In its heyday, Tradehill was the second largest exchange for experimental virtual currency Bitcoin. But the site closed down due to a protracted regulatory dispute and a string of payments fraud charges.

With a new team and a design reboot, Tradehill is ready for a relaunch. The new site goes live today with a new business-focused product dubbed “Prime.”

“We want to be the grownups in the Bitcoin space,” said chief operating officer Ryan Singer in an interview. “Our goal is to be the institution that other institutions turn to when they have needs related to digital currencies.”

Bitcoin is a cryptographically secure currency that operates without a central authority, unlike the dollar or yen. It burst into the public eye in the spring of 2011, and its value has fluctuated widely ever since. Last week, the currency collapsed 23 percent due to a technical glitch.

Bitcoin is a favorite of the libertarian and hipster crowd. Criminals too. The FBI fears the anonymous payment network is a haven for money laundering and other criminal activity.

Tradehill founders Ryan Singer and Jered Kenner (L-R)

However, Tradehill’s founders are convinced their first product will be a hit with business and accredited investors who need a better way to engage with the digital economy. Every client will receive a $75 credit to test trading and can activate an account with a deposit of at least $10,000, 200 Bitcoins, or $5,000 in Mt. Gox codes.

The difficulty in managing online transactions and exchanging digital wealth for hard cash led to the rise of exchanges like Tradehill, which use online wallet services to move real money around. Money transfers are regulated and require licenses.

Tradehill claims to be the first institution in the Bitcoin market to hold over $5 million in user funds and process full payouts. “Every other Bitcoin company that achieved scale either lost money in a hack or went insolvent,” a press release states.

Still, the Bitcoin currency has a few advantages — namely, it allows for complete anonymity and privacy. Once a transaction is completed, there is no central server with information that a government agency could subpoena. In addition, Bitcoin advocates will tell you that about 60 countries are blocked completely from PayPal, so sites like WordPress will accept Bitcoins for blog upgrades.

The team is confident it can deal with any potential problems that may arise.

“We have more lawyers than engineers,” said Singer, who stressed that the new Tradehill will be fully compliant. Likewise, the site’s defenses are up. To avoid being hacked, the founders recruited a chief technology officer from Google’s privacy unit.

It has been just over a year since Tradehill went bankrupt. In February 2012, founder Jered Kenna shut down the site after losing $100,000 in a dispute with one of its payment processors.

Singer said the company made the decision to keep the Tradehill name as it’s an “established brand” with a strong network, and the team refunded its investors when the site shut down. The founders also say they have strong relationships with other Bitcoin sites and services (and potential competitors) Mt. Gox, Coinbase, BitInstant, and BitPay.

The new team, based in San Francisco, has raised a small seed round of funding from angel investors and expects to close a first round of about $300,000 in the coming months.

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.

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.

Advocates of Bitcoin, the open-source digital currency that’s easy to anatomize and difficult to duplicate, were quick to point out that Bitcoin — just like paper money — is only as secure as the place you store it.

The digital currency is stored in an unencrypted wallet file, but Bitcoin users can take measures to improve the security of their investment.

“If there was a means to invalidate the thieves’ coins or to reclaim them, then the same could be done to a legitimate user. Bitcoin is a secure system only so long as you keep your wallet secured — and sadly it seems you were not able to adequately do so,” one forum post pointed out, adding that “this isn’t a reason to abandon bitcoin completely or to dismiss it as flawed, but of course it’s understandable that you wouldn’t want to reinvest after having lost so much.”

It’s unlikely that a person would be able to recover the stolen investment, since Bitcoin isn’t recognized by a national government. The U.S. government is even seeking legal action against those that use Bitcoin. At the very least, the thieves could be prosecuted for illegally compromising another person’s property and taking their possessions.

While Bitcoin may ultimately prove to be a bad investment, it can still be used as a means to an end –  purchasing goods and services that are illegal with a large degree of anonymity.

However, people are tracking the market value of Bitcoin now more than ever. StockTwits, the Twitter for business, recently created a Bitcoin trading symbol ($BCOIN) to make it easier to track.