Virtual currencies are not a new phenomenon. From airline miles, to Second Life’s Linden Dollars, virtual currencies have been around in one form or another for over 40 years. However, it’s only recently that Bitcoin, the world’s first decentralized peer-to-peer digital currency, has caused a real stir in the online community.
In case you’ve somehow missed the hype, the Bitcoin is a new kind of “money” that isn’t really money at all. It’s the world’s first crypto-currency;that exists in the virtual world and is controlled by computer technology, rather than a Government or bank. This “digital money” can be used to buy anything (where the currency is accepted)and can be sent directly from person-to-person, in any country.
Bitcoins are held in virtual wallets with unique keys. Transactions are made by sending bitcoins from one wallet to a unique key associated with another wallet in a cryptographic process that is verified by computers across the bitcoin network.