One of Las Vegas’ first bitcoin enthusiasts was only 9 years old when she obtained her first unit of the cyber currency. In 2010, the daughter of Julian Tosh, a self-proclaimed computer and cybersecurity nerd, began “mining,” the process for discovering new bitcoins. At the time the new currency was worth less than a dollar.
Over the years, father and daughter’s fascination with bitcoin grew. The former began reaching out to local merchants, urging them to adopt it. He organized weekly lunch mobs, introducing newbies to its benefits. He started a consulting agency, offering free advice to business owners wanting to unlock its rewards.
Meanwhile, Tosh’s daughter continued to share her dad’s passion for bitcoin, not to mention cybersecurity: These days, she prefers to be called by her hacker name, Kryptina. She blogged about her mining experience and even uploaded a YouTube video in 2012 of her singing Selena Gomez’s “I Love You Like a Love Song.” Instead of the original lyrics, she substituted ones about bitcoin. People gave her tips in the currency, which at the time hovered around $13.
Today, Kryptina is almost 13, one bitcoin is worth approximately $440 and there are more than two dozen local businesses that accept the virtual money.
“I just kept having these epiphanies,” Tosh says. “You have to take the time to experiment with it.”
In circulation since 2009, bitcoins have been growing in popularity and use while simultaneously raising regulatory eyebrows. The digital currency eliminates banks as the middlemen for money transactions, so there are no credit-card fees. Also, international payments are cheaper, and purchases can remain anonymous.
Because of concerns about money laundering and security, many states are attempting to regulate bitcoin without hindering the potential for growth. Given Nevada’s budding tech scene and favorable tax structure for new businesses, many of the currency’s early adopters are hoping that Las Vegas becomes a national springboard for bitcoin businesses.
“You have state [after] state wanting to add layer after layer of regulation,” says Michael Terpin, head of the Las Vegas-based investor group BitAngels. “Nevada as a state and Las Vegas as a city have not been ones historically to shy away from doing things their own way.”
It makes sense why international destination Las Vegas and bitcoin would be a good fit. Travelers wouldn’t lose nearly as much of their money to transaction fees and could have faster and easier access to their accounts. In theory, that means more money for tourists to spend.
Terpin is one of those committed to increasing bitcoin’s presence in Las Vegas. In 2013, he and a partner started BitAngels, which only invests in cryptocurrency companies like the bitcoin payment platform GoCoin. BitAngels’ network of investors has grown to 500 people in 30 cities, and Terpin says more than 300 companies have approached BitAngels with proposals. So far, they’ve funded 15.
In an editorial for CNN Money earlier this year, Terpin wrote about the idea of Las Vegas serving as a special economic zone for bitcoin, where businesses could get started without fear of overregulation. Then Terpin set about organizing the first bitcoin investors conference, called CoinAgenda, scheduled for Oct. 7-9 at the Palms. “This year, we counted 800 bitcoin companies in existence in the U.S.,” he says. “Last year there were only 100.”
Bitcoin proponents compare the fledgling industry to that of the Internet when it started becoming more accessible to the public in the 1990s. Most didn’t understand or trust the Internet. Once awareness spread, though, new companies were there to help build out the infrastructure and make it easier for the non-tech savvy to use. People needed to find Web pages, so they built search engines. People wanted to share photos of themselves or their activities, so they built social networks.
“Just like the Internet in 1991 is nothing like the Internet you see today when you turn on your iPhone, the bitcoin infrastructure of 2034 is going to be nothing like the bitcoin you see today,” Terpin says.
Las Vegas is already home to several new bitcoin businesses, one of the first being Robocoin, the bitcoin ATM company founded by Jordan Kelley. The ATMs dispense cash and allow people to buy, sell and send the digital currency in minutes. There are now 35 Robocoin machines up and running worldwide, two of them in Las Vegas. Kelley hopes to have more than 100 machines in operation by next year.
