(Photo: Imgur)

When you're marvelously rich off of the Internet's favorite cryptocurrency, what's a person to do? If you're Reddit user Bitcoinbillionaire, a self-proclaimed "early adopter" of Bitcoin, you start gifting random Redditors with significant amounts of BTC.

According to Business Insider, Bitcoinbillionaire began using Reddit's Bitcoin tip function, which allows users to send Bitcoins to random Reddit users, to give out thousands of dollars in the cryptocurrency. All in all, Bitcoinbillionaire gave away $13,600 to Reddit strangers, including $5,000 to a lucky user named Karelb, who already used a portion of the money to buy a new cell phone.

Bitcoinbillionaire has yet to divulge much personal information about him or herself, simply leaving grateful users with the following message before riding off into the night: "It's been a fun and wild day." He also closed with a Ron Paul quote, 'cuz this is Reddit after all.

(Photo: Bitcoin Talk)

Bets of Bitcoin is an anonymous platform that allows users to make bets on current events--everything from hockey to war with Iran to aliens--using the peer-to-peer digital currency Bitcoin. Users place Bitcoin bets on yes or no answers to statements, and the earlier you bet the more BTC you can win.

The prediction market launched back in August 2011 and has for the most part operated under the radar since then. Though online gambling is still technically illegal in the U.S., betting with Bitcoin, which isn't recognized as an official currency, protects the anonymous operators and bettors from legal action.

Though many of the bets revolve around international events, our current favorite is whether or not an actual living, breathing, human girl will show up to the next Montreal Bitcoin meetup on April 27th:

The bet returns agree if user and host adamstgBit reports a female human attended and shows a picture taken at the time, the picture and female attendance is then verified by another forum user and attendee with >100 posts and who joined before november 2012 that indeed the female did attend.

We're happy to say the bets are currently in favor of the statement, meaning Bitcoin bettors really do think a female person has a good chance of showing up to the meetup. So you'll only win big if you bet against the statement and no ladies attend.

What glass ceiling?

(h/t Ben Regenspan)

(Photo: Pizza for Coins)

The Bitcoin community is continuing its bid for mainstream popularity with a new startup that promises to let users order pizza and pay for it using Bitcoins. Because nothing says cryptocurrency like a side of carbs with your carbs.

Pizza for Coins lets users order all of the cheesy bread and pepperoni pies their hearts desire from Dominos (Papa Johns and Pizza Hot coming soon!). Users then plug in their Bitcoin address and the site extracts the payment for the pizza, including a .09BTC fee (a little over $2 at the current conversion rate).

After the payment goes through, Pizza for Coins sends the order to the Domino's site, and the pizza is dispatched to the user's address. It's unclear whether you get to use the super sweet pizza tracker if you go through Pizza for Coins, which is really the only reason to order Domino's in the first place.

We're unsure why users would want to use a cryptocurrency like Bitcoin to do something as simple as ordering pizza, but we suppose if you have the BTC you may as well spend them on pizza.

(h/t Digital Trends)

(Photo: Wordpress)

Wordpress.com, which hosts close to 58 million blogs across the world, announced last night that it will now accept payments for upgrades via Bitcoin, the peer-to-peer digital currency. The blog hosting platform says its mission is to "make publishing democratic," and because PayPal and other payment companies block access in a fair amount of countries, the company has decided to accept Bitcoin, enabling users without access to PayPal to still purchase Wordpress upgrades.

According to the blog post:

PayPal alone blocks access from over 60 countries, and many credit card companies have similar restrictions. Some are blocked for political reasons, some because of higher fraud rates, and some for other financial reasons. Whatever the reason, we don’t think an individual blogger from Haiti, Ethiopia, or Kenya should have diminished access to the blogosphere because of payment issues they can’t control. Our goal is to enable people, not block them.

Wordpress has made paying with Bitcoins extremely easy, creating a Bitcoin section on the checkout screen that shows the price of your purchase in Bitcoins as well as an address to a wallet unique to that purchase.

By accepting Bitcoin, Wordpress is helping to legitimize the notion of open source digital transactions, a move that Reddit is also considering. Bitcoin has long been sequestered in a darker corner of the Internet, painted as the favorite currency for hackers and black market drug dealers. With more and more sites adding a Bitcoin payment option, along with the creation of the Bitcoin Foundation, the currency is making strides towards being accepted by the mainstream.

Writes Wordpress: "With Bitcoin we join a new digital economy that doesn’t leave anyone behind, essentially making financial transactions open source — something WordPress.com is behind 100%."

Mr. Shtylman (Photo: Twitter)

The problem with virtual currency is that it doesn't take an Italian Job-style heist to make off with hundreds of thousands of dollars worth of Bitcoins. There's no need for expert safe crackers, gun-wielding maniacs or limber laser dippers; despite the currency's hardcore encryption, all you need is an Internet connection, a hacker and probably some Mountain Dew.

The relative ease and inexpensiveness of robbing a Bitcoin repository has most likely contributed to the rash of heists the virtual currency has endured since June 2011. Bitcoin has certainly seen its share of bad publicity. Over the last 15 months, more than 290,000 BTC have been stolen, according to CNET and Bitcoin talk forum.

