It was the world in which Shrem, a computer whiz from Brooklyn's Syrian Jewish community, rocketed to prominence as a wealthy businessman, with a bitcoin trading platform and the bar to his name.
Now, Bitcoin exchanges will likely have to team up with traditional banks or at least imitate some of their anti-money laundering practices, keeping meticulous records of customer identities and report any suspicious activity to regulators. Law enforcement officials have already shown they can attach real names to the Bitcoin addresses of suspected criminals, which means the digital currency is no longer a cloak for some to hide behind.
The loss of much of the anonymity of Bitcoin trading may diminish its appeal before it has the chance to get traction with larger numbers of potential users, some experts say.
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"With a fluctuating price driven by speculators and an uncertain legal regime, Bitcoin's viability as a consumer currency is still up in the air," said Matthew Rhoades, director of the cyberspace & security program at the Truman Project and Center for National Policy.
Certainly, the strongest Bitcoin supporters say there are still plenty of attractions despite the changes, including the speed of transactions and lack of centralized control. They are banking on mass adoption of the currency to smooth out awkwardness created by its wild price fluctuations and unwieldy technology. They say if the majority of businesses can be convinced to accept Bitcoins there will be less need to exchange them for mainstream currencies, and less interaction with the authorities.
"I think regulation will actually normalize the whole thing," said James Barcia, the communications director for the NYC Bitcoin Center, which hosts the weekly trading sessions.