Not only are startups like Robocoin popping up everywhere, but investors are also looking to get a piece of the pie. In July, bitcoin news website CoinDesk reported that $150 million was already invested in bitcoin businesses and estimated that by the end of the year, funding for cryptocurrency startups will surpass 1995 investments in Internet companies.
Even with all the hype, the public remains skeptical. Controversy over bitcoin’s association with the online black market Silk Road—as well as the shutting down of Mt. Gox, the largest bitcoin exchange—did not calm any concerns. But Julian Tosh is among those who hope the general public will catch on as the currency becomes more available.
“I usually have to sit down with someone and show them how to buy bitcoin for them to really understand the benefits,” Tosh says. “Las Vegas could be great for bitcoin because it’s a global destination. And bitcoin is a global currency.”
Meet your local bitcoin companies
One of the first bitcoin companies to sprout up was Robocoin, the bitcoin ATM company founded by Jordan Kelley. The ATMs dispense cash and allow people to buy, sell and send the digital currency in minutes. There are 35 machines up and running worldwide, with two of them located in Las Vegas. Kelley hopes to have more than 100 machines in operating by next year.
Recently, his team launched a new feature called Robocoin Wallet, which allows people to send bitcoin from the kiosk, where anyone can redeem the currency. Currently, you have to use a kiosk to sign up for a Robocoin account to redeem the money, but within three months Kelley and his team plan to roll it out to anyone with an Internet connection.
Kelley came up the with Wallet when he was watching people’s confusion when encountering the ATM machine.
“The machine’s job was to be the easiest way for people to buy and sell bitcoin,” he says. “We had to take a lot of those confusing elements out of the equation.”
Another Las Vegas startup is hoping to cash in on the supply side of the cryptocurrency. Chris Shepherd and his coworker Gabe Evans started mining for bitcoin in March 2013 while working at a Downtown startup. When bitcoin was created by an unknown person under the name Satoshi Nakamoto, the finite amount of bitcoin was set at 21 million. Miners use special software that solves complex math problems and are awarded new bitcoins. Thirteen million bitcoins are in circulation today, and it will take an estimated 130 years to until the remaining 8 million are mined.
Sheperd at first wanted to expand his mining operations, but then it hit him. During the Gold Rush, the first millionaires were not the people who struck gold. They were the merchants who supplied the tools for the miners. So he decided to do the same.
“Miners can be greedy, because in the end, they’re only building software to get money,” he says.
He became a merchant in the digital Gold Rush with HashRabbit, a tool that helps monitors and manages digital mining rigs so miners can be more efficient and turn higher profits. Shepherd and Evans are developing HashRabbit in the Bay Area after being accepted into a high-profile bitcoin accelerator called Boost.
Leetcoin, a competitive video-gaming platform that allows gamers to battle for bitcoin in real time with immediate payouts.
Las Vegan Kingsley Edwards came up with the idea while playing popular computer game Minecraft, when a friend showed him a bitcoin casino hosted in the virtual realm. He thought that the concept could easily transfer to video games, and launched Leetcoin in October. The company already boasts 1,000 beta players and raised $40,000 from Edwards’ friends and family before entering Downtown’s accelerator Progression Labs.
Just finishing up a three-month stint there, Edwards hopes to build more traction and raise more funds, which may not prove hard thanks to a new partnership with Riot Games, the video-game publisher behind popular PC game League of Legends, played by 27 million people each day, according to The Wall Street Journal. Leetcoin just released support for the game, and is working on Counter-Strike and Team Fortress 2 next.
The company is also reaching out to game developers by making their API, the programming interface that specifies how the software functions, available for free. So independent developers can decide how they want to integrate Leetcoin into their games, build their player base and then monetize.
Because of online gaming regulations, Leetcoin is only legal in 37 U.S. states, but is permitted in Canada, most of Europe, Asia and South America. Edwards plans to integrate other currencies in the platform in the future.
Did we miss a Las Vegas bitcoin company? Email Nicole Ely and we’ll add it to our list.