin price movement this week on Mt. Gox in the chart below.

Bitcoin illustration by Tom Cheredar/VentureBeat

Bitcoin is beginning to boom again.

Customers of Coinbase, a platform for buying and selling the digital currency, have bought or sold more than $1 million worth of Bitcoins in the past 30 days.

“There’s an incredible amount of demand for people who want to buy Bitcoins now,” Coinbase CEO Brian Armstrong told VentureBeat. “The pace of going from $0 to $1 million was staggering.”

Coinbase launched last year and aims to be “the PayPal of Internet-only currency.” It helps merchants and consumers by providing a Bitcoin wallet and platform to make transactions easier, but the vast majority of its revenue comes from letting users buy and sell Bitcoins directly from Coinbase. It charges a one percent fee on top of each transaction.

The company claims that it has seen huge growth in the past three months, after it started letting users buy and sell Bitcoins by connecting any U.S. bank account.

“Bitcoin is a difficult technology, but we’re making it easy to use,” Armstrong said. “People keep wanting to buy more and more of it.”

The success of Coinbase, along with other recent developments like WordPress accepting Bitcoins, are signs that Bitcoin is gaining serious traction once again. The decentralized currency is currently trading at $22.66 per Bitcoin on Mt. Gox, the largest Bitcoin exchange.

San Francisco-based Coinbase was founded in June 2012. The company has raised $600,000 in seed funding from investors including Y Combinator, IDG Ventures, Greg Kidd, Adam Draper, FundersClub, Start Fund, and Garry Tan. Armstrong said Coinbase has nearly 40,000 users and performs 30,000 transactions per month.

Bitcoin badge via Ben Ostrowsky/Flickr

Blogging platform WordPress will now accept Bitcoin as a form of payment, the site announced yesterday.

Bitcoin is a form of digital currency that uses decentralized (peer-to-peer) technology to manage transactions and validate payments instead of a government-regulated banking system. Anyone can convert their local country’s currency into Bitcoins.

People with a free WordPress.com-hosted blog (not to be confused with the free open-source WordPress platform available on WordPress.org) can now use Bitcoins to buy most upgrades, such as removing advertising or enabling blog design customization.

WordPress said it decided to start accepting Bitcoin because of its “role” as a universal currency. PayPal and a number of credit card companies actually restrict transactions in certain parts of the world due political circumstance, high criminal activity, and more.

“Whatever the reason, we don’t think an individual blogger from Haiti, Ethiopia, or Kenya should have diminished access to the blogosphere because of payment issues they can’t control. Our goal is to enable people, not block them,” WordPress’ Andy Skelton wrote in a blog post. “With Bitcoin, we join a new digital economy that doesn’t leave anyone behind, essentially making financial transactions open source — something WordPress.com is behind 100 percent.”

Currently, few legitimate businesses accept Bitcoin, which has primarily been used for black market (aka mostly illegal) transactions. And since banks aren’t involved with Bitcoin transactions, purchases don’t leave a “paper” trail for law enforcement agencies to track criminal activity.

U.S. federal government isn’t too fond of Bitcoin — and with good reason. A universal currency like Bitcoin could hypothetically destabilize a government’s capability to regular its finances. And if that happens, it could disrupt their authority.

But despite any negative connotation attached to Bitcoin in the past, WordPress’ intentions seem entirely pure.

“I think the technology is value-neutral,” WordPress creator and Automattic founder Matt Mullenweg told VentureBeat via email. “I’m sure many people use paper dollars and euros for bad things as well, but that doesn’t mean they’re intrinsically bad (or good).

“I hope many more businesses, particularly digital ones, follow our example and support Bitcoin so it can continue to shake off its early reputation.”

WordPress said the Bitcoin payment option will be available for all WordPress.com blog upgrade purchases in the next few months.

Ready for the most outlandish story of your day? Here we go. Today a hacker allegedly stole Mitt Romney’s tax returns and is demanding $1 million in Bitcoins for silence. The hacker also sent a USB drive and letter to the Republican and Democratic party offices in Williamson County, Tenn. as proof.

Williamson County Republican party executive director Jean Barwick confirmed to VentureBeat that the U.S. Secret Service has taken the USB drive and letter from the GOP party office to examine it and see if this is a hoax or a real situation.

“We don’t know what this will turn into, if anything,” said Barwick in an interview with VentureBeat. “[The Secret Service] didn’t say what they would do with it.”

In a letter, the hacker says the records were stolen from PricewaterhouseCoopers in Franklin, Tenn.

PricewaterhouseCoopers PR managing director Chris Atkins told VentureBeat in an e-mail, “We are aware of the allegations that have been made regarding improper access to our systems.  We are working closely with the United States Secret Service, and at this time there is no evidence that our systems have been compromised or that there was any unauthorized access to the data in question.”

The letter begins:

Dear PricewaterhouseCoopers LLP,

… We were able to gain access to your network file servers and copy over the tax documents for one Willard M Romney and Ann D Romney. We are sure that once you figure out where the security breach was, some people will probably get fired but that is not our concern.

Barwick went on to tell me that the GOP office did not call the Secret Service but expects that news traveled through the U.S. Attorney’s Office, which prompted the confiscation. She also added that she doesn’t believe they are the only office that received a letter such as this, though she’s hearing conflicting stories.

