The divide over bitcoin

Just more than one-tenth of the adults in the U.S. who know about bitcoin — the cybercurrency that exists outside of bank regulation — say they would choose to invest in it.

But the distrust some Americans have in the wild west of digital money hasn’t deterred bitcoin champions, who are descending on San Francisco this week for the CoinSummit, nor online retailers from embracing bitcoin as the new way to pay for purchases on the Web.

A new survey out Tuesday by Yodlee, an online financial services provider for consumers based in Redwood City, surveyed more than 2,000 adults in the U.S. about their feelings on bitcoin. Almost half of survey participants said they were familiar with bitcoin, which has gained attention as an alternative to big banks and government regulation since it began circulating in 2009. But trust of the currency, which is traded by professional investors and ordinary people, is low — about 13 percent said they would choose to invest in bitcoin over gold. And the more people know about bitcoin, the less they trust it, according to the survey.

Trust of the bitcoin may be even lower today Than when the Yodlee survey was done in December. Last month, the world’s largest bitcoin exchange, Japan-based Mt. Gox, filed for bankruptcy after saying it had lost more than 750,000 bitcoins. (Oh, then it found 200,000 of them in a forgotten wallet.)

Another bitcoin-trading site, Vircurex, announced on Monday it would halt operations after two hacking incidents last year depleted users’ account, and Vircurex was left to cover the loses. It was a bigger loss than the site could handle.

Bitcoin has had a rough go of it recently, with two exchanges going kerpoof and But it retains a loyal and enthusiastic following, which will be on full display Tuesday and Wednesday in San Francisco. CoinSummit is a two-day event is a place for virtual currency entrepreneurs,  investors, hedge fund professionals and other bitcoin enthusiasts.  The lineup includes big-name valley investors such as Marc Andreessen, and startups using bitcoin.

Some online retailers and ecommerce startups have embraced bitcoin. San Francisco-based Gyft, a digital gift card startup, announced it is now allowing customers to purchase Walmart gift cards using bitcoin.

And Patrick Bryne, the CEO of online retail site Overstock. com and libertarian, has become an unofficial spokesman for the digital currency when his company became the first large online retailer to accept bitcoin. Bryne will be a keynote speaker an international bitcoin event in Amsterdam, sponsored by the Bitcoin Foundation — the currency’s lobbying group.

 

At top: An April 3, 2013 file photo shows bitcoin tokens in Sandy, Utah.

 

Heather Somerville Heather Somerville (224 Posts)

Heather Somerville is a business reporter covering venture capital and startups for the Bay Area News Group.