You may have heard about bitcoins.The internet is abuzz these days with tweets and articles about the digital currency that’s been around since 2009, but has lately soared to record-high prices.Bitcoin is a decentralized and anonymous way to exchange money.Yes, they have real cash value.On Wednesday morning, when this story was filed, one bitcoin was worth a record $266.(In the afternoon, its value dropped by nearly half, however, before rising overnight to $168./.)And, yes, you can trade bitcoins for real products and services—to an extent.Howard Johnson’s accepts them.And Business Insider reports that one family sold a Porsche for 300 bitcoins.But bitcoins are not regulated by any centralized government agencies or financial institutions.Not having the strong arm of government to protect ordinary citizens might scare some people; but, for others, lack of regulation and anonymity is precisely the appeal.Because you can trade bitcoins without anyone knowing who you are (your bitwallet is basically a random string of 27-34 numbers and letters), shady buying and selling is possible.

Bitcoin could allow someone to purchase guns, drugs, and other questionable products without leaving a paper trail, which has law enforcement officials concerned.However, because it is not associated with any banks, folks can also transfer money to anyone in the world without paying fees, which is appealing to law-abiding citizens as well.Is it legal?Yes, technically—though some lawmakers think it is just a complicated online money laundering scheme.law prohibits the creation of tangible coins, bars, or bills that resemble any real currency, but bitcoin is virtual.Since nothing like bitcoin could have been imagined when the laws were written, bitcoins don’t fall under the categories outlined.In other words, bitcoins are legal because they are not deemed real money.Still, you can exchange bitcoins for real cash.Or, if you want the convenience of brick and mortar, just wait, a bitcoin ATM could be in your neighborhood soon.How do you get bitcoins?You can buy bitcoins online by wiring cash straight from your bank account.

You can trade products or services for bitcoins.Or, you could mine for them…Huh!?“Miners” find 64-digit numbers by decrypting equations with the complexity of rocket science.Every “block” mined is worth about 25 bitcoins (currently worth more than $6,000).But don’t reach for your virtual pickaxe quite yet.You need an advanced degree to even understand the questions.Plus, working alone, it could take you about 3 years to solve one block.There are other options: you can download some software and rent your computer’s processing power to a pool of miners.bitcoin evolution coursLeave your computer on 24 hours a day and you’ll reap a share of the mining profits equal to the amount of processing power you contributed.etotheipi bitcoinIt is like crowdsourced cooperative mining.bitcoin estate

But is it worth making the effort?Some people certainly think so.The value of a bitcoin has increased substantially in a very short amount of time and some analysts think it will skyrocket up to about $400 per bitcoin.But others say it is just a passing fad and the bitcoin bubble is about to burst.My take: As much as I love a good science-fiction futuristic fantasy, bitcoin is probably not the future of money.I doubt it will replace the dollar as the preferred international currency anytime soon.However, as Jared Keller at the Atlantic has pointed out, “it may become the de facto dollar for technical services in the digital space.”If you don’t sell something that requires anonymity there’s probably no advantage to dealing in bitcoins yet.And if you just like the idea of currency exchange as an investment, there are much safer options.Consider an ETF or mutual fund that trades in foreign currencies.The potential payout is smaller, but so is the risk.Is it Time to Ditch Your Cell Phone Provider?

Best Way to Build Your Own Website 5 Surprising Ways to Save Money OnlineBitcoin ("BTC") isn't only recognized as the first cryptocurrency; it's also the basis for every other crypto-coin that's popped up since it was formally introduced in 2009."Satoshi Nakamoto" (the pseudonym used by the person or the group of people who created bitcoin) designed it as a peer-to-peer system that relies on users to keep working.Also, all transactions are recorded on a public ledger (called "block chain"), so even though no name or email address is associated with an account, the system's not entirely anonymous.Similar alternative currencies follow that structure even now, though they add features of their own, as well.Litecoin, for instance, was designed for faster transactions (the average confirmation time for each bitcoin transfer is 11 minutes as of January 2015, because it has to be verified by a miner -- more on this later), while Quarkcoin promises a more secure system.Others rely on their novelty more than anything, such as Dogecoin, which likely appeals most to fans of the (in)famous doge meme and Coinye West that was seriously a thing until Kanye West went onstage to court and didn't let it finish had it shut down.Now, if you're wondering if you should invest in any kind of cryptocurrency, the answer isn't simple: It depends, as their values fluctuate quickly and widely.

