What is money, or currency? According to Bitcoin, money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. In Bitcoin's case, "money" is a peer-to-peer exchange of value using a "Bitcoin," with no use of any central banking institution. http://bitcoin.org/When the virtual currency bitcoin was released, in January 2009, it appeared to be an interesting way for people to trade among themselves in a secure, low-cost, and private fashion. Cryptocurrency
The Bitcoin network, designed by an unknown programmer with the handle "Satoshi Nakamoto," used a decentralized peer-to-peer system to verify transactions, which meant that people could exchange goods and services electronically, and anonymously, without having to rely on third parties like banks.
Its medium of exchange, the Bitcoin, was an invented currency that people could earn—or, in Bitcoin's jargon, "mine"—by lending their computers' resources to service the needs of the Bitcoin network. Once in existence, bitcoins could also be bought and sold for dollars or other currencies on online exchanges.
For small person to person transactions, there typically are no fees, thought complicated transactions might require some amount. Transaction_fees. But there is a problem. There are not many things a user actually can buy with a Bitcoin, transaction volume seems to be dropping, providing little incentive for real-world or digital goods merchants to accept them for payment. One take on Bitcoin
People have come to see it primarily as a way to make money. In other words, instead of being used as a currency, bitcoins are today mostly seen as (and traded as) an investment.
One of the reasons people seem to be hoarding Bitcoins is that there is a firm limit of 21 million Bitcoins in total, and the number of coins cannot be increased. That means Bitcoin value can fluctuate based on market demand, but cannot be bebased by "printing more Bitcoins." Controlled Supply
Bitcoin might wind up being an interesting experiment. Other similar systems might emerge. It appears almost certain that regulatory opposition from national governments will be an issue if any of the systems start to get serious traction. There are legitimate concerns about money laundering, criminal activity and tax evasion, for example.
So it is not likely "virtual currency" in the sense of a medium of exchange that supplements or competes with other existing currencies, is going to escape scrutiny by regulatory and governmental agencies. But it is interesting.
Right now, there is more interest in "captive" forms of value in the form of points, tokens or other "virtual" stores of value used within closed communities, and often for use within games such as Farmville. But as those activities grow, there is bound to be growing interest in virtual currencies that actually can be exchanged for "real world" currencies.
Bitcoin might wind up being an interesting experiment. Other similar systems might emerge. It appears almost certain that regulatory opposition from national governments will be an issue if any of the systems start to get serious traction. There are legitimate concerns about money laundering, criminal activity and tax evasion, for example.
So it is not likely "virtual currency" in the sense of a medium of exchange that supplements or competes with other existing currencies, is going to escape scrutiny by regulatory and governmental agencies. But it is interesting.
Right now, there is more interest in "captive" forms of value in the form of points, tokens or other "virtual" stores of value used within closed communities, and often for use within games such as Farmville. But as those activities grow, there is bound to be growing interest in virtual currencies that actually can be exchanged for "real world" currencies.
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