Bitcoin the buzz at South by Southwest

At last year's South by Southwest gathering, regarded as the place where the hip technology companies show up, Bitcoin was still such an underdog that it was not important enough to command a single event or panel.

This year, it was hard to avoid the upstart virtual currency. Bitcoin has been the subject of official events at SXSW’s largest venues, and was also the buzz at after-parties that had luminaries from the tech world in attendance.

It was soon after SXSW last year that Bitcoin won an informal stamp of approval from the Treasury Department. That helped send the price of a Bitcoin on a wild ride, starting at around $50 and rising to more than $250, before a quick crash.

Since then, it has experienced several run-ups and quick drops. Most recently the price was sent careening after the collapse of the first big Bitcoin exchange, Mt. Gox, which raised questions about the long-term viability of Bitcoin.

Still, the sheer number of events, and the level of interest in virtual currency, at SXSW underscored the degree of fascination that Bitcoin is generating in the mainstream tech sector, and the broad applications that some people are imagining for it.

"Anyone who has any interest in technology has to be interested in this," said Russell Castagnaro, who was attending his second SXSW for his job with the Hawaii Information Consortium.

Castagnaro has attended as many of the Bitcoin events as he has been able to pack in, finishing with a meet-up of Bitangels, a group that is trying to connect start-ups with angel investors. Castagnaro is hoping that governments will begin to use the ledger that is a part of the Bitcoin system to transfer property and make payments easier. There were people from about a dozen different countries at the Bitangels events, and only a few of them were involved with Bitcoin companies.

Even at events not specifically about Bitcoin, the topic frequently came up. At a panel discussion on “The Future of Money” hosted by Yahoo, one panelist was from PayPal and the other from BitPay, a company that enables merchants to accept virtual currency payments.

The rapper Nas brought it up during a panel discussion that featured the venture capitalist Ben Horowitz, co-founder of Andreessen Horowitz, a firm that has invested about $50 million in Bitcoin-related start-ups. Horowitz said he believed Bitcoin was like "the internet of money".

At one of the most exclusive parties at the conference, hosted by Nas and Horowitz, the two kibitzed with Fred Ehrsam, the chief executive of Coinbase, a Bitcoin company they have both recently invested in. "Once you get people talking about this, you can't get them to talk about anything else," Ehrsam said.

For Bitcoin entrepreneurs, the rise from scrappy outsiders to tech world insiders has been a bit dizzying. A year ago, Coinbase, for instance, was barely up and running and consisted of just Ehrsam and a partner. This year, his first time at SXSW, Ehrsam was invited to be the main speaker at a session on Monday afternoon in one of the conference’s largest venues, which drew a large crowd.

Ehrsam’s event, and many others, have frequently had to address the scandals that have plagued the virtual currency, including the downfall of Mt. Gox, and the frequent use of it for illegal means.

At the Bitangels meeting, a man from Spain said, “I am really sceptical about Bitcoin, but I’m willing to learn,” while an entrepreneur from Los Angeles said he was concerned “about the snake oil aspects of it”.

Ehrsam, like many other Bitcoin backers, argued that Mt. Gox was a company that used Bitcoin, but it was not important to the underlying decentralised network that Bitcoin runs on. As a result, he said, its collapse should not threaten the basic technology that was invented in 2009 to allow digital money to be moved around the internet. Many of the Bitcoin start-ups at the conference were pitching services that would make virtual currency accounts more secure with things like multiple-signature capabilities.

Bitcoin fans are hoping that the events at SXSW will help broaden the acceptance of virtual currencies beyond the early adopters and speculators who have driven many of the price moves until now. But these fans are also imagining such rapid growth for the currency that they think a year from now, Bitcoin may be helping SXSW rather than the other way around.

"Bitcoin could help SXSW continue to evolve as some of the other trends drop away," said Michael Terpin, the founder of Bitangels.

– New York Times News Service