Ripple is now a Tsunami!

Just like that, Ripple's market cap now exceeds that of Bitcoin. There are a lot of people asking just what the heck is going on, and of course, trying to figure out if this is just another digital currency bubble.

Taking into consideration the total number of Ripples (XRP), that is, 100 billion, and the current exchange rate of approximately 70 XRP/USD, the XRP market cap is $1.43 billion USD. Bitcoin's market cap is currently $1.30 billion USD.

Clearly the XRP exchange rate has been influenced by the limited supply of XRP. The question is, how many are actually "floating" and how many have been locked away by OpenCoin and the founders?


We do know that the founders have retained 20 billion XRP, and that OpenCoin controls 80 billion XRP. Of that 80 billion, 50 billion are being "given away," though how that is happening is a bit of an unknown. It's likely that giveaways like the one we saw on the bitcointalk.org forum are the exception and not the rule. OpenCoin is probably paying developers in large lots of XRP to help build Ripple's infrastructure and applications.

Six days ago, someone put together a spreadsheet that lists all non-zero Ripple accounts and their XRP holdings. From this list, we can make some educated guesses:

There are 99.25 billion XRP in the top 55 accounts, with the smallest one holding 40 million XRP. These are likely OpenCoin holdings or those of major investors. We can safely assume that none of these coins are in circulation.

There are another 17 accounts with exactly 10 million XRP that, again, are not likely in circulation. That brings the total number of "institutionally held" XRP to 99.42 billion.

The total number of XRP that are actually being bought and sold right now is therefore in the 500 million range. At 70 XRP to the USD, they would be worth just over $7 million USD, a realistic estimate of how much fiat and BTC has been deposited into Ripple.

Account number nine on the spreadsheet is of great interest, as it appears as one of the nine billion XRP accounts, but one that has been drawn down by 1.421 billion XRP. What is this account being used for? Perhaps for actual giveaways, or for selling Ripples to re-sellers such as BitStamp or xrptrader.com.

Sources tell me that, in the same vein as what has been happening with Bitcoin, Chinese investors have shown great interest in Ripple, and are responsible for a non-trivial fraction of the recent rise in XRP valuation.

So what is Ripple actually worth? As a protocol, it has Bitcoin beat hands down. Remember that most merchants do not accept Bitcoin directly, instead, they use services like BitPay to instantly convert Bitcoins to fiat. A good portion of Bitcoin's utility is as a protocol, not as a store of value. We will probably see much of Bitcoin's protocol-driven business move into Ripple as additional gateways, like the soon-to-be open Kraken, come online. If Ripple's "Federation Protocol" gains traction, we could very easily see a market cap in excess of $10 billion USD within a year.

Remember that Ripple's key investors have connections to PayPal and Dwolla, and will want to bring them on as Ripple Gateways. Such a move would boost Ripple's valuation well into the stratosphere, leaving Bitcoin behind as a beta-version afterthought.

Expect to see some interesting discussion, debate, and hopefully some big revelations at this year's Ripple... err... Bitcoin Conference in San Jose in two weeks. With the drama surrounding CoinBase and MtGox, and the explosion of interest in Ripple, the timing couldn't be better.

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How to Explain Bitcoin to Anyone

There have been numerous attempts at this, but I'm going to give it a shot, anyway. Feel free to pass this around or make suggestions as to how it can be improved.

Thanks to the Internet, 2.1 billion people are now connected to each other, all around the world. As a result, the Internet makes it easier and cheaper to send mail or make phone calls, especially when compared to the old postal and telephone systems.

The system that we depend upon to send money, however, does not yet take advantage of the Internet. It still consists of a closed network of banks and credit card companies that manage those transactions for us, and it is slow, expensive, or both. Isn't it amazing, that in this day and age, we still can't pay our bills on weekends?

PayPal, like your credit card, also uses that same old banking network, and it's the reason why they charge two to three percent, or more, to let you send money through their system.

