Bitcoin gets new friends, but still a bit player

The digital currency is gaining in legitimacy with new supporters

By , IDG News Service |  Software

Bitcoin scored several big wins this week, including endorsements from U.S. federal officials and Virgin Group founder Richard Branson, signalling its progress toward wider acceptance.

Bitcoin has battled concerns about volatility, criminal use and potential government crackdowns, but people continue to invest in the virtual currency. It may still be a way from mass market acceptance, but developments over the past few days show it gaining support beyond enthusiasts, Libertarians and black market traders.

On Monday, federal officials including the acting assistant attorney general at the Department of Justice argued that Bitcoin could benefit the financial system and global commerce more broadly. But the anonymous nature of the currency, which makes it attractive for black market transactions, must be watched, they said.

Some see Bitcoin more as an investment -- if a potentially risky one -- than a legal tender. On Friday a bitcoin was worth more than US$800 on the Mt. Gox exchange, up from just $30 earlier this year. Bitcoin is managed and traded on a peer-to-peer network and is meant to be free of regulation by any central financial authority.

The recent positive attention Bitcoin has received increases its legitimacy and means more people now see it as a real currency, said Jordan McKee, an analyst with the Yankee Group, who has been tracking Bitcoin's evolution.

Take British billionaire Richard Branson. The Virgin Group founder's space travel startup Virgin Galactic will start accepting payments in bitcoins, Branson announced Friday, a currency he referred to as "one of the world's most innovative businesses looking to the future."

"For people who can afford to invest a little in bitcoins, it's worth looking into," said Branson, an investor in the currency himself.

There's also a documentary in the works about Bitcoin and the "deep web," by "Bill & Ted's Excellent Adventure" actor Alex Winter. "Guns, drugs and murder, and a new global currency created by hackers that exist outside the control of government and banks," Winter says of the movie on his Kickstarter page.

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