/ Jesse Powell, Chief Executive Officer of Kraken Bitcoin Exchange, sits at the company's office in San Francisco on Aug.| BLOOMBERG Business Mt.Gox insider’s Kraken exchange to open in Japan next month Bloomberg Jesse Powell knew Mt.Gox was not long for this world more than two years before the once-dominant bitcoin exchange went bankrupt in February.In June 2011, Powell took a last-minute flight to Tokyo to help Mt.Gox recover from a hacking attack.He ran the day-to-day business, drafting press releases, hiring and training staff, while Chief Executive Officer Mark Karpeles focused on reviving the service.A month after the trip, Powell founded a competitor — Kraken.It is in talks to offer services in Japan, he said in an interview, declining to give a date.“It was clear after that hack at Mt.Gox, when they were down for like a week, that the exchange is really the most critical piece of the ecosystem,” said Powell, 33, who started dealing with digital currencies more than a decade ago when he set up an online store for virtual swords and armor.

“I wanted there to be another one to take its place, if Mt.Gox failed.” When a $470 million heist finally shuttered Mt.Gox for good in February, San Francisco-based Kraken’s user base surged 50 percent in two months, making it one of the top bitcoin exchanges.The company accounts for about half of the virtual currency’s daily euro trading, Powell said in a telephone interview on July 29.Powell is already an industry veteran. for the virtual potions, runes and amulets used in some computer games — seven years before bitcoin came into existence.When he dropped out of California State University, Sacramento, in 2003 to run the company full time, the business environment was similar to that facing bitcoin entrepreneurs now, he says.So-called real money trading, or sale of in-game items, currency and characters, has been banned by many companies that run massive online multiplayer games.Square Enix Holdings Co.set up a special task force to punish transgressors in “Final Fantasy XI,” while the terms of use for Activision Blizzard Inc.’s “World of Warcraft” explicitly forbid it.

Powell says one of his acquaintances lost about $100,000 worth of virtual gold overnight after Blizzard suspended his account, leaving the man with no recourse.scottish bitcoinEven so, Lewt prospered.bitcoin faucet affiliateIt tapped into a latent demand from people that slipped through the cracks of the financial system — kids, foreigners, those with a bad credit score, he said.is bitcoin income taxableThe business also gave Powell a nose for opportunities offered by digital currencies as well as the real money to get Kraken started.bitcoin casino illegal“The whole game currency space was very interesting to me, which is how I was able to notice bitcoin,” Powell said.bitcoin nz tax

“It has all the benefits of these gaming currencies without that centralized point of weakness.bitcoin morgan stanleyI think it’s really the future.” Regulatory hurdles and uncertainty still make opening new markets difficult for bitcoin businesses, Powell said.That’s why he was back in Japan in May, rubbing shoulders with local legislators and laying the groundwork for the new service.Kraken is one of the founding members of Japan Authority of Digital Asset, together with CoinPass and BitFlyer.A picture posted on the web shows Powell, with long blond hair, in a T-shirt and a down vest, posing for a photo with black-suited Liberal Democratic Party parliamentarian Mineyuki Fukuda.Another photo shows Fukuda squatting next to a homemade bitcoin mining rig.“I was really surprised how open-minded Japanese politicians are,” Powell said.“Compared to Japan, the United States is in the Dark Ages.” The start of Kraken’s services was set back by half a year when the Financial Crimes Enforcement Network, a bureau of the U.S.

Department of the Treasury, issued guidance on virtual currencies in March 2013, Powell said.The rules made it difficult to get custodial bank accounts to hold customer funds, limiting the company’s U.S.services to five states — South Carolina, Montana, Alabama, New Mexico and Massachusetts, he said.Kraken got a break when it partnered with Germany’s Fidor Bank AG in October.Euro trading of virtual currencies, including bitcoin, litecoin and dogecoin, accounts for about 95 percent of the company’s volume, Powell said.The exchange also allows deposits and withdrawals in South Korean won.“Most of our launches into a new region depend on getting a banking partner there,” Powell said, declining to name the Japanese counterpart.“It’s a big expense opening a new region.Whoever goes in first will do all the hard work.” Competition for a slice of Japan’s virtual currency market is intensifying as new entrants seek to take advantage of the vacuum left by Mt.BitFlyer began offering services in April.