But if we're all connected to each other by the Internet, why do we still have to go through the slow and expensive banks to send money to each other?

Thankfully, someone invented a system that lets us send money to each other without using banks, and it's called Bitcoin. The Bitcoin network is part of the Internet and it works so well, in fact, that it has transferred hundreds of millions of dollars around the world over the last three years, and not a single mistake has ever been made. It's also the most powerful computer network in the world, because it's made up of all of its users, connected together.

To start using Bitcoin, all you have to do is buy Bitcoins from anyone who already has some. They can be easily exchanged for whichever currency you already use, and once you have Bitcoins, they can be sent to anyone, anywhere, for almost no fee.

Just like the postal service and telephone companies, Bitcoin makes the old ways of banking seem ancient. Best of all, like the Internet, nobody owns the Bitcoin network; it's for everyone to use as they wish.

To get started, just talk to any Bitcoin user; they would be more than happy to help you out. You can also check out weusecoins.com.

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The Bitcoin Brief - 29 Dec 2011

Some quick snippets from the world of Bitcoin:

• Ogrr.com, Bitcoin's highly anticipated virtual goods marketplace, has exited from its invite-only phase. Anyone is now free to join. There will also be some new feature announcements coming shortly.
• BitPing is now alive and running, a service which provides merchants (or anyone) with payment notifications. BitPing replaces the old Bitcoin Notify service that was sold on November 13th.
• There is ongoing discussion that the code scheduled to be implemented in Bitcoin 0.6 may require more testing than previously anticipated. Gavin also briefly mentioned eventually allowing for Bitcoin to support a quantum-computing-resistant signature algorithm; nice to know it's in the back of their minds.
• Open Transactions is now running a server for alpha testing. Between Open Transactions, Bitcoin, and Ripple, one cannot even begin to fathom the potential applications. If you have any interest at all in the potential of digital currencies and open-source, anonymous banking, I highly recommend keeping an eye on these developments. 

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"Bitcoins for Christmas" Aims to Bring New Users to Bitcoin

"Bitcoins for Christmas" was launched today with the goal of introducing new users to Bitcoin.

Potential new Bitcoin users have been burdened with extensive research, poring through endless articles about hacking and malware, figuring out how to download a client and then, how to secure it. If they got that far, they then freaked out because their coins hadn't shown up until three hours later when the blockchain finally finished downloading!

Bitcoins for Christmas removes that burden.

With Bitcoins for Christmas, you can give Bitcoins to anyone that has an email address. The site will send out an email to the intended recipient, informing them that they've been sent a Bitcoin gift. A unique link will then take them to the site, where they will be given a three-step walkthrough on how to install the lightweight MultiBit client (no blockchain), copy their Bitcoin address, and paste it into a form. The site will then send them their gift, and it's done. The new Bitcoin user will then be provided with some links to where they could potentially spend their coins.

If you want to send someone a large gift and you're worried about MultiBit's lack of security, that's not a problem either. Bitcoins for Christmas will inform you when the recipient has been sent their coins. At that point, you can contact the recipient and talk them through the installation of the Satoshi client; not a burdensome task when you, the experienced Bitcoiner, are supporting the process.

The main principle behind the site is that when you send someone free Bitcoins, they're going to be far more interested in Bitcoin than if you had simply tried to educate them. The site's FAQ explains things a little more thoroughly.

Bitcoin users could also potentially use it as a platform to send Bitcoins to someone where they know the intended recipient's email address but do not have their Bitcoin address handy.

From the site itself:

"Bitcoins for Christmas charges no fees. We're sponsored and protected by the leading and most trusted merchants in Bitcoin, and created as a Christmas present to the whole Bitcoin community."

By launching a Christmas site on the day before Halloween, Bitcoin is officially 24 hours ahead of Wal-Mart!

I know where my first Bitcoins are going - to Tim Worstall. Anyone have his email address?

