Here is an interesting step that might broaden the market for bitcoins. Right now bitcoins fails a simple convenience test – it can take an hour or more to convert the money into bitcoins. Now an online poker store has added bitcoins as a form of payment, giving it a much wider reach:
“Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. … Infiniti Poker … plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. ‘Because we’re using Bitcoin, we’re not using U.S. banks — it’s all peer-to-peer,’ Hajduk says. ‘I don’t believe we’ll be doing anything wrong.'”
Hajduk says the ability to store Bitcoins on players’ computers is appealing. “At the end of the day, [the government] cannot freeze your account because they cannot kick down the door to Bitcoin,” he says
There are other risks as well. In recent months hackers have pulled off several Bitcoin heists, and this summer Bitcoin Savings & Trust, billed as a “Bitcoin hedge fund,” made off with more than $5 million entrusted to the site by investors, in what appears to be a Ponzi scheme. Also, Bitcoin wallets can vanish as a result of hard-drive crashes or other computer problems. That’s how at least one user lost 50,000 Bitcoins, according to Peter Vessenes, chairman of Bitcoin Foundation, an organization that helps develop and promote the virtual currency.
The economy for the infamous SilkRoad is much smaller than the 1.5 trillion+ profits that come from the international drug trade:
Silk Road sellers have collectively had around $1.9 million of sales per month in recent months. Almost 1,400 sellers have participated in the marketplace, and they have collectively earned positive ratings from 97.8 percent of buyers. And the service is growing, with Silk Road’s estimated commission revenue roughly doubling between March and July of this year.
The current market price for all existing bitcoins is estimated at over $100 million.