

Bitcoin is the digital currency that lives entirely on the Internet.

It’s developed a shady reputation because of its use in the drug trade and because its value can fluctuate wildly, or as it happened in the case a Bitcoin exchange named Mt. Gox – vanish entirely.

“Dow Jones believes that 750,000 of customers’ coins may have been lost,” says CBS Moneywatch’s Jill Schlesinger.

But the concept of a digital currency is so popular that the customers of Mt. Gox this week agreed to drop their bankruptcy suit in exchange for a piece of the action.

They will now be co-owners of a resurrected Bitcoin exchange.

All of which seems to signal that Bitcoin is here to stay. This man wants to take it out of Geekdom and into the mainstream.

“We are the first Bitcoin machine in the country that is state-level licensed as a money transmitter,” says Nick Hughes, the general manager of CoinMe – a Bitcoin ATM.

The first ATM of its kind is in a Seattle bar called Spitfire on 4th Avenue in Belltown, and it will let anyone open an account. All you need is some ID, a smart phone and the palm of your hand.

“You scan your palm four times,” explains Hughes. “Then it actually takes a picture of your face so that the person who is interacting in our system is who they say they are.”

That stops tax evasion and money laundering.

To buy a $400 Bitcoin, you’d open your account and just feed your cash into the machine. And in return for your cash, you would get a unique string of letters and numbers, about 60 characters long, that signifies the right to spend $400 worth of Bitcoin exactly once.

“The thing with Bitcoin is, every single transaction, or every single Bitcoin is a unique address so it can’t be counterfeited.”

And you could store that code in your computer or even write it down on a piece of paper.

“The number itself contains a value,” he explains.

Although it is still like cash, in that if someone else got hold of your string of numbers, either by stealing them or memorizing them, goodbye money.

And the other feature of Bitcoin is that the value of a Bitcoin can fluctuate, so even if it’s not stolen, it could be worth less by the time you spend it. Or more.

And the latest wrinkle is, since there is no central digital currency bank, you can have more than one digital currency.

“Anyone can break off and essentially slightly alter the codebase and create what they’re called, ‘altcoins’ or ‘side coins.’ The second most popular one is called ‘light coin,'” says Hughes. “The value is quite a bit lower than Bitcoin, and it’s quite a bit less popular. I don’t think there is going to be a plethora of other ones.”

It sounds like it’s a jungle out there.

Correction: An earlier version of this story said Bitcoin could be used for purchases at Spitfire. The bar does not except Bitcoin as tender.