---
For those of you who might be concerned about this being a potential scam, the site is a joint venture between myself (GoWest) and Josh Strike (StrikeSapphire Casino): two guys with a vested interest in seeing Bitcoin grow and succeed.

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Ogrr.com Launches Massive Bitcoin-Enabled Virtual Goods Marketplace

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Edit: Ogrr.com is currently in beta and invite only. It will be opening to the public in the very near future.
---

When you first visit Ogrr.com, your initial impression is that you've stumbled across your average Internet discussion forum. After a few seconds, however, you begin to realize that you're looking at something bigger - much bigger.

Image from simonmainwaring.com

There are two things about the site that catch your eye, one being a little more obvious than the other. As you scroll down, you are presented with the massive scope of the community that Jesse Powell and his team at Payward, Inc. have put together. Scrolling back up to the top, assuming you are logged in, a much subtler feature greets the astute eye. In tiny writing you see the acronym "mBTC," and a number. This number, which tells you how many milliBitcoins you are holding on the site, sets the community apart from the competition and is what Ogrr hopes will win it a substantial portion of the global virtual goods market. Incredibly, sales of virtual goods generated $7.3 billion in global revenue in 2010 and, according to Powell, the market could be worth as much as $16 billion in 2012. He explains how his site is different and why users will prefer Ogrr over existing sites:

"There are a few other sites like this one that are well-known in the gaming world. The idea for a marketplace forum with a built-in currency isn't anything new. What's new about this forum is that we're using Bitcoin as the forum currency and we allow our members to cash out their holdings at any time. Other forums have operated on closed forum gold systems that do not allow cashing out, which is great for the forum owner but not so great for the users. Some even go so far as to ban users for merely mentioning the existence of trades with external currencies."

The demographic that Ogrr is targeting is male and generally between 18 and 30, though players have been known to be as young as eight and as old as eighty. "It's kind of a hard figure to determine," says Powell, "because the kids aren't usually the ones doing the purchasing, but maybe that will change with Bitcoin."

"Tons of people still have never heard of Bitcoin or only have a vague idea of what it is. We need to change that."
- Jesse Powell, Ogrr.com

Competition is steep, with the likes of d2jsp.org, a forum with 650,000 members and an Alexa ranking of 17,931 in the United States, holding a huge share of the market that Ogrr is trying to tap into. d2jsp operates with a currency called "Forum Gold," which, unlike Bitcoin, can never leave the site.

To take a stab at the competition and win over users that have a lot invested in other sites, Ogrr is prepared to pull out the big guns. By offering one free Bitcoin to each of its first 1000 users and an additional Bitcoin to the first 1000 users who can sign up ten friends, Ogrr hopes to grow its membership quickly. This strategy, Powell emphasizes, is an attempt to realize the site's primary goal of expanding Bitcoin's userbase, something he says is desperately needed. "Tons of people still have never heard of Bitcoin or only have a vague idea of what it is. We need to change that."

For those of you who are not familiar with the concept of virtual goods, Jesse Powell runs us through some of the possibilities:

"Some examples of virtual goods are platinum in Everquest, mounts in World of Warcraft, and runes in Diablo 2. The most I've ever seen anyone pay for one item was about 10 years ago in Diablo 2: $2000 for a v1.08 Arkaine's Valor (then out of print). In games like Second Life, Project Entropia, and EVE online, virtual real estate sells for much more than that; tens of thousands of dollars and more. Some people spend more of their free time in the virtual world than they do in the real one so you can understand why they'd be willing to expend what may be a small amount of real world capital for a large amount of virtual world power and status."

Powell's justification for bringing Bitcoin to the virtual goods community is hard to argue against:

"[The market] is huge and it's growing fast. Bitcoin allows us to take payments and not have to worry about chargebacks which have plagued virtual goods sales since the very beginning. Historically, to take a (generally) irreversible payment such as Western Union or a bank wire transfer, it meant exorbitant fees that made small transactions cost-prohibitive.

