You have reached your limit of free articles this month.

Enjoy unlimited access to

Starting at just 99¢ for 8 weeks.


  • ePAPER

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and bonus content- exclusively for subscribers. Starting at just 99¢ for 8 weeks


Welcome to

This subscriber-only site gives you exclusive access to breaking news, in-depth coverage, exclusive interactives and bonus content.

You can read free articles of your choice a month that are only available on

Credit demands trust; bitcoin bypasses it

They don’t take cash.

At Atlanta Kick, in Buckhead, they accept credit cards, debit cards and … bitcoin.

There is no register. Only a safe in the back and a 2-D QR code in the office underneath the price sheet that people can scan on their smartphones in order to shoot bitcoins to the gym’s digital wallet.

“If you don’t have a credit card, we don’t want you,” co-owner Jeff Thompson said, jokingly. “Unless, of course, you have bitcoin.”

Not yet the norm as a business model, perhaps. But the martial arts studio off Miami Circle is indicative of a surging interest in such cryptocurrencies, especially in Atlanta. The city, already a national payments center, has spawned a network of bitcoin enterprises rivalling that of New York or Silicon Valley.

Thompson likes bitcoin because it insulates him from employee theft or being robbed, he said on a recent Tuesday afternoon as kids screamed and karate chopped around the gym.

Like serial numbers at the bottom of dollar bills, bitcoins are represented by unique identifiers on a public ledger called the blockchain. Each time a unit of bitcoin moves from one digital wallet to another, its authenticity is verified and the movement is recorded in the ledger for all to see.

That’s a fundamental shift in the basis for transacting business: substituting transparency for trust. We’ll talk more about the implications later, but here’s the headline: The technology behind cryptocurrencies could change our financial dealings as radically as the Internet changed how we communicate.


Practically speaking, for a Karate mom paying at Atlanta Kick, the process is relatively simple. She opens an app, her digital wallet, on her Android smartphone and scans the QR code.

Her wallet stores cryptographic keys that unlock her bitcoins – which she might have acquired through a bitcoin exchange or brokerage. The app transfers ownership of the bitcoins from her wallet to the gym’s wallet, the address of which is stored in the QR code.

Immediately, on a website, such as, an Atlanta Kick employee can see that an unconfirmed transaction has been recorded. In roughly ten minutes, the gym will own those bitcoins and the block chain will be updated.

Underneath the hood, Bitcoin is basically a decentralized, worldwide, real-time electronic accounting system. Here, things get very geeky, very fast.

The open-source computer code that established bitcoins and many other cryptocurrencies is the work of an anonymous individual or small group. But the system is operated by a decentralized network of computer owners across the globe.

They use cryptography, the branch of math that has to do with codes, to “mine” new bitcoins (the digital currency is created at an ever-slowing rate determined by the original source code). The miners also authenticate and post each transaction involving bitcoins on the blockchain.


Here, in Atlanta, a small trove of companies has built up around the cryptocurrency.

The best known, which deals with the headache of moving bitcoin to U.S. dollars for merchants, is BitPay (think: PayPal, but with bitcoins). It is backed by $2.7 million in funding.

Located in a small office in Atlanta Tech Village, on Lenox Road, 30-plus employees perform that service for the NBA’s Sacramento Kings, Wordpress and hundreds of others. BitPay moves about 2,000 transactions a day for its customers, which mostly sell wares online across international borders, at an average ticket of about $400.

Coinfirma lets people rent computers within a data center that mine new bitcoins by by computing the complicated mathematical formulas required.

CoinX is an Atlanta-based exchange that’s under development. It is acquiring money transmitter licenses across the country to allow it to remit payments.

PlayCoin (which has created a Facebook app that helps nonprofits accept bitcoin), Atlanta Bitcoin (which has its own bitcoin ATM) and CampBX (a bitcoin trading platform) round out the metro area’s busy scene.


Jeff Costa, a technical salesmen for web security outfit Akamai Technologies, started mining bitcoins with a $1,500 starter kit he bought online early this year. He stores his rig in the unfinished basement of his two-story home in Smyrna.

As of the beginning of April, the system has rewarded him with about 1.78 bitcoins — just enough to pay the electric bill and let him trade in the digital currency.

“I think the spark in it, for me, is what it can be,” says Costa, 44. “Just the potential of this, for the secure transfer of assets.”

