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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.

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.

In Kreuzberg, Berlin, virtual currency Bitcoin has expanded off the internet to become a favoured medium of exchange in real shops and bars. Joerg Platzer, the owner of bar Room 77 is helping to establish what he believes to be the world's first Bitcoin local economy.

The federal agency charged with enforcing the nation's laws against money laundering has issued new guidelines suggesting that several parties in the Bitcoin economy qualify as Money Services Businesses under US law. MSBs must register with the federal government, collect information about their customers, and take steps to combat money laundering by their customers. The new guidelines do not mention Bitcoin by name, but there's little doubt which "de-centralized virtual currency" the Financial Crimes Enforcement Network (FinCEN) had in mind when it drafted the new guidelines.

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.

Bitcoin sounds like something from science fiction: A purely digital currency, created by an anonymous hacker, that operates outside the world's traditional banking systems. The four-year-old currency is very real, though, and it's trading an all-time high, tripling in value in the last two months alone. One bitcoin is was worth about $40 U.S. dollars on Tuesday, and surged on Wednesday to nearly $49. That's up from around $13 in January, and 5 cents in 2010, according to Mt. Gox, the bitcoin market's main exchange.

Under sanctions imposed by the U.S. and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It’s settled, for now, around 27,000. The central bank’s fixed official rate is 12,260. Yet there’s one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency.

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.

"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.