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Online Cash Bitcoin Could Challenge Governments, Banks

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Courtesy of Bitcoin

Bitcoin is an open source distributed and anonymous digital currency created by Satoshi Nakamoto to enable people to exchange money without being traced.

Unlike previous digital currencies that still required a third party intermediary to monitor the transaction, Bitcoin distributes the database of transactions across a peer-to-peer network, allowing a record to be kept of all transfers, so the same money cannot be spent twice. Governments would be unable to regulate a massive Bitcoin economy because there are no intermediaries and Bitcoin's anonymity makes it difficult for governments to directly go after individual consumers. Bitcoin relies on public-key cryptography to secure transactions, so there is no way to determine who sent money to whom.

The Bitcoin economy is currently estimated to be worth about $5 million, but exchanges are being created that enable users to exchange money for bitcoins and the number of vendors that accept bitcoins for payment is growing.

From Time
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