For four blissful years, the exchanges that trade in bitcoin operated within a cloud of legal uncertainty, awaiting the day when the regulatory beast would awaken to its new opponent. Now, that day has come. This week, the Department of Homeland Security took a quick and hard strike at MT Gox, the largest online exchange, serving its payment processor Dwolla with a warrant (later obtained by ars technica) to seize the MT Gox account. Dwolla is one of the preferred ways of getting government currencies in and out of MT Gox and the news caused temporary tremors throughout the Bitcoin community. Trading volume spiked and the exchange rate bobbled down to $106 before climbing back up.
These exchanges are the supply lines for Bitcoin, which has steadily increased in value over the last year. With one supply line down in the U.S., many people will be looking for alternatives. And soon they will find them.
Two brothers, Mark and John Russell are scheduled to unveil a new automated exchange kiosk this weekend at a Bitcoin conference in San Jose, CA. They're calling the machine Robocoin. It will provide a physical place for people to convert their dollars to bitcoins and vice versa.
A couple other similar machines are also in the works, such as this one from a team in New Hampshire. But, all of those previously shown have worked in only one direction, taking dollars and crediting them to a bitcoin address. Robocoin seems to be the first to work in the opposite direction.
Here's a video of it in action:
"I could walk up to it, put in a hundred dollars, and it will quote however much bitcoin that will net, after a fee," says Mark Russell. "And then you just have the QR on your phone, you scan it with the machine and it will send the bitcoins right to you and print out a receipt."
When converting to cash, however, people will have to put up with a small lag. After transferring bitcoins to the machine and taking a QR coded receipt, the customer will have to wait for the Bitcoin network to confirm the transaction, then come back with the receipt and collect the cash, which is dispensed by the machine like a regular ATM.
It's basically an interface to MT Gox. It's selling at the spot rate. It just integrates completely with MT Gox's API and it's all automated," says Russell.
Eventually, he says, they will add new functions to the kiosks, ideally turning them into physical portals for online bitcoin shops, news sites, and virtual casinos.
So, you could walk up to the kiosk put in 100 dollars and then buy a Mullvad subscription or buy something with Bitcoin," says Russell.
Although, they've chosen a heroic name for the machine, Robocoin will likely not be fighting on the side of law enforcement. According to Russell, it's equipped to receive and dispense as much as 60 000 dollars in a single transaction.
"It's basically like a money laundering person's dream," says Russell. "That's why we're not operating it."
The brothers have chosen to sell them instead while providing full technical support. So far, they claim to have eleven buyers in the U.S. and one in Canada all of whom are waiting for a price tag, a detail that Russell says they will figure out after gauging the level of demand at the conference this weekend.