Free Digital Gold by Nathaniel Popper

company—held everyone’s money. If Jed offered good security measures, this might prove safer than holding coins on a home computer. But Jed was not a security expert, and if he did somehow lose the private keys to the exchange’s digital wallets, his customers had little recourse. Unlike the banks that Bitcoiners had bashed, Mt. Gox had no deposit insurance and no regulators overseeing the safety and soundness of Jed’s operation. The choice was between security and principles on one hand and convenience on the other.
    When a forum member asked why they should choose Mt. Gox over the alternatives, Jed responded in his characteristically modest but confident way.
    â€œIt is always online, automated, the site is faster and on dedicated hosting and I think the interface is nicer.”
    Even Jed, though, was surprised at how quickly people trusted his setup and sent money to his PayPal account. During his first day in business, July 18, twenty Bitcoins were traded at five cents each on Mt. Gox—an inauspicious opening. But within the first week he had his first hundred-dollar day of trading, and by the end of the month Mt. Gox had overtaken Martti’s service and the other existing exchange in trading volume to become the largest Bitcoin business around.
    These weeks marked a subtle but dramatic transition for Bitcoin. Until this point, there had been occasional transactions, but mostly between aficionados making them out of a desire to help the network. After the Slashdot story, the difficulty of mining new Bitcoins ramped up quickly with the surge in the number of people racing to win coins. Satoshi had determined that as more computers joined the network, the mining of new Bitcoins would become more difficult, ensuring that it would always be roughly ten minutes between releases of new coins. The week after the Slashdot story,the difficulty of mining new Bitcoins jumped 300 percent. Gavin Andresen, who had initially started mining Bitcoins to help the network, now found it all but impossible to win new coins with his four-year-old Mac laptop.
    Suddenly, if a person wanted Bitcoins, he or she had to buy them. And people were showing a willingness to do just that and part with real money for these unproved slots on a digital spreadsheet. The growing popularity of Bitcoin was hard to miss. One new forum member wrote:
    What I like about Bitcoin is that it is a community with a solution that we are actually trying. I don’t know manypeople in real life that are even close to as radical in their thinking as I (and many others on these forums) am. Surprisingly, however, I am able to talk with my real life friends about Bitcoin much longer than my normal rants about “what should be,” because Bitcoin actually exists.
    I N LATE J ULY Martti launched the first foreign-language forum, in Russian, and within a few weeks it had hundreds of postings. The English forum grew much faster.In one month, the forum had gained more new members—370—than it had since coming online in November 2009. Craving more conversation, the expanding herd of dedicated Bitcoin followers found their way to the chat channel Martti had set up. Now, the Bitcoin channel on Internet relay chat, or IRC, became a sort of twenty-four-hour global coffeehouse where the new users could gather and marvel at this experiment they were all taking part in.
    Around midnight on September 26, one new Bitcoiner wrote: “gosh I can’t sleep ! I keep thinking about this great stuff. To me Bitcoin is the ‘cyberspace gold.’ I’m just amazed.”
    The next afternoon another new user spoke of spending ten hours reading everything he could find about the network.
    â€œI did the same thing when I first heard about Bitcoin,” Gavin wrote back.
    The appeal of Bitcoin varied from person to person, but most were in love with the basic idea of a digital cash that each user could control and move around the world with