TYLER (KYTX) -- There is now a form of currency that's entirely electronic and all you need to use it is a code you can carry around on your cell phone. It's called cryptocurrency and there are several versions including Litecoin and Dogecoin, But the most popular form of it is called Bitcoin. It's unregulated by any government and it's not backed by any physical coins but it's becoming more and more widely accepted and there are two ways to get it.
Joseph Yazdanpanahi is a young man with great vision. He heard rumblings about Bitcoin in 2011, looked into it, and liked what he found. He said, "it was an opportunity to make some money."
The Bitcoin network was created in Japan in 2008 and hit the U.S. in 2011. Each Bitcoin was worth only a few dollars back then and now they're each worth hundreds of dollars. We'll explain why in a moment.
Bitcoin has drastically grown in popularity. Some East Texas businesses accept it because they don't have to pay the same high transaction fees charged by credit card companies. Scott Williamson accepts it at Tyler's Brewing Supply. He said, "I saw a need online."
Consumers like it because it's accepted in any country. And some businesses can choose to pass the transaction fee savings along to customers. Plus a purchase is untraceable back to the Bitcoin holder which ensures your anonymity with discreet purchases. But most Americans don't know about it. "You're going to have some people who are never going to use them, but that's with anything. But as it grows it's going to have the potential to become very very dominant," said author Tom Mitsoff.
Mitsoff works with the Tyler Morning Telegraph and co-wrote the book Bitcoin Decoded. He says you can make purchases by scanning a QR code at a store or exchanging your Bitcoin code during a transaction online. And if you want to get a Bitcoin yourself there are two ways to get your hands on them.
Bitcoin exchanges are websites that allow you to buy and sell Bitcoins sort of like the stock market. You can pay for them with currency from any country. The more in demand and highly traded the coins are the more they're worth. Mitsoff said, "that is why the value right now is fluctuating so wildly at times."
The value of one Bitcoin was up to more than $1,200 earlier this year. Now it's around $400. But it's not without risk. Some of these exchanges don't store your Bitcoin data but some do. And that can leave them vulnerable. One of the biggest exchanges named Mt. Gox was recently hacked and lost half a billion U.S. dollars worth of Bitcoins. So you have to know who you're dealing with. "You can do research online to find out about companies," Mitsoff said.
Coinbase stores all the Bitcoin codes offline either in printed form or on thumb drives. Mitsoff says Bitstamp is another reputable exchange.
The other way to get these Bitcoins is through a process called mining that allows you to generate them yourself. Rather than issuing money from one source like the Federal Reserve, the Bitcoin network relies on people in the marketplace to create them. That's what Yazdanpanahi has been doing for years. Anyone can download free software or even buy a special mining computer that completes a complicated mathematical algorithm to create the Bitcoin. Yazdanpanahi has one and it works all day long. That's because the people who are plugged into the Bitcoin network trying to mine coins the longer it takes. Yazdanpanahi said, "in 2011 I'd be getting several Bitcoin a day, now I'd be getting one a year of I'm lucky."
And he's not letting go of his Bitcoins hoping they'll keep increasing in value. And Mitsoff says Bitcoins are only going to keep growing in popularity. Mitsoff said, "the thing with Bitcoin is it's not easy to get, it's not easy to spend. But there are venture capitalists working feverishly to set up that infrastructure."
So if you're not already monitoring the Bitcoin market, trading with them, or making them yourself and holding onto them, you may be soon.
We've posted an interactive map on the Hot Button here on cbs19.tv that let's you see where Bitcoins are accepted all across the globe. There are two places in East Texas, both in Tyler and many in the DFW area. There's also a Bitcoin ATM in Austin where you can buy your own Bitcoin or a piece of one.