In the letter, the hacker threatened the release of the tax returns to “all major news media outlets” if the Bitcoin ransom is not received (the hacker also politely suggested people should “Google it if you need a lesson on what Bitcoin is”). The person also set up a bit of a race for Romney: first to pay the sum will receive the goods.

Of course, Bitcoin has its own problems after a hacker stole the Bitcoin equivalent of $250,000 dollars Tuesday.

via Nashville’s The City Paper; Mitt Romney image via Dave Delay/Flickr

Camp BX founder Keyur Mithawala launched the site to transform Bitcoin trading — which is little more than a hobby for geeks and tech enthusiasts these days — into a professionally-traded currency. That means the site is subject to security audits from third-party security providers like McAfee. It also means that the trading options should be more robust and emulate other trading markets like the stock market, Mithawala said.

There are two other major trading sites for Bitcoins — Mt. Gox and TradeHill. But neither of those sites allows for short-selling, which is basically a hedge on the price of the Bitcoin that injects cash into the trading ecosystem. Camp BX will let its users short-sell Bitcoins, which will help stabilize the volatility for the young currency. Today, an 8 percent swing in the value of the Bitcoin throughout the day is pretty typical.

“They have kind of a hobby project feel to them, and they are doing $27 million a month in trades,” Mithawala said. “Other than speculators, no one wants to deal with a highly volatile currency like that.”

Mt. Gox, one of the largest trading sites for Bitcoins, has around 60,000 users. But a majority of those users did not have a balance of Bitcoins, so only around 6,000 of those users are active traders, Mithawala said. Mt. Gox was also recently hacked, sending the price of the Bitcoin down to nearly zero before it later recovered. That site was basically forced to roll back the trade and pretend the whole incident never happened.

Bitcoins are designed to remove the middle man in transactions. That can be a transaction provider like PayPal or a bank when someone makes a purchase with a credit or debit card. When someone makes a transaction, the Bitcoin is automatically transferred to the recipient through an encrypted transaction that ensures Bitcoins can’t be hacked or created artificially. New Bitcoins are added to the market through “Bitcoin Mining” — a process where individuals run servers that handle Bitcoin transactions and get paid in Bitcoins for doing so.

Camp BX, like other online Bitcoin trading sites, takes a cut of the transaction as a fee. The site charges 0.55 percent of the transaction made as a fee for letting Bitcoin traders use the website. But that transaction fee is still lower than what PayPal and other payment providers charge, which keeps it in line with the Bitcoin ethos of trying to eliminate transaction costs, Mithawala said.

The number of Bitcoins available to users is algorithmically limited — meaning the number of new Bitcoins introduced into the economy decreases over time and reaches a cap of somewhere around 21 million. That means that, similar to days on the stock market where there is low trading volume, smaller moves in the market are able to cause greater swings in the value of the Bitcoin.

Camp BX is based in Atlanta, Ga., and has four employees — Mithawala and three contractors. Mithawala founded the company in May this year and spent the next several months rolling out the trading service. The company built the service in a little more than a month, and the site ran around 1,600 transactions amounting to 90,000 Bitcoins in the 11-day testing phase. The site has around 200 users so far.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

A trojan horse virus that steals Bitcoins, a digital currency that people can use for transactions online, has been spotted in the wild, according to computer security software firm Symantec.

The trojan, called Infostealer.coinbit, finds a Bitcoin owner’s “digital wallet”, which contains information about the individual’s Bitcoins, and mails it to the attacker. The hacker can then use a brute-force attack to discover the password for the Bitcoin wallet and steal the owner’s Bitcoins.

The new announcement today adds to concerns about the safety of investing in the digital currency, which faces the same security problems that anything else stored on a network or hard drive faces. The whole Bitcoin ecosystem is also inevitably linked to computer systems. And there have been plenty of instances where even some of the best online services, like Amazon’s cloud computing, have failed for significant periods of time.

This is the second time Bitcoins have made news because of potential security concerns linked to the currency’s digital origins. A thief recently stole 25,000 Bitcoins — which amounted to roughly $500,000 at the time they were stolen — from a compromised Windows computer.

Geeks and tech-savvy individuals have heralded Bitcoins as the next evolution of currency because it is designed to remove the middle man in transactions. That can be a transaction provider like PayPal or a bank when someone makes a purchase with a credit or debit card. When someone makes a transaction, the Bitcoin is automatically transferred to the recipient through an encrypted transaction that ensures Bitcoins can’t be hacked or created artificially.

New Bitcoins are added to the market through “Bitcoin Mining” — a process where individuals run servers that handle Bitcoin transactions and get paid in Bitcoins for doing so. The number of Bitcoins available to users is algorithmically limited — meaning the number of new Bitcoins introduced into the economy decreases over time and reaches a cap of somewhere around 21 million. That means that, similar to days on the stock market where there is low trading volume, smaller moves in the market are able to cause greater swings in the value of the Bitcoin. An 8 percent swing in the value of the Bitcoin throughout the day is pretty typical.

Symantec said that the whole method of generating Bitcoins was an open invitation to malware developers to exploit the system. Tech-savvy hackers that control botnets — a massive network of computers that they can send commands to — can use those huge botnets to generate nearly $100,000 a month through Bitcoin mining based on an exchange rate of $20 per Bitcoin.

Despite a lot of hype surrounding the new currency, the currency is facing growing pains with new reports of theft and heavy volatility in the Bitcoin trading market. The currency is unstable and is being used mostly as a speculative vehicle, according to the consensus answer on question-and-answer site Quora.