As you know, when you deliver a virtual item, you're left with no verifiable evidence that you've done so and it's very simple for the buyer to claim that they've never received it, or that their card was stolen, or that their child made the purchase without their permission. It's this not having to worry about chargebacks that allows us to store Bitcoin on behalf of our users and allow them to trade and cash out at any time. If we had to worry about deposits being reversed, there'd be no way we could allow users to make withdrawals. Bitcoin solves this problem."

Ogrr has certainly pulled out all the stops to create a service that, by leveraging the advantages of Bitcoin, will definitely make the competition nervous. Whether Jesse Powell and his team of five at Payward can take a bite out of the multi-billion dollar market and grow Bitcoin's userbase remains to be seen. This is a project, however, that will certainly excite the Bitcoin community.

---
Jesse Powell resides in San Francisco, California, and joined us from Shanghai, China.

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Send Money to China with Bitcoin and Save Huge!

Note 1: You may have to be logged in to your Mt.Gox account to see some of the links in the directions below.
Note 2: CNY (Chinese Yuan) is the same currency as RMB (Renminbi).

Step 1) Open an account at Mt.Gox;

Step 2) Open an account at BTC China;

Step 3) Verify your Mt.Gox account by scanning and sending a photo ID and utility bill. This may take a business day or two, but will not have to be repeated for future transactions;

Step 4) Go to a Chase branch and deposit the money you wish to send to your Mt.Gox account using a deposit slip. There is no charge for depositing;

Step 5) Once the funds are added to your Mt.Gox account (this currently takes one business day but will soon be one hour), buy Bitcoins by clicking "trade" and entering your order at the market price. You will be charged 0.6%;

Step 6) Using the withdrawal page on Mt.Gox, send the Bitcoins you bought to your Bitcoin address on BTC China (this will take about an hour to complete, as the Bitcoin network verifies the transaction;

Step 7) Sell your Bitcoins on BTC China for RMB. You will be charged 0.3%;

Step 8) Withdraw RMB via TenPay. Withdrawal fees are on the order of 1 or 2 percent according to this guy;

Your total cost = USD sent - (RMB withdrawn x USD/RMB exchange rate).

Example using Mt.Gox/BTC China/Currency rates at the time of this post:

$100 USD to be sent to China.

Best ask (Mt.Gox) = 2.355 USD/BTC (Determine the number of BTC you can buy, here.)

Bitcoins purchased = 100/2.355 - 0.6% = 42.463

BTC China best bid is 15.21 RMB/BTC. The entire sell order cannot be filled at this price, so we are actually selling for a range of prices. You can place a fictitious order here to verify what you will get for your Bitcoins.

42.463 x (range of bids) = 604.51 RMB - 0.3% = 602.70 RMB

After withdrawal fee (assuming the high end of 2%) = 590.65 RMB

590.65 RMB x 0.1566 USD/RMB = $92.50 USD.

Total fee for sending $100 USD to China, including currency conversion = $7.50!

Overall costs will vary depending on the bid depth on BTC China and the amount you are trying to send. If you were trying to send $10, in this example, the fee would have been 2.4 cents.

I repeat, you can send $10 USD to China, including currency conversion, for 2.4 cents, right now. Previously, this was neither possible nor practical. This is a first...

...and it's only possible with Bitcoin. Got coins?

UPDATE: Here is a handy spreadsheet to see how much your transaction will cost you. This morning, I ran the numbers for $100 USD again and you would actually earn money! Just hit "File... Make a Copy" if you want to make changes to the spreadsheet.

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A Bitcoin Evening

March 12th, 2013: Andy's on his way home from work, having just put in a long day at the office. Spirits are up, however, because it's payday. Just in time, too; the Bitcoin account was getting a little low. He stops at the bank and wires $200 to ExchangeBitcoins to replenish the coffers for the month.

A few minutes later, he pulls his sapphire-blue '09 Accord into driveway, turns it off, and heads inside. After a quick hello to his wife and a hug from his kids, he cracks open his laptop and logs into the exchange. He sighs to himself as he clicks the "buy" button, "not like the good ol' days!" The account balance updates: 1.2 BTC.