Take for example, bitcoin, which reached its current all-time high of $1,242 per coin in November 2013, whereas each BTC was worth only around $200 a few months before that.As of this writing, bitcoin's value is back to $210, and who knows if it'll ever be worth more than $1K apiece ever again.Point is, if you plan on investing your life savings on bitcoin or any other alternative, you'll have to study it closely and prepare for the consequences.Instead of getting your kids' college tuition or your retirement fund when you're ready to liquidate, you might end up with but a fraction of what you originally invested.Still want some first-hand experience with these crypto-coins anyway?We put together some basic info you should know before getting started, using bitcoin as the reference currency.These are some of the most common ways to get bitcoins or any of its alternatives:As we mentioned earlier, cryptocurrencies aren't regulated by any institution, so there's no bank that would print more money when the need arises.

Take note, though, that the system makes it harder to mine the more blocks of transactions are processed.The rewards were also designed to be cut in half every four years to prevent inflation and to keep the total number of bitcoins in circulation to 21 million at most.At the moment, the reward for each block mined is 25 BTC, and the process has become difficult to the point that you'll now have to join a mining pool if you actually want to earn anything.A mining pool combines the resources of a group of people to mine bitcoins and divides the loot amongst the members.Sound complicated?Well, mining isn't exactly a simple concept.Watch the video above first, then let's try to visualize the idea: Imagine that you're an actual miner with a pickaxe in your hand, and there's a big boulder in front of you with golden coins hidden in its very center.To get to the gold coins, you'll have to chip away at the boulder: The better your equipment is, the faster you can go.Unfortunately, you're not the only one trying to get to the center of the boulder, and it's a race between you and other miners with better, more high-tech pickaxes.

That's why the best way is to pal up with other people to get to the very center of the boulder and divide the loot.As time goes by, though, you'll notice that boulders become harder to break and the gold coins in the center become fewer in number.That's but an oversimplification of the process, of course, but it should give you an idea of how it works.The boulder in this case represents a block or a big bunch of transactions miners have to verify and solve.Each piece of rock a miner chips away represents a verified transaction, and the gold coins represent the bitcoins a miner can earn and introduce into the circulation.Before you exchange your hard-earned dollars or mine for some BTC, though, you'll first need a wallet to keep your virtual money in.Within these wallets, you'll find your secret codes or keys needed to be able to spend your coins, as well as an address (which functions similar to a PayPal email, except it's a long code of letters and numbers) that you need to give people sending you money.

Some wallets can even generate several addresses so you can give a different one to every person you're transacting with as an extra precaution.There are many types of bitcoin wallets, including desktop programs and mobile apps, which are ideal if you want to pay for purchases in brick-and-mortar stores.Some of them can be accessed online, but in case you end up with an inordinately large amount of bitcoins, you're likely better off keeping most of it offline in what's known as "cold storage."While bitcoins stored online are more easily accessible, everything stored offline is much safer.When exchange service Bitstamp was hacked in early January, the thieves got away with "only" $5 million, because most of the company's reserves were stored offline.We kept saying earlier that bitcoins don't have a physical form -- well that's still true, but in addition to apps, programs and online services, another way to store the cryptocurrency is through "paper wallets."There are businesses that will print your address and private key as QR codes on a card.

Want something fancier than a paper card?A website called Casascius sells actual physical bitcoins (which you can see in the top image) with your address and private key hidden underneath a hologram.They used to come loaded with spendable BTC, but after being questioned by the feds, the owner has decided to sell them empty -- you'll have to find a way to load the coin on your own.For those who think paper and flashy coin wallets are too risky, there are special hardware wallets that promise to keep your money secure while also being easier to access, such as that prototype bracelet by MEVU.Some physical wallets even take on an unusual form, like a CD or a vinyl encoded with private keys as audio files.Since cryptocurrencies aren't governed by an institution -- there's a Bitcoin Foundation, but it merely promotes the currency's use and doesn't function like a bank -- they've become ideal for transactions that, well, aren't exactly legal.As we've mentioned earlier, bitcoin is the online black market's preferred method of payment, including drug and gun transactions, among other items.

Prominent black market website and marketplace "The Silk Road" had $25 million worth of bitcoins by the US government during a raid back in 2013.The government ended up auctioning 50,000 BTC from what was confiscated.A bitcoin exchange executive and foundation member was even to two years behind bars for helping run an underground dollar-to-BTC operation for Silk Road regulars.Also, because exchange services keep part of their reserve in online wallets, quite a few companies were hacked in the past year.One of the most high-profile bitcoin-related security breaches happened to Japan-based exchange company Mt.Gox, which lost 850,000 BTC and ultimately had to shut down.According to the latest info from authorities in Tokyo, it could have been an inside job.Gox CEO Mark Karpeles has recently been accused of being Silk Road's mastermind who hid behind the name Dread Pirate Roberts, something that he categorically denied.Speaking of naming people as the face behind pseudonyms, Newsweek published a piece in 2014, pinpointing Japanese-American and California-native Dorian Nakamoto as the Satoshi Nakamoto.