Bitcoins: The New Age of Currency

A look at the most popular virtual currency.

Digital Currency at the Tip of Your Digits - Bitcoins are the most popular “crypto currency” in the world. Satoshi Nakamoto, a group of anonymous developers, introduced bitcoins to the world five years ago. But the digital currency is taking off now; sparking conversations between the US Federal Reserve's Ben Bernanke and the Bank of England. Cafes and restaurants in San Francisco and Massachusetts already accept bitcoins as a form of payment, but what exactly is the bitcoin and how does it work? BET.com goes inside the latest digital currency trend. — Dominique Zonyéé(Photo: REUTERS/Jim Urquhart)

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Digital Currency at the Tip of Your Digits - Bitcoins are the most popular “crypto currency” in the world. Satoshi Nakamoto, a group of anonymous developers, introduced bitcoins to the world five years ago. But the digital currency is taking off now; sparking conversations between the US Federal Reserve's Ben Bernanke and the Bank of England. Cafes and restaurants in San Francisco and Massachusetts already accept bitcoins as a form of payment, but what exactly is the bitcoin and how does it work? BET.com goes inside the latest digital currency trend. — Dominique Zonyéé(Photo: REUTERS/Jim Urquhart)

What Is a Bitcoin? - A bitcoin is digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen such as the Federal Reserve. Bitcoins have digital addresses, with the balances stored and documented in an online ledger called a “blockchain.”(Photo: George Frey/Getty Images)

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What Is a Bitcoin? - A bitcoin is digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen such as the Federal Reserve. Bitcoins have digital addresses, with the balances stored and documented in an online ledger called a “blockchain.”(Photo: George Frey/Getty Images)

What Are the Advantages? - Since bitcoins are transferred from person to person with the exclusion of a third party bank, users are not subjected to high banking fees, limited account access or signing any arbitrary agreements. You can also use bitcoins as the same currency in any country without paying an exchange fee. (Photo: Cameron Spencer/Getty Images)

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What Are the Advantages? - Since bitcoins are transferred from person to person with the exclusion of a third party bank, users are not subjected to high banking fees, limited account access or signing any arbitrary agreements. You can also use bitcoins as the same currency in any country without paying an exchange fee. (Photo: Cameron Spencer/Getty Images)

How do Bitcoins Work? - One bitcoin is worth about $800 right now, and they are generated all over the Internet by anyone running an application called a bitcoin miner. For each block of coins there is a “mining” system, which is regulated by the network so that they are always within a certain rate. Once they are mined, your bitcoins are stored in bitcoin wallet, which allows users to send and receive bitcoins with a unique digital signature or a mix of alphanumeric coding that serves a function similar to a social security number.(Photo: David Ryder/Getty Images)

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How do Bitcoins Work? - One bitcoin is worth about $800 right now, and they are generated all over the Internet by anyone running an application called a bitcoin miner. For each block of coins there is a “mining” system, which is regulated by the network so that they are always within a certain rate. Once they are mined, your bitcoins are stored in bitcoin wallet, which allows users to send and receive bitcoins with a unique digital signature or a mix of alphanumeric coding that serves a function similar to a social security number.(Photo: David Ryder/Getty Images)

Bitcoins Rise in the US - The Senate Committee on Banking, Housing and Urban Affairs held its first-ever hearing on virtual currencies on Nov. 19 to outline the potential benefits and liabilities of bitcoins. "The Department of Justice recognizes that many virtual currency systems offer legitimate financial services and have the potential to promote more efficient global commerce," said Mythili Raman, acting assistant attorney general for the Justice Department's criminal division.(Photo: Sean Gallup/Getty Images)

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Bitcoins Rise in the US - The Senate Committee on Banking, Housing and Urban Affairs held its first-ever hearing on virtual currencies on Nov. 19 to outline the potential benefits and liabilities of bitcoins. "The Department of Justice recognizes that many virtual currency systems offer legitimate financial services and have the potential to promote more efficient global commerce," said Mythili Raman, acting assistant attorney general for the Justice Department's criminal division.(Photo: Sean Gallup/Getty Images)