A big heist on Monday night signaled the 10th since June, and was so damaging that it has shut down BTC exchange BitFloor, which--according to BitFloor founder Roman Shtylman--is the number one USD exchange in the U.S. (Mr. Shtylman says it also ranks number four worldwide.) The hacker successfully stole 24,000 BTC, which amounts to over $250,000 as of this writing.

In a Bitcoin Talk forum, spotted by CNET, Mr. Shtylman wrote:

Last night, a few of our servers were compromised. As a result, the attacker gained accesses to an unencrypted backup of the wallet keys (the actual keys live in an encrypted area). Using these keys they were able to transfer the coins. This attack took the vast majority of the coins BitFloor was holding on hand. As a result, I have paused all exchange operations. Even tho only a small majority of the coins are ever in use at any time, I felt it inappropriate to continue operating not having the capability to cover all account balances for BTC at the time.

Mr. Shtylman is currently considering which path to pursue following the heist, but wrote that he doesn't want "BitFloor to shutdown and cause more panic in the bitcoin community." Still, the site is currently shuttered as the BitFloor team decides how to handle the loss. Wonder if Mark Wahlberg is available to lend his assistance.

(Photo: Flickr.com/Images_of_Money)

The FBI recently estimated that after three years, the Bitcoin economy is worth at least $35 million. Thanks to the uncertainty surrounding certain government currencies, it may soon be worth more. The Financial Post reports that fear over the value of the euro, strained by potential government insolvency in Greece and Spain, has led to a significant uptick in euro-for-Bitcoin trading.

Given the cyberattack last month in which thieves made off with $90,000 in Bitcoins--that's €71,738 euros, by the way--one would think another currency might be a better place to park your cash. However, some are scrambling to turn their euros into Bitcoins. Charlie Shrem, the Brooklyn-based founder of the Bitcoin transaction service BitInstant, claims potential customers are desperate to mail him euros. "European volume has been skyrocketing," he told the Post.

More euros changed hands on Bitcoin exchanges over the past week than in any week in Bitcoin’s history, according to the blog Bitcoin Money.

Data from the Bitcoin exchange Mt. Gox shows a significant increase in the volume of euros traded over the last month, when the price of Bitcoin in euros increased by roughly 15 percent. The euro is the second-most traded currency in the Bitcoin markets, accounting for 9 percent of transactions, followed by the British pound sterling (8 percent) and the Second Life Linden dollar (5 percent). The U.S. dollar still dominates, accounting for 72 percent of trading.

Traders on foreign currency exchanges had more faith in the euro, which has suffered from volatility but had been on a three-week high against the U.S. dollar.

(Wikimedia Commons)

Last week, Betabeat received an email from an anonymous source claiming to have leaked an internal FBI report about the virtual currency Bitcoin. The report, published April 24, revealed the agency is worried the currency could become a payment method for cyber criminals in the near future, and could be used to fund "illicit groups." (Wikileaks, anyone?) The FBI also determined the currency to be an "increasingly useful tool for various illegal activities beyond the cyber realm," and could become attractive to money launderers.

The report, titled "Bitcoin Virtual Currency: Intelligence. Unique Features Present Distinct Challenges for Deterring Illicit Activity," was the FBI's first research report on Bitcoin. The report was not classified, but it was marked "for official use only." Betabeat, Wired, and a number of blogs ran with the story without confirming the report's authenticity, but today we got a call back from the FBI. "It is legitimate, but it was not leaked by the government," an FBI representative told Betabeat.

It's likely that the report was leaked by someone in law enforcement who got the report from the FBI. "FBI intelligence documents are meant for use primarily within the law enforcement community to provide situational awareness," the spokesperson told us. "These documents are not for release beyond law enforcement and public safety personnel. We provactively gather intelligence and share information with our law enforcement and intelligence community partners related to a wide range of potential threats."

The report was disseminated to 11 agencies including the Australian Federal Police, New Zealand Police, Royal Canadian Mounted Police and Serious Organised Crime Agency. It was prepared by the Domestic Threats Cyber Intelligence Unit, Technology Cyber Intelligence Unit, and the Financial Crimes Intelligence Unit of the FBI.

The report contains a basic explanation of how Bitcoin works, noting that its decentralized nature presents some challenges for law enforcement. One of the biggest problems, the FBI noted, is the risk of people stealing Bitcoins from each other; also, the report notes the unauthorized use of computer equipment to mine Bitcoins. The FBI estimates the Bitcoin economy is worth between $35 and $40 million.

The FBI has seen this kind of threat before. The report notes that criminals may adopt Bitcoin alongside other virtual currencies such as WebMoney, "which they have little reason to abandon." All in all, the report leaves little impression that the FBI is afraid of Bitcoin or considers it an extraordinary threat, though it does note that "If Bitcoin stabilizes and grows in popularity, it will become an increasingly useful tool for various illegal activities beyond the cyber realm," citing child pornography, human trafficking, gambling and terrorism.

