The World’s First Bitcoin Bank Will Open This Summer

The people who brought you bitcoin ATMs are now looking to conquer bitcoin banking.

A pile of Bitcoins are shown here after Software engineer Mike Caldwell minted them in his shop on April 26, 2013 in Sandy, Utah. Bitcoin is an experimental digital currency used over the Internet that is gaining in popularity worldwide. 
National Journal
Dustin Volz
May 1, 2014, 10:49 a.m.

The world’s first bit­coin bank is set to open early this sum­mer in more than a dozen coun­tries, in­clud­ing the U.S.

Rob­ocoin, which made an ap­pear­ance on Cap­it­ol Hill last month to show­case the “world’s first bit­coin ATM,” is launch­ing the bank and says it will help bring the vir­tu­al cur­rency “to the masses.”

So why does it mat­ter to have a bank for a cur­rency that has no phys­ic­al pres­ence and isn’t backed by any gov­ern­ment?

Pre­vi­ously, own­ers could only store and ac­cess their bit­coin by down­load­ing a self-hos­ted per­son­al “wal­let” onto their com­puter. Now, users can store their bit­coin with the bank. By al­lowed users to de­pos­it bit­coin in a bank, Rob­ocoin CEO Jordan Kel­ley says his com­pany hopes to al­le­vi­ate some of the com­mon con­cerns as­so­ci­ated with the de­cent­ral­ized cur­rency — namely that it is not a se­cure or simple meth­od of pay­ment.

“It’s no longer about buy­ing and selling bit­coin in their own wal­let or hav­ing to store a re­ceipt,” said Jordan Kel­ley, Rob­ocoin’s CEO. “My dad, mom, sis­ter are all ter­ri­fied of that pro­cess.”

The an­nounce­ment may catch many in the bit­coin com­munity by sur­prise, as the tech­no­logy is cher­ished by its ad­op­ters as a de­cent­ral­ized form of pay­ment that doesn’t op­er­ate with­in the con­fines of gov­ern­ments, tra­di­tion­al banks, or cred­it-card com­pan­ies.

The open­ing of the bank will also change the way the com­pany views its bit­coin ATMs, which ex­ist all over the globe. The ATMs, Kel­ley said, will now be deemed “branches” of the com­pany’s bit­coin bank­ing em­pire.

But Kel­ley said his new ven­ture is not a “bank” in the tra­di­tion­al sense, be­cause it will not store gov­ern­ment notes and is in­stead meant to fa­cil­it­ate easi­er bit­coin use and ac­cept­ance.

“The bit­coin com­munity is go­ing to see mass ad­op­tion be­cause of this,” Kel­ley said. “We’re just solv­ing prob­lems for every­one in the game — for bit­coin new­bies, it makes it easi­er, and for bit­coin vet­er­ans, it makes it more use­ful.”

Bit­coin is a form of on­line pay­ment that ex­ists en­tirely on­line. It can be ex­changed for tra­di­tion­al dol­lars or spent at an ever-grow­ing num­ber of on­line stores and real-world re­tail­ers.

Ad­op­ters see it as a fast form of pay­ment that avoids most fees usu­ally tacked on to on­line trans­ac­tions. Crit­ics, however, warn that bit­coin and oth­er di­git­al cur­ren­cies could make an­onym­ous drug traf­fick­ing or money laun­der­ing easi­er.

Kel­ley said his com­pany has not yet figured out a rev­en­ue stream for its bank, and will in­stead “fine-tune” that de­tail as the busi­ness grows.

Last month, the founders of Rob­ocoin brought one of their ATMs to the halls of Con­gress for a demon­stra­tion with Rep. Jared Pol­is of how the tech­no­logy works. The Col­or­ado Demo­crat has been among bit­coin’s most ar­dent boost­ers in Con­gress, and has cri­ti­cized his col­leagues for fre­quently be­ing scared of a “good, dis­rupt­ive idea.”

At­tor­ney Gen­er­al Eric Hold­er and oth­ers have ex­pressed skep­ti­cism of bit­coin, not­ing that it poses con­cern for law-en­force­ment of­fi­cials be­cause it could “con­ceal il­li­cit activ­ity.”

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