The Bitcoin markets have been sleepy over the past week or two, and Bitcoin traders are starting to whine. What happened to the drama of hacks, the excitement of skyrocketing prices? The biggest news out of the weekend’s Bitcoin World Conference and Expo was that the organizers teased future conferences in Thailand and Amsterdam. “As fun as it was, seems there were no great world-shattering announcements that would affect the world of bitcoin in the near future,” one Bitcoiner who was present told Betabeat. “Other than more conventions as announced by Bruce.” On the Bitcoin Forum at bitcointalk.org, user tacotime wrote: “Well, someone buy or sell a bajillion BTC and do something, it’s boring as hell right now out there.”
But the Bitcoin markets may soon pick up again as a Bitcoin start-up launching later today, in partnership with one of the better-known exchanges, is likely to encourage a new crop of casual traders and the Bitcoin-curious.
It can take days, even weeks to get real money with which to buy e-currency into an account on one of the Bitcoin exchanges. In general, trading on the Bitcoin exchanges is relatively slow due to the inconvenience of transferring money and the scarcity of the coin. The fastest way to get money from the largest exchange, Mt. Gox, into TradeHill, for example, another well-known exchange, is to transfer money via the payments processor Paxum, which takes around 48 hours and charges a transaction fee.
Charlie Shrem, a Brooklyn-based entrepreneur, and fellow Bitcoin trader Gareth Nelson, based in the U.K., set out to solve this problem with The BitInstant Project, a start-up they’re announcing today in an exclusive partnership with the Bitcoin exchange TradeHill.
Basically, BitInstant verifies a deposit and then fronts the credit to both parties so users can deposit money into their accounts immediately–hopefully in seconds, BitInstant says, but at most, within 30 minutes. “Our system works in many ways like a 0 percent interest short-term loan,” Mr. Shrem, whose background is in e-commerce, said in an email. “Except you pay us and receive the money all in one shot, meaning it’s not actually anything like a loan at all and that analogy is sorta invalid. You pay us an amount equal to whatever you wish to be deposited into your exchange account plus a small commission and at the same time we make a direct transfer at the exchange side from our account to yours.”
BitInstant supports Liberty Reserve, Mt.Gox Coupon Codes and Dwolla, with more payment methods planned.
In the past, there could be a significant spread between the price at different exchanges–that will likely be eliminated thanks to BitInstant and future services in the same vein, which will have some depressing effect on trades by eliminating some of the market inefficiencies traders have been taking advantage of, but also encourage other more cautious traders who didn’t want to bet on what prices would do in the days it took to complete a transaction.
Sorry Bitcoin thrillseekers–it does seem like Bitcoin engineer Gavin Andresen’s wish may be coming true and the rollercoaster ride may be ending. That is, until the next SNAFU–hack, heist, technical difficulty, regulatory interference, etc.