A foundation has been established to create a more solid footing for Bitcoin, the virtual currency admired for its technical genius but dogged by doubts over its long-term viability.
The Bitcoin Foundation plans over the next year to fund efforts to create a set of best practices for merchants accepting Bitcoins as well as conduct a payments-oriented conference in Silicon Valley early next year, wrote Peter Vessenes, who will be the foundation's chairman and executive director.
Its other plans include creating a opt-in certification process for businesses accepting Bitcoins and funding a development team lead by Gavin Andresen, a foundation board member and lead developer for the overall Bitcoin project.
Bitcoins are transferred using a peer-to-peer system that employs "miners" to cryptographically verify transactions to ensure people are not trying to double-spend their currency. All transactions are entered into a publicly accessible ledger. The ledger shows a person's 32-character alpha-numeric address, which is used to transfer funds, but no more identifying information of the involved parties.
Promoters of Bitcoin say the very low fees charged to send currency to other people makes it attractive to businesses using traditional banking systems. Transactions are also irreversible unless the receiver of a Bitcoin wants to transmit it back to a sender, eliminating the risks businesses face of possible chargebacks when transacting with credit cards.
Since Bitcoin launched in 2009, the exchange rate used to move it into government-issued currency by Bitcoin exchanges has fluctuated widely. A small but growing list of retailers are transacting in Bitcoins, but greater adoption by merchants is seen as a way to stabilize exchange rates. Software tools for merchants are under development.
As with any online system involving money, Bitcoin has drawn its fair share of hackers, who have targeted Bitcoin exchanges that specialize in converting the virtual currency into fiat currency. Botnet operators and Ponzi schemers have also left their marks.
"We can help solve or mitigate these problems as a community," Vessenes wrote. "My hope is that the Bitcoin Foundation will be the organization that focuses and unlocks all of your energy and talents towards promoting Bitcoins, protecting them, and increasing their legitimacy through standardization."
A platinum annual membership for enterprises to join the Bitcoin Foundation costs 10,000 BTC, which is about US$124,000 as of Monday. A gold membership for business costs 2,500 BTC, and the silver category is 500 BTC annually. Lifetime membership for individuals is 25 BTC, and a one-year individual member is 2.5 BTC.
Send news tips and comments to email@example.com