Orlando entrepreneur Victor Hugo Romero is hoping the next gold rush happens online, in virtual currency.
Romero recently got a money-transmitters license from Florida to operate a virtual currency exchange. He’s running his business, Mercury Cash, from a warehouse off South Orange Avenue.
The best-known virtual currency is Bitcoin, which has gotten more popular and gained in value during the past two years. You can buy Bitcoin at some specialized ATM machines in Orlando, if you sign up for a free account called Bitcoin wallet. Romero deals in a currency called Ether, which ranks second to Bitcoin among their competitors.
He likes to explain virtual currency by referencing Spotify, the popular online music-streaming service. Somehow, Spotify’s website keeps track of each time a person plays one of the 30 million songs it has, calculates how much money should go to the artist and transmits payment.
People trade units of Bitcoin or Ether online like they trade oranges or soybeans on the Chicago exchanges, or like stocks on Wall Street. But virtual currency exists only online – in the virtual cloud. That means the banking, accounting, transmission and value are established entirely online using algorithms and equations on a central platform that can transmit money around the world.
But virtual currency is still in its infancy, and experts warn that scams and big changes in value are still common when it comes to trading it. For example, a Bitcoin exchange started by Tampa businessman Anthony Murgio was used to defraud a New York credit union; in June, Murgio was sentenced to 66 months in prison for running an unlicensed exchange.
Exchanges such as Mercury Cash are vulnerable to hacking, said Andrew Miller, an Orlando native who is now assistant professor of computer science at University of Illinois Urbana-Champaign.
Miller is also associate director of the Initiative for Cryptocurrencies and Contracts (IC3) at Cornell University. He had not heard of Mercury Cash yet, which just launched trading Aug. 21.
“A new exchange has to build credibility, so it’s good if they got a money-transmitters license,” Miller said. “But I and many others are aware that a lot of scams come up in this area, and there are cyber attacks on exchanges.”
The uncertain value of all virtual currencies was highlighted this summer when China’s central bank beefed up regulation of them and outlawed certain business transactions using them. Bloomberg reported that virtual currencies dropped by as much as 14 percent after China’s announcement, but values rallied since then.
Bitcoin values dropped again Tuesday after JPMorgan CEO called it a fraud. Yet in 2016, JPMorgan announced a trial project using Blockchain, the computer network on which Bitcoin and Ether sit, according to Financial Times of London.
At Romero’s office, banks of computer servers hum in an empty room, which he says are defending the exchange from hacks.
Romero has no experience in running a financial company, but he does have a track record – in Venezuela – as an entrepreneur. He ran a comic book company known there for a character series called Jaimito. He has also been involved in a youth program for the World Economic Forum. Mercury Cash has about a dozen employees, mostly working from home. Many are in Central or South America.
“We had to rent out extra warehouse space just for the power demand we expect,” Romero says. “The world needs a financial decentralized system and this can be it.”
Experts on virtual currency, also called cryptocurrency, are thrilled that Ether has caught on so quickly. A unit of Ether was worth only about $8 earlier this year, and it hit prices near $400 in June and again in early September. Romero said he choose Ether over Bitcoin because it is new, gained traction quickly, and uses a formal contract to verify it.
Romero said 366 people registered on his exchange in the first day, and it handled $400,000 in business in the first two weeks. That results in a fee to Mercury Cash of $7,600, or 1.9 percent.
Romero is still waiting for a few final details before he thinks the business will take off. He only recently published his Application Programming Interface for his platform, and hopes to be listed on cryptocurrency-monitoring websites such as Coin Market Cap.
He also intends to create units of Ether, a process known as mining, using complex computer equations that would require much more computer power and huge amounts of electric supply. He’s talked to Duke Energy about that, and they’ve told him he will have to pay thousands of dollars to have a new transformer installed.
Dave Scanzoni, a spokesman for Duke, said the company does not provide information about individual customers. He said large server farms require larger transmission.
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