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Who Accepts Bitcoins? - It’s time to spend those coins…but where? Some sites that accept bitcoins include Wordpress, some vendors on Etsy and BitCoin Coffee, a site that sells gourmet coffee beans. But you can also use your bitcoins in person.  20mission Hacker Hotel and Pacific Tradewinds Backpacker Hostel, both in San Francisco, accept bitcoins. For more places that accept bitcoins visit here.(Photo: Sean Gallup/Getty Images)

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Who Accepts Bitcoins? - It’s time to spend those coins…but where? Some sites that accept bitcoins include Wordpress, some vendors on Etsy and BitCoin Coffee, a site that sells gourmet coffee beans. But you can also use your bitcoins in person.  20mission Hacker Hotel and Pacific Tradewinds Backpacker Hostel, both in San Francisco, accept bitcoins. For more places that accept bitcoins visit here.(Photo: Sean Gallup/Getty Images)

Take a Trip to Outer Space - Billionaire entrepreneur and owner of Virgin Galactic Airlines Sir Richard Branson announced that the commercial space flight venture will accept bitcoins as a form of payment. If you have  $250,000, or about 322.5 bitcoins, then you can become an astronaut on the first flight scheduled to leave sometime next year.(Photo: Virgin Galactic)

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Take a Trip to Outer Space - Billionaire entrepreneur and owner of Virgin Galactic Airlines Sir Richard Branson announced that the commercial space flight venture will accept bitcoins as a form of payment. If you have  $250,000, or about 322.5 bitcoins, then you can become an astronaut on the first flight scheduled to leave sometime next year.(Photo: Virgin Galactic)

Purchase Anonymously - While bitcoins seem like a science-fiction reality, which makes purchasing much easier, there are some disadvantages to the virtual coins. People can purchase almost anything from drugs to child pornography anonymously online. This form of anonymity could cause illegal transactions to peak online.(Photo: Tetra Images/Getty Images)

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Purchase Anonymously - While bitcoins seem like a science-fiction reality, which makes purchasing much easier, there are some disadvantages to the virtual coins. People can purchase almost anything from drugs to child pornography anonymously online. This form of anonymity could cause illegal transactions to peak online.(Photo: Tetra Images/Getty Images)

Digital Bank Robbery - Unlike cash, you cannot forge a bitcoin. However, bitcoins are still subjected to “bank robbery.” European bitcoin payment processor BIPS lost the equivalent of about $1 million in November after a distributed denial of service (DDoS) attack overwhelmed its server. Additionally, China’s GBL exchange abruptly went offline in October, with $4.1 million in users’ bitcoins going missing.(Photo: REUTERS/Stephen Lam)

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Digital Bank Robbery - Unlike cash, you cannot forge a bitcoin. However, bitcoins are still subjected to “bank robbery.” European bitcoin payment processor BIPS lost the equivalent of about $1 million in November after a distributed denial of service (DDoS) attack overwhelmed its server. Additionally, China’s GBL exchange abruptly went offline in October, with $4.1 million in users’ bitcoins going missing.(Photo: REUTERS/Stephen Lam)

The Future - Experts predict bitcoins will become the future of currency, however it has a ways to go. If you are not in the tech world, you may not see to many people using bitcoins just yet, especially those comfortable with traditional cash systems. But In November alone, bitcoins’ value rose 107 percent in one week. With more vendors accepting it as a form of payment and the current state of the global economy, experts predict more users will come on board.(Photo: Cameron Spencer/Getty Images)

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The Future - Experts predict bitcoins will become the future of currency, however it has a ways to go. If you are not in the tech world, you may not see to many people using bitcoins just yet, especially those comfortable with traditional cash systems. But In November alone, bitcoins’ value rose 107 percent in one week. With more vendors accepting it as a form of payment and the current state of the global economy, experts predict more users will come on board.(Photo: Cameron Spencer/Getty Images)