Tommy, Andy's ten year-old, takes after his father. He was always good with technology and even better at gaming.

"Dad, can I have some Bitcoins for the HALO tournament? It's only 35 millicoins! Can I, please? I promise I'll win!"

Half sure that his son probably would win, he opens his Bitcoin address book, clicks his son's name, enters "35," selects "milli" and clicks "send."

"There ya go, kid. Now go show those Koreans how it's done!"

Tommy skips out of the room with a smile on his face. Dad, however, has some other business to take care of. Last week he had posted an ad on a forum for Bitcoin-accepting artists, looking for a new logo for his business cards. "Willing to pay 80 millicoins for good work!" it read. An artist in Spain saw the ad and made him a logo, which he just received in his email today. Thrilled with the results, Andy clicks "reply" on his Bitcoin-enchanced email client:

Felix,

Your logo looks fantastic - it's exactly what I was hoping for! I'm paying you right now.

Thanks Again,

Andy

He selects the "pay" icon, types in "80," selects "milli," and clicks "send." The client automatically associates Felix's Bitcoin address with his email address, and the blockchain is notified of the transaction.

"Better pay Doug back for lunch," he reminds himself. Just like with Felix, he composes an email to Doug:

Doug,

Thanks for covering me at lunch. Here's my half. See you tomorrow!

Andy

Andy enters $11.50 USD into the pay field. The client grabs the latest exchange rate from ExchangeBitcoins, and shows him that he owes Doug 87 millicoins. He clicks "send" and off they go.

After a wonderful dinner of apple-stuffed pork chops, Andy, being an economy buff, surfs over to his favourite blog, ZeroHedge, to read the latest news. The news indeed, as that's all there is on the page - all of the advertisements have disappeared. Since the beginning of the year, ZeroHedge has been able to cover all of its expenses, and then some, on Bitcoin donations alone. After an hour, Andy gets his fill, enters 1 mBTC into the tipping application at the top of his browser and clicks send. Unbeknownst to Andy, over a thousand readers have done the same thing in the last hour.

Yawning, Andy just about closes the lid on the laptop when his wife shouts, "Andy, are you coming to bed soon? Don't forget about Sandra's birthday, she's turning eight, you know."

"Thanks honey, I'll send her a little something!" Andy loads up BitcoinBirthdayCards.com and finds a funny one with a picture of a kitten scratching records. He frowns as he reads the caption, "Have a Mew-sical Birthday!"

"I guess an eight-year old will find that funny," he decides, as he adds 10 centicoins to the card which are automatically sent from his Bitcoin wallet.

"Thank goodness for Bitcoin," Andy thinks to himself as he heads to bed, "but I bet that 10,000 Bitcoin pizza guy is still kicking himself."

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Interview Series Part 1: Josh Strike - Strike Sapphire Casino

Josh Strike is the founder and CEO of Costa Rica based online Bitcoin casino, Strike Sapphire. In this exclusive interview, he describes the entertaining path he has followed to get into the online gambling business, the challenges he has faced getting there, and he gives us his insight into the future of Strike Sapphire and Bitcoin, with some interesting revelations.

BT: Where are you originally from, where do you live now, and what is your background in terms of education and previous employment?

JS: I was born in LA, but most of my family has lived in Las Vegas since the early '70s. I grew up around floor managers, pit bosses and bartenders, and I spent a lot of my childhood in the coffee shop at the Sahara, keeping track of my Mom's keno cards and wandering around the edges of casinos hiding from the Sheriff while my Mom played slots.

I started to think in terms of odds at a pretty early age. I remember stealing a bunch of keno cards so I could set up a game for my friends in third grade. Around the same time, my half brother graduated from Cal Poly SLO [California Polytechnic State University, San Luis Obispo] as a programmer, and gave me his TRS-80 Model 100 laptop from RadioShack, along with the original manual, which had everything you needed to know to start programming in BASIC. It had 16k of RAM, ran on AA batteries, and I took it everywhere, along with a tape recorder for saving programs. So I was sitting in Vegas, turning the odds on keno cards into little simulations when I was eight years old.