BitOcean, a Chinese startup, joined with New York-based Atlas ATS Inc.to bid for the assets of the defunct Mt.The two companies plan to start a bitcoin platform in the country this month, according to Nan Xiaoning, founder and chief executive officer of BitOcean.Bitcoin fetched about $518 in Tokyo on Aug.15, down from a record $1,151 in December, according to CoinDesk Bitcoin Price Index.NEW YORK — Long off the public radar, digital payment network bitcoin has been gaining momentum this fall, bolstering the views of some advocates that bitcoins will be a mainstream currency worldwide in the not-too-distant future.The value of a bitcoin surged to more than $400 last week from its low this year of $177.28 in mid-January.Meanwhile, the technology known as blockchain that underlies bitcoin trading is slowly being adopted for uses far removed from currency.Analysts also are getting more bullish on the bitcoin system."Webelieve bitcoin and its associated blockchain technology have the potential to disrupt the existing financial infrastructure over the next several years, and believe the value of the bitcoin currency will benefit from this trend," Gil Luria, an analyst at Wedbush Securities in Los Angeles, wrote in a research report last week.

For the last three years, the virtual currency has struggled with wild price fluctuations that hit more than $1,100, a murky regulatory status and its use on the Internet's dark side, including drug sales.Though the price fell to $337.93 on Wednesday, the recent rally has renewed more favorable attention on the virtual currency than it faced early last year in the collapse of the biggest bitcoin exchange, Mt.Gox.The price of a bitcoin surged passed the $400 mark last week for the first time in more than a year before pulling back, but it's still up 25% in the last month and more than 72% from its January lows.Although the reasons for the recent rally are unclear, analysts point to an upsurge in bitcoin trading in China as one reason for the growing momentum, saying the surge may reflect attempts to move money out of the country as the economy slows and financial markets fluctuate.Luria said the price bump also may have been partly driven by recent Chinese regulatory changes allowing for easier transfer of money out of conventional bank accounts to bitcoin exchanges.

But he said deeper currents also have been pushing up the price."The long-term price is driven by how many people use it for actual economic applications," he said."The price of bitcoin has sort of caught up to the usage."Inhis report, Luria said that the number of bitcoin transactions per month has grown from about 1 million in October 2012 to more than 4 million last month, and he forecasted a price target of $600 a year from now.He estimated that the market for online payments, money transfers and other uses for bitcoin will grow from about $8.6 billion last year to about twice that by 2025."Thefluctuations that happen day-to-day don't matter," said Jerry Brito, executive director of Coin Center, a nonprofit virtual currency research center, noting that deeper trends are embedding the currency in the economy."It's part of a long march toward normalcy."Undera federal court order last week, the U.S.Marshals Service sold 44,341 bitcoins worth more than $17 million in its fourth bitcoin auction of assets seized in the prosecution of Ross Ulbricht, founder of the online black market Silk Road.

The government sale of bitcoins is seen as one more mark of legitimacy for the currency as a store of value.Also, in a September enforcement action against San Francisco start-up Coinflip Inc., the Commodity Futures Trading Commission referred to bitcoin as a commodity, lending further regulatory legitimacy to the currency, observers said.Meanwhile, prominent new players are entering the business, led by the opening last month of Gemini, a new Bitcoin exchange backed by Internet entrepreneurs Cameron and Tyler Winklevoss.To be sure, Bitcoin has a long way to go.The total value of bitcoins is still a little more than $6 billion, a rounding error in the multitrillion-dollar currency markets.As a decentralized digital currency that uses peer-to-peer technology to operate without a central authority, bitcoin potentially has a large effect on the international money exchange and transmission business now dominated by big banks and players such as PayPal and Western Union.Meantime, the blockchain technology has even wider applications.The blockchain is a giant ledger, or spreadsheet, that anyone with an Internet connection can access.

However, its entries can't be changed, only added to, allowing transactions to be tracked permanently and theoretically enabling the low-cost, verified exchange of a wide range of assets.A start-up, OneName, has garnered attention with technology that aims to allow users to claim a single, secure identity that can be used across the Internet.This year, the Nasdaq Stock Market launched a pilot ledger, known as Nasdaq Linq, using the blockchain to keep track of and transfer the securities of non-public companies., which is providing blockchain technology for the exchange, said the idea was a natural extension to tracking and transferring virtual money."Whatwe're saying is, why shouldn't other assets function this way?"he said.A report released Wednesday said that major banks could start using blockchain technology to track syndicated loans as early as next year.The report, by New York research firm Tabb Group, said the use of the blockchain for such complex tasks as securities trading is probably a decade away but the potential for the technology is nonetheless far-reaching.A consortium of major banks led by financial technology firm R3 is developing a framework for applying blockchain technology to capital markets.