Meet the First Public Bitcoin Company

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Feb. 11 (Bloomberg) –- Bitcoinshop CEO & CFO Charles Allen discusses Bitcoinshop, a website where you can buy products using bitcoin. He speaks to Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Currency called bitcoin.

How do you describe bitcoin to those of us using regular money?

I would describe it as a virtual currency.

There are a few.

Bitcoin has the largest market value, almost $9 billion.

Bitcoins are created through a process of mining.

It is similar to mining going -- mining gold.

You have to go out and do work to get it, but it is computer power didn't set of axes and shovels.

Or tractors and equipment.

The effort gets harder and harder each time a bitcoin is mine.

You need to invest in expensive computers to do it.

The currency is decentralized, so no government can print more money or change it.

It is controlled by a peer to peer network.

That is, in essence, the currency.

I got to stop you there.

When you went to the peer to peer network, i kind of understand what that is because i remember about napster and the idea that once something goes out into the internet either it can bounce around -- into the internet ether, it can bounce around and you do not know where it is going to land.

But you say there is a limited number of these and you have to my name with computer power.

Is it a big long string of numbers?

I would look at it -- you know, try to keep it simple.

The number of bitcoins can go to 21 million.

It could get mind to that point and it gets harder and harder to make more.

Once you have a bitcoin, you have to have a key to unlock it so you can pass it on to the next user.

Or the other way to get a bitcoin if you did not mind one is to go to an exchange and convert, let's say, u.s. dollars to bitcoins.

And there has been a lot of wallet tilde there.

There has, because a lot of these exchanges are having problems maintaining the accuracy of the exchange.

For instance, in japan.

Correct, they had an issue.

It was not the first attack that bitcoins have been under.

Lit -- live by technology, died by technology.

Correct, but as exchanges get more established mother will be dominant players in the industry and they will have best practices to make sure it is secure.

Where does bitcoin shop fit into all of this?

Our firm was started by two nasa engineers and they realized that it is great to have a currency, but if you cannot spend it on anything, what is the point?

It is a means of speculation.

We believe if you can gather a currency that can be spent on goods and services, then you can actually do something with it.

It can actually be convenient.

Isn't it already convenient to, let's say, use your credit card or some other form of electronic immense?

What is the at -- at electronic payment?

What is the advantage to acquiring these bitcoins and then going to a specific location on the internet to buy pot -- to buy products that might be available somewhere else?

The convenience will be built in overtime.

Right now, with a digital wallet on your phone you can scan a qr code and purchase something that way.

You can do that with your phone.

It is a global currency and by, let's say -- and you can go to another country and by come a let's say, -- andbuy, let's say, a cup of coffee.

Right now, there are not enough products that you can buy.

We have over 140,000 products on our website.

If you want to buy a big screen tv with bitcoin, you can do that on our website.

Is that just your connection to someone else's inventory echo correct.

You are just in incense -- in a sense, a broker and you take a fee for that.

Correct.

Is this bill to something, how big is this industry?

That is hard to say.

It could be massive.

If it is massive, use a reverse merger -- you use a reverse merger to become a public company.

Why do that rather than a more traditional route of a traditional public offering or venture capital?

Very simple.

Three reasons, one, publicity.

We are an e-commerce site and we need to convert potential investors.

Couldn't you get that publicity by just having the name bitcoin in the name of the company?

Sure, but would i be sitting here on tv with you tonight and have all of these viewers watching?

We are running a 10% discount this week.

We need the publicity and it is coming for free.

As a startup company, that is huge.

The second is transparency.

There has been a lot of skepticism around bitcoin in general, and to the extent that we can open the lid and let people look under and see what we are doing -- what is the volume right now?

Are you doing a lot of volume?

It is pretty small.

We have been in business since june of last year and we really only opened the website in the third quarter.

We are effectively -- just give an example.

What is the quarterly volume or dollar volume in sales?

X we have not disclosed that at this juncture.

As a company we did not have an audit done that would be approved.

Hence the reverse merger.

No, we did the reverse for publicity am a transparency, and the other big one was time to market.

The bitcoin ecosystem is moving extremely fast.

If we had done and ipo, it would have taken nine months.

It would be very challenging to get a banker interested at that level.

If we had done a venture capital round, it would have been three to four months to get the financing and we would not have gotten the publicity.

We will keep an eye on it.

Thank you for being here.

Charles allen is the chief

This text has been automatically generated. It may not be 100% accurate.

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