SALT LAKE CITY -- A Utah company joins a growing list of retailers accepting bitcoins for payment. Overstock.com says the digital currency is being used by millions, so they decided to offer the payment option to their customers.
Bitcoin isn't something you can touch like a dollar bill, so it's still a tough sell to a lot of people -- but the idea of digital currency is beginning to grow in popularity.
So much so that someone was able to buy a house in the Hamptons with bitcoins but critics warn: buying into bitcoins is a volatile business.
"I know that it's been going up in price, beyond that I really don't know much," said Kathy Brooks, a Salt Lake area resident.
"It's the world's first digital currency," explains Michael Harmond, another Salt Lake area resident.
Beyond the simple explanations by every day Utahns, the peer to peer payment system is still a bit of a mystery. "The creator of bitcoin is Satoshi Nakamoto, that's all I know about him," said Mike Caldwell, president of a local software company and a bitcoin enthusiast.
Caldwell came up with the first bitcoin coin.
"What prompted me to create the coins was my observation to explain virtual currency to someone, to tell someone you can't touch it, hold it or put it in your pocket I knew that was a deal breaker for a lot of people," he said.
Caldwell said that's what makes explaining bitcoin so complicated. The digital currency is controlled by cryptography and so-called miners are the ones who verify transactions and your bitcoins but there's no one really regulating anything; that's why countries like China have rules in place, which don't allow people to exchange bitcoin for their currency.
However, the principle behind bitcoin is so appealing millions use it to make purchases.
"What sets bitcoin apart from everything else is that it's decentralized, there's no organization,” Caldwell said. “There's no central bank, there's no head to cut off someone didn't like the way it works."
Overstock says in just days thousands of orders have come in all with costumers paying by bitcoin.
"One thing is very apparent to us, is that this is a dramatically underserved proportion of the market there are a lot of people who hold bitcoin that want to spend it but there are very few places that permit them to spend it," said Judd Bagley, the Director of Communications at Overstock.com. "The biggest risk when using bitcoin is it's volatility, the fact that it's value fluctuates quite wildly from day to day."
In 2009, one bitcoin was worth a fraction of a penny.
"Right now it's about $828 last I checked," Caldwell said.
There's no telling how long bitcoin will stick around but Caldwell believes the currency will someday gain mainstream status.
Caldwell said a lot of people will purchase them from www.localbitcoins.com.
Fox 13 has also learned Pie Hole in Salt Lake City is also now accepting bitcoins to buy its pizza.
