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The FBI sees the anonymous Bitcoin payment network as an alarming haven for money laundering and other criminal activity—including as a tool for hackers to rip off fellow Bitcoin users.

That’s according to a new FBI internal report that leaked to the Internet this week, which expresses concern about the difficulty of tracking the identity of anonymous Bitcoin users, while also unintentionally providing tips for Bitcoin users to remain more anonymous.

Bitcoin is a free and easy to use, open source peer-to-peer electronic cash system that is completely decentralized, without the need for a central server or trusted parties.

Users hold the crypto keys to their own money and transact directly with each other, with the help of a P2P network to check for double-spending. Users can transfer money easily through the Internet, without having to trust middlemen. Third parties can’t prevent or control your transactions.

Bitcoin is a peer-to-peer network based anonymous digital currency. Peer-to-peer (P2P) means that there is no central authority to issue new money or keep track of transactions. Instead, these tasks are managed collectively by the nodes of the network. Anonymity means that the real world identity of the parties of a transaction can be kept hidden from the public or even from the parties themselves.

A new website Silk Road has come on-line with an agorist philosophy. They sell illegal drugs using technology that makes both the client and server anonymous. Purchases are only through bitcoin, which is a non-government peer-2-peer virtual currency. Being peer-2-peer means that it is decentralized and nearly impossible to shut down. The article claims that it's like eBay or Amazon, where dealers are rated by clients thereby "certifying" sellers without government licensing.

Bitcoin has been all the rage lately. The stuff, or lack thereof, runs on peer-to-peer technology, is fully decentralized, has no patents, and is open source. Currently, there are almost 11 million bitcoin units in existence and the maximum amount of bitcoin units that will ever be created by the logic of its design are 21 million. For more details on how they work, see the recent Mises Daily “The Money-Ness of Bitcoins” by economist Nikolay Gertchev.

"How's this for a disruptive technology? Bitcoin is a peer-to-peer network based digital currency with no central bank, and no transaction fees. Using a proof-of-work concept, nodes burn CPU cycles searching for bundles of coins, broadcasting their findings to the network. Analysis of energy usage indicates that the market value of Bitcoins is already above the value of the energy needed to generate them, indicating healthy demand. The community is hopeful the currency will remain outside the reach of any government."

A growing list of merchants accept bitcoins.

Over the years, Bitcoin has experienced ups and downs; the currency has been targeted by hackers and thieves and botnets and been victim to more than one embarrassing software glitch. But it has persevered, and this week, one can fairly say that Bitcoin came of age. On Monday, the U.S. Treasury’s Financial Crimes Enforcement Network released its first “guidance” as to how “de-centralized virtual currencies” should fit into the larger regulatory regime under which currencies of all kinds are required to operate.

Online theft is a fact of life nowadays, but yesterday a BitCoin user woke to find his haul of virtual currency had been plundered. A user with the handle allinvain found 25,000 BitCoins had been stolen. If the thief were to cash-out he or she would net just about $500,000 at current BitCoin-US Dollar exchange rates.

Already bigger than many sovereign currencies, Bitcoin has broken the $1 billion in value mark this week. In the wake of continuing economic crises and liquidity shortages, this new virtual currency is poised to challenge the euro and US dollar.
By not being tied to any particular financial institution and independent from world governments, Bitcoin will become a safe haven for anyone trying to save their money from the crippled international banking system, claimed Max Keiser, the host of RT's Keiser Report.