So, just what is that potential? It’s all about taking trust out of the equation.

Plastic money is 100 percent about trust. First, the card issuers determine that you can be trusted to pay your debts, then they verify that the person using your card is actually you.

With cryptocurrencies, the currency itself is authenticated every time it changes hands, and its movements are tracked and recorded in full public view. The identities and trustworthiness of the individuals involved are wholly irrelevant.

Operationally, there have definitely been kinks in the system – say, the collapse of the Japanese exchange Mt. Gox, which said it lost more than $450 million worth of bitcoins to hackers. But the underlying mathematical principles could fundamentally alter how we do business on every level.


The open-source code could be used to transfer ownership of cars, stocks and bonds from person to person, with little intervention by lawyers or other professionals. It could launch fleets of Uber-like enterprises, where goods and services are exchanged between individuals, without middlemen. It could engender decentralized corporations, with no hierarchy.

Innovators are already building exciting new companies based on Bitcoin, said Marc Hochstein, the executive editor of American Banker.

“I like the idea of removing trust, and removing the need for trust,” he said

He points to an international organization of programmers calling themselves Ethereum, which is creating a programming framework inspired by the concept of the Bitcoin protcol. Already, others are using it to create smart contracts, which, like escrow services, can hold money until both parties agree that a transaction of, say, a house is finalized.


This all isn’t to say that cryptocurrency, bitcoin especially, doesn’t have its downsides.

Most importantly, if you get robbed, you’re out of luck. There is no federal deposit insurance.

Therefore, banks want nothing to do with bitcoin.

And, recently, the IRS has also said that it plans to tax bitcoins as property – creating an accounting headache that may deter many average users.

“People will stay away from a currency the government says will cost them capital gains tax for buying a shirt online,” tweeted Mike Dudas, a former Google Wallet executive and a current PayPal executive.

As for Thompson of Atlanta Kick, he got into bitcoin after going to a cryptography conference in Tel Aviv two years ago with his girlfriend. She’s studying for her doctorate in computer science and cryptography at Georgia Tech.

So far, he’s amassed about 400 bitcoins, worth roughly $200,000 at present prices.

He knows he’s taking a risk. “It could all go to zero. I’m not foolish enough to think it won’t all collapse tomorrow,” he said.

He doesn’t care. It’s the idea behind bitcoin that excites him, not the monetary value — though that is nice.

Reader Comments ...

Next Up in Business

The questions all landlords should ask

The vast majority of rental problems can be eliminated in advance through a good screening process. Many amateur landlords are so desperate for a tenant that they accept the first applicant who walks in the door. That is a rental nightmare waiting to happen. When screening any applicant, remember to be consistent - treat all potential renters the same...
New Atlanta Fed president sees lighter burden for small banks
New Atlanta Fed president sees lighter burden for small banks

Banks — especially the smaller ones — can probably expect a lighter touch from regulators in the future, but not in areas that would weaken protections against another industry meltdown, according to the Atlanta Federal Reserve Bank’s new president. Earlier this month the U.S. Treasury Department unveiled a nearly 150-page report...
Couple gets engaged on Delta flight
Couple gets engaged on Delta flight

A Delta Air Lines plane at 30,000 feet became the scene for a carefully-orchestrated engagement this week. Flights were already part of the couple’s long-distance relationship stretched between Atlanta and Pennsylvania — Deepum Patel works in Atlanta while girlfriend Neha Chakravarti has been in dental school in Pennsylvania. During a Wednesday...
Georgia sees huge drop in people on food stamps
Georgia sees huge drop in people on food stamps

Georgia is seeing a significant decrease in the number of people receiving food stamps as the improving economy lifts many recipients into new jobs and frees them from the fear of going hungry. The number of Georgians getting food stamps has dropped by 300,000 from 1.9 million in April 2013 to 1.6 million. That decrease of 16 percent in the federally...
Record number of travelers expected over July 4th weekend
Record number of travelers expected over July 4th weekend

A record number of people are expected to travel over the 4th of July holiday weekend, according to AAA. A total of 44.2 million Americans are forecast to take trips over the period running from June 30 to July 4. In Georgia, 1.3 million people will travel for the holiday, AAA says. Most of them will be driving. But 3.4 million across the country are...
More Stories