May 19, 2013, 3:01 PM — With Bitcoin all the rage and startups popping up left and right, it's hard to know who's an expert in the virtual currency and who just has an opinion. Most people would put Jeff Garzik in the former camp.
A Bitcoin core developer for three years, he left his job at Red Hat on Friday to start work at Bitpay, the biggest Bitcoin payment processing service. IDG News Service caught up with him at the Bitcoin 2013 conference in Silicon Valley, where he talked about the state of Bitcoin today, the parallels with open source, and Bitcoin's pseudonymous creator, the elusive Satoshi Nakamoto. Following is an edited transcript of the conversation.
IDGNS: What's on people's minds at Bitcoin 2013? It feels like the Wild West right now -- the exchange rate's up and down, the government's starting to regulate, there are startups cropping up everywhere, where are we at?
JG: Bitcoin's growing up. It's been a hobbyist-grown organic piece of software, an organic community. I was one of the hobbyists. It grew up slowly, slowly, slowly over time, and now VCs are all over the place trying to write checks. As a developer, I've told several people, I don't want your check. I just started work for a startup called Bitpay, my first day is today.
For a long time the Bitcoin developers were working at Fortune 500 companies like Red Hat and Google. You didn't know if Bitcoin would be a success, we have families and have to support ourselves, so we all had non-Bitcoin jobs. This is sort of the watershed where developers are starting to be employed by Bitcoin companies, Bitcoin companies are starting to see outside investors, and the number of users is going through the roof. This is its coming out period.
IDGNS: I've talked to people here who trade bitcoins on exchanges, they say the exchanges need to become more professional and more stable.
JG: There's a race on. In order to legally service customers in the U.S., you have to register with the federal government, with FinCEN [the treasury department's Financial Crimes Enforcement Network], and you have to obtain licensing with 48 out of 50 U.S. states. That's what the Mt. Gox thing was all about, it wasn't an attack on Bitcoin, it was a specific compliance issue.
IDGNS: Because Mt. Gox isn't properly licensed to trade?
JG: That's what that seizure was all about, it was specifically saying that they were violating the money transmission regulations, and money-transmission licensing is what the exchanges all need. So you have four or five exchanges that are racing to get all the licenses, because the prize at the end is going to be U.S. customers.