Later on, in 1995, I got a summer job doing graphic design for an ad agency in LA and worked that and a coffee shop job until the end of high school. I then moved to a crackhouse hotel on Jones & Geary in San Francisco and got a job in Web design, and taught myself Flash and PHP. After the bubble in 2000, I tried college for a year at Pratt Institute, but I'm not a big team player and organized education didn't agree with me. I was getting burned out on design, so I dropped out and became a cab driver for a couple years in LA. After that I drifted to New York and waited tables at the Carnegie Deli and Deluxe on Broadway, and dealt underground blackjack & poker games in Harlem and the Bronx all night. Finally I found myself broke in New Orleans after a bad three weeks of solid gambling, and took the train back to LA to start my life over.

Once back in LA, I got a job working for a guy who ran an instant postcard montage kiosk at a mall, and did Bar Mitzvahs, and worked for him as a speed-Photoshopper for about a year doing 20

montages an hour. He introduced me to his cousin who was starting a doggy daycare center in New Jersey called the Barker Lounge, and that's when I started coding again seriously. The Barker Lounge wanted a ton of original software written to manage the franchises they were planning, and I knew I could do it. Right about then my apartment got broken into and all my s--t stolen, so I made a deal with the owner of the company so I could get an advance and write the software from abroad, and my girlfriend and I moved to Argentina. That was the foundation of the Strike Agency, which is my day job. Since then we've worked and traveled across South America, New Zealand, Australia, Thailand, Vietnam, France and Spain.

BT: How did you get started in the online gambling business?

JS: I guess I came by it honestly, but I'm definitely an outsider in the business, to put it mildly. About 3-1/2 years ago in New Zealand, I was the only coder on contract for the now-defunct sexypolitics.com, which was this video strip quiz site about the 2008 elections. It ended up getting bought out by Fox, who shelved it. I sat down to think about what to do next; I wanted to start my own site, and I compared a bunch of different business models.

I couldn't get past the allure of gambling. I knew it would be hard to satisfy the legal regulations, but it turned out I had no idea how hard that would actually be. I just happened to have the time and money to sit down and do something for myself, so I started writing a casino. I had the basic framework for Sapphire and a working blackjack and poker game in about six months; after about a year I had ten games. I started beta testing, ironed out a lot of bugs, and by the end of year two we had about 15 games and a couple of lawyers on board, and I thought we were ready to open for business.

I actually thought it was as simple as incorporating in Costa Rica, staying away from US players and signing up with some payment processors. Man was I wrong. Online gambling is a tight club, and they aren't accepting members - ever. Pity the fool that wanders into this naively. You've really got to do something unique to break into the club. I spent a year talking with lawyers and investors and payment processors, trying to get things working. The bottom line was, we probably couldn't have launched it for less than seven figures. And then along came Bitcoin...

What's been awesome about Bitcoin is, we get to start small and focus on the software. We can test the system, train employees, learn day-by-day how to run it, and be making enough to prove the concept from day one, without breaking any laws anywhere or exposing ourselves to more risk. And it's completely possible that in a year or two we could actually bootstrap it to other payment methods, without ever paying to buy into their club, and they'd be scrambling to catch up with us in the Bitcoin market. That's how I'm thinking, and I love the idea.

BT: How difficult was it to write the software?

JS: I wrote it, and rewrote it, and rewrote it. It's about 500,000 lines of code, front and back, and I know every line by heart. I don't think it could've been written any other way. One of my heroes is Chris Sawyer, who wrote Roller Coaster Tycoon back in 1999. He is supposedly the last person to publish a game that is completely written by one coder. I wouldn't compare myself to him because he writes in Assembly and he's a complete genius, but I've always believed in the DIY ethic.