"There are two other bitcoin ad serving services out there, AnonymousAds and Operation Fabulous, but both in my opinion do not meet the needs of what typical advertisers want," wrote the Bitcoin entrepreneur, who declined to give his real name but said he is an IT manager for a major web service in San Francisco and the owner of "about" 12 Bitcoin businesses, with "several more in the planning phase." The roadmap for the BitcoinAdvertisers includes automatic translation into a user's preferred language and multiple sizes for banner ads, he said.

"I feel that BitcoinAdvertisers.com is the first service to give web publishers exactly what they need to start making bitcoins and serve the bitcoin business community desire to raise revenue with the business model proven to work by Google with Adsense," he said in an email.

He considered calling the site "BitcoinSense," but some advertisers raised copyright concerns.

Many of the transactions will likely be between Bitcoin-themed businesses advertising on each others' sites. Luckily, that's how economies work. Like hamster wheels.

There are a few existing industries that have taken a liking to Bitcoin because it makes it easy for customers to pay semi-anonymously: the illegal drug market and the porn industry. Prospective users are already requesting that BitcoinAdvertisers keep the sex ads separate. In the next week, BitcoinAdvertisers will add categories "to limit adult themed ads into appropriate channels." The unaffiliated ad network SexyBitcoinAds, supposedly launching this week as well, may take a bite out of that business anyway.

CoinDL.

A new Bitcoin commerce site, CoinDL, makes it fast and easy to buy and sell virtual goods from music to avatars. Traders on Wall Street may be speculating with Bitcoin, but it's efforts like CoinDL that truly bolster the budding digital economy. CoinDL offers a marketplace where you can buy digital goods with digital money: wallpapers, ringtones, avatars, music, videos--basically anything that can be downloaded. "Our downloads are fast, easy, and for Bitcoin only. Scan our QR codes for maximal geek arousal," the site says.

CoinDL was created by David Sterry, who formerly operated the Bitcoin exchange ExchB. ExchB closed in October as it faced increasing resistance from banks.

"People need to have a way to have a positive experience with Bitcoin," Mr. Sterry said. "CoinDL enables people to buy digital items for Bitcoin, but also letting them do it really quickly. If things are virtual it can be very easy."

Mr. Sterry sees CoinDL as a potential solution for independent artists to sell their stuff online. CoinDL charges sellers a flat rate of 20 percent. The site launched with songs, a ringtone, a few wallpapers and a video, mostly Bitcoin-themed. But Mr. Sterry is hoping to add more music, ebooks, podcasts and photos. He's obviously bullish on Bitcoin, pointing to the anticipated change in the software that will make Bitcoin harder to mine and therefore stabilize the economy somewhat. Currently, 50 Bitcoins are created every ten minutes when a "block" of transactions is recorded and added to the master log of transactions. When the total number of Bitcoins issued reaches 10.5 million, which is estimated to be later this year, the "block reward" will drop to 25 Bitcoins every ten minutes.

"I think back to when Twitter started," Mr. Sterry said. "Twitter had a lot of problems and they still had the fail whale a lot of times, but those problems kind of kept them in people's minds somewhat. So I don't see the problems with Bitcoin as 100 percent bad."

They can't stop Bitcoining. (Getty Images)

Betabeat noticed back in August that professional Wall Street traders were taking an interest in Bitcoin. Even though the Bitcoin market is valued lower than in the past, and volatility (read: easy opportunities to flip coins and make fast money) has also flattened out, it seems pro bankers are still trading in BTC. 

Reuters reports that workers at Morgan Stanley and Goldman Sachs in London and New York have been visiting Bitcoin exchanges up to 30 times in a day as finance professionals peer into the digital Wild West created by the Bitcoin gold rush. The article does not specify whether the traders work in foreign exchange, the closest analogue to Bitcoin speculation, or if they trade stocks. It's also possible that some of the finance professionals looking at Bitcoin work in IT.

But one trader who said Bitcoin is his "second job" estimated 90 percent of traders have bought Bitcoin. "It is a better form of money than we have right now, or than anyone has designed so far," he told Retuers anonymously.

Finance pros may have been attracted by the increasingly complex Bitcoin instruments, such as options and margin trading:

Perhaps the most notorious is Bitcoinica, a platform offering margin trading, short selling and stop orders run by 17-year-old Chinese high school student Zhou Tong.

Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment.

Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang.

To be "Zhou Tonged" is to be wiped out financially.

As Bitcoin draws in new demographics, its susceptibility to regulation grows. Mt. Gox, the largest Bitcoin trading exchange, sued the French bank Credit Mutuel's Credit Industriel et Commercial after the bank shut down Mt. Gox's account. A court ruled to have the account reopened and Mt. Gox compensated, but had to refer the question of whether Bitcoin is a virtual currency under French law "and thus subject to relevant regulation" to another court.

Meanwhile Bitcoin may have a different sort of day in front of a judge as the now-defunct exchange TradeHill is embroiled in a lawsuit with payments provider Dwolla.