Just as the Internet forever changed (some say destroyed) publishing, a digital currency known as Bitcoin threatens to change forever the way we do banking. Bitcoin is the first digital currency that is distributed via P2P network. No bank is required between the coin owner and whomever they are dealing with.
Decentralization is the basis for Bitcoin’s security model. Bitcoins can be sent to anyone with a Bitcoin address and a hash is used to secure the transactions. Other benefits include nontaxable transactions and the inability to have your accounts frozen. Because the transactions
leave no paper trail [Update: A reader left this link to Bitcoin Explorer which shows the trail] and are completely anonymous, several discussions have centered around the illegal possibilities of using untraceable money:
- Drug deals
- Hiring a hitman
While these possibilities certainly exist, it is more likely that major banks and governments will kill it before it gains too much traction. After all, what government would allow citizens to purchase goods and service stax free (well, more tax free than they already do on the Internet). What do you think about Bitcoin?