BT: Are there any additional features coming to Strike Sapphire?

JS: Yes. I'm adding new features constantly, and soon I hope I'll be adding coders who'll be adding more features. Since we launched, I've brought in lobby chat, special FX for VIP players when they win, and improvements to a lot of the underlying systems for smoother performance in a lot of games. But more than anything else, I want to focus on inventing new games. So far, I think Mayan Gold, Sixty Watt Slots and Sapphire Keno are our most original, but there are about six more I've got on paper right now that'll seriously blow people's minds. I just need some spare time, because suddenly I'm deep into casino management and expansion and trying to train up new employees.

BT: Why should I gamble online at Strike Sapphire vice other Bitcoin casinos?

JS: Well, I could give you a stock answer but I guess, if you dig it, do it. I think the fact that all our table games are multiplayer gives us an advantage in the community because people can play and

meet each other. Right now, we're the only truly legal complete casino with a full spectrum of original games, with an actual corporate structure and lawyers; what you kind of expect from an online casino. As far as I know, we're the only one that isn't based in the US, and we're also the only casino in the world running our software. I'm hoping the software, and the atmosphere, will be the two biggest draws to players. We really try to keep things chill and friendly, and get to know our players personally. It's a very social, chatty casino. One guy accused me of running a tea room instead of a poker room!

Also, we do things with a level of transparency that no other casino does, like showing every single blackjack shoe and publishing our randomness reports every day. I'm not going to hammer on the bonuses or freerolls or whatever, because every casino has stuff like that, and honestly ours aren't as loud and splashy as others. But with us you know what you're getting. I think people should just check out all the sites and decide for themselves if we're better.

BT: Do you have any other projects in the works?

JS: (laughter) I'd like to build a 14-foot-wide version of Mayan Gold and put it in the Luxor, but I had a fight with the architect, and I'm kind of full up right now anyway...


BT: What sorts of projects would you like to see developed for Bitcoin?

JS: Anything that makes it easier to transact through Bitcoin is a good thing for the currency, and a good thing for us. I think the biggest hurdle is exchange, so I love the ATM concept, and the green address idea; we'd love to work with that. If you have a larger volume of generic, day-to-day transactions going on all the time, the market will stabilize and you'll have less volatility, less speculation. I think bootstrapping Bitcoin as a global currency is going to be a two-step process, and step one is stabilizing it as a medium of exchange between other currencies - a cheap way to get money online and send it to someone who can withdraw it. The second step is we have a completely functioning Bitcoin economy where you don't need the exchanges, and then the doors come off. Step one seems to me a prerequisite to step two, so we're happy to be helping with that.

BT: ...so I guess you think Bitcoin has a pretty bright future!

JS: I think it has an extremely bright future, and I'm not the only one. One of my partners in this project, who contributed to our initial float investment, was a co-producer on two of the three best-selling video games of all time. He prefers to remain anonymous so that's all I'll say, but it was my decision to go with Bitcoin that convinced him to get into it. Another friend of mine who works for Yahoo in a senior payment-related role has been asking me about Bitcoin too. People are curious. I think it needs to gain critical mass, and part of that is going to be ease of use, including ease of use as a simple exchange instrument without having to hold it or worry about it going down.

Another important thing is showing that the community can police itself so that Bitcoin doesn't end up being a medium of exchange for mostly illegal businesses. That's one reason we try so hard to be compliant with US laws, and I wish other casinos would see that it's in their best interests to do that too.

I think Bitcoin will go through a period of increased hardship as governments crack down and a lot of the sites you see now are targeted for illegal activity. All that's an excuse for governments to demonize the currency, to delegitimize it. But in the end, I don't think governments can actually shut it down. And if more legitimate sites pop up that have nailed down what we have - basically a plan for working within the system at the early stages, keeping it legal, hedging Bitcoin risk and just using it as a free way of receiving payments - then an explosion of Bitcoin value could happen pretty fast. That explosion has the potential to radically change the world.

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