May 18, 2013, 5:13 AM — Bitcoin is growing up. The virtual currency that caught the public's attention last month when its value zoomed briefly past US$200 kicked off its first Silicon Valley conference Friday evening and shows no sign of losing momentum.
The event is small by Silicon Valley standards, with about 1,000 attendees expected and 19 exhibitors, but it's bustling with startups launching new exchanges, software developers looking to strengthen the Bitcoin network, and venture capitalists seeking places to invest.
There's now $45 million a day being traded on the Bitcoin network, or $16 billion a year, according Peter Vessenes, chairman of the Bitcoin Foundation, who talked at the start of the event in San Jose, California.
The volume of activity is accelerating, he said. There have been 18 million transactions in the four years since bitcoins were introduced, and the figure is expected to reach 20 million next month.
With the increased activity has come greater value. Bitcoins were trading at about $125 Friday on the Mt. Gox exchange, down from their surge last month but still 24 times higher than at this time last year, when a bitcoin was worth $5.08.
This will be a big year for competition, Vessenes said, and "whippersnapper" companies will emerge to unseat early leaders. "Someone's going to get rich this year on Bitcoin," he predicted.
But there's also work to be done for the virtual currency to succeed. The Bitcoin Foundation, which has just two full-time staff, will hire a Washington lawyer this year to engage with politicians and try to hammer out a regulatory environment in which the virtual currency can thrive.
The foundation will also hire two technologists, and establish international chapters to work with local regulators and help Bitcoin expand overseas, he said.
Bitcoin is a currency that can be bought and sold much like any other, but it's managed and traded on a peer-to-peer computer network. Proponents say it allows frictionless payments anywhere in the world, and transaction fees are lower than those charged by companies such as Visa and MasterCard.
It's also popular because it exists outside the authority of the traditional banking institutions, and like open source software, there's a side to Bitcoin that's political. When one of the speakers asked Friday if there were any libertarians in the audience, he was met with a rousing cheer.
Some "star power" was provided by Tyler and Cameron Winklevoss, the brothers best known for claiming to have given Mark Zuckerberg the idea for Facebook, and who are now investing in Bitcoin companies.