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Flowers for Bitcoin: A Large Exchange Sputters, but Digital Currency Stays Afloat in San Francisco 

Wednesday, Mar 5 2014
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In Tokyo, a disgruntled British trader stands outside the vacant, shuttered offices of Mt. Gox, once the highest-volume Bitcoin exchange in the world. He waves a sign bearing what could be either be a hugely volatile, or deeply metaphysical, question, given that it pertains to invisible currency. "Mt. Gox," the sign asks. "Where is our money?"

Meanwhile, in San Francisco, Internet Archive founder Brewster Kahle sits down to lunch at Sake Zone restaurant in the Richmond District. He orders a bento box for .014 Bitcoin. The high-tech crypto-currency might be crashing and burning thousands of miles to the east, but Kahle remains sanguine.

Reports of Bitcoin's demise are highly exaggerated, he says.

Mt. Gox collapsed amid reports of mass theft, accounting errors, cyber attacks, and scuffles with government regulators, all of which could be to blame for the exchange losing 750,000 of its customers' coins — worth some $480 million — before filing for bankruptcy. Instantly, the value of Bitcoin plummeted. Tech bloggers rushed to pronounce it dead. A joke made the rounds about florists who'd taken Bitcoin for Valentine's bouquets: It's not time to buy flowers with Bitcoin; it's time to buy flowers for Bitcoin.

Kahle is resolute. "Mt. Gox should be credited as one of the real pioneers of Bitcoin, and it had to withstand all the stresses," he says. "It had technical issues, it had regulatory issues, it had $5 million seized by the federal government [last year]." But, he cautions, if a money system can survive without any of the bulwarks that protect Wall Street, then it might come out stronger.

"These sorts of things die when people stop being interested," Kahle insists.

Indeed, interest hasn't flagged that much in San Francisco, where Bitcoin is still subversively fashionable. Over the past few months, cupcake shops, sushi restaurants, doctors, landlords, and do-gooder nonprofits began trading in digital currency. Promotional Bitcoin billboards popped up throughout this city. At a recent Bitcoin Fair in Japan Town, vendors hawked ramen, T-shirts, and Japanese Izakaya dishes for infinitesimal amounts of Bitcoin.

Marshall Hayner, who launched the fair with his business partner, Nathan Lands, shares Kahle's optimism. "Five years from now, we might see an entirely new system with better security, and a better protocol," he says, characterizing Mt. Gox as a bad actor — a high-tech Bernie Madoff — that had to be weeded out. "It's not about the death of Bitcoin," Hayner continues. "It's an example of how to do things wrong."

If enthusiasts can keep the currency alive, then it might flourish, albeit in a less glamorous form. Down the line, Hayner envisions moderate security controls and audits; "survival," for Bitcoin, means straying away from its outlaw libertarian roots.

He and Kahle can live with that. So long as there's a market for T-shirts and bento boxes.

About The Author

Rachel Swan

Rachel Swan

Bio:
Rachel Swan has been a staff writer at SF Weekly since 2013. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.

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