Bitcoin and Beyond: Digital Money in 2012

December 24, 2012 2:51 PM

US dollar bill and binary code (Digital Composite)

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(Image: ThinkStock)

Money question

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What Is Digital Currency?

The most famous digital currency is Bitcoin, which is designed to function like cash. Other digital currencies include the fake gold used in online games and the virtual Credits used on Facebook. All of these can be traded for real cash, and though they are popular, they are far from mainstream. (Image: ThinkStock)

A Prosperous Idea

Perhaps the most intriguing development in digital money is the news that Chris Larsen, who previously founded E-Loan and Prosper, is involved in the design of a new digital currency called Ripple.

A pedestrian walks past the Facebook Inc. 'like' logo displayed on a sign at the entrance to company headquarters in Menlo Park, California, U.S., on Wednesday, Feb. 1, 2012. Facebook, the social-networking website that began about eight years ago in a Harvard University dorm and now boasts more than 800 million users, filed to raise $5 billion in an initial public offering. Photographer: David Paul Morris/Bloomberg

David Paul Morris/Bloomberg

Status Update

As Facebook grows its audience for online payments, it is phasing out the use of Credits, its own digital currency. Instead, the company urges developers to transact in local currencies. (Image: Bloomberg News)

Cultivating an Idea

Amex tied its Serve digital wallet to the Facebook economy with the addition of a quest in the popular Facebook game Farmville. The quest urges Farmville players to open a Serve account.

Welcome mat in doorway

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A Welcome Change

One Bitcoin exchange, Bitcoin-Central, welcomed European regulators by entering a partnership this year meant to further legitimize the digital currency. (Image: ThinkStock)

Doormat

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Not as Welcome

Tradehill, a company that exchanges money for bitcoins, shut down after being targeted by regulators for lacking a money transmitter license. (Image: ThinkStock)

Mitt Romney, Republican presidential candidate, participates in a presidential debate with U.S. President Barack Obama, unseen, at the University of Denver in Denver, Colorado, U.S., on Wednesday, Oct. 3, 2012. Romney said Obama favors a form of "trickle-down government" that will result in more taxes and regulations, as the two met in their first debate in the race for the White House. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Mitt Romney

Andrew Harrer/Bloomberg

Romney Ransom

Bad news for Bitcoin: the digital currency is now associated with a ransom demand and a Ponzi scheme. The ransom was requested in exchange for Mitt and Ann Romney's tax records. The Ponzi scheme is tied to an online hedge fund called Bitcoin Savings and Trust. (Image: Bloomberg News)

Spy

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Hackers Attack

Bitfloor, the fourth largest exchange dealing in U.S. dollars, was hacked in September. The equivalent of about a quarter of a million dollars in bitcoins was stolen from users. The exchange reopened shortly after the incident. (Image: ThinkStock)

Blogging hands

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Word Up

As Bitcoin fought for legitimacy, it got it from an unexpected source. The blogging platform WordPress announced it would accept bitcoins as part of its effort to promote free speech the cashlike nature of Bitcoin makes it resistant to the restrictions placed on card transactions. (Image: ThinkStock)

Visitors play Activision Blizzard Inc.'s "World of Warcraft" video game at the Gamescom video games trade fair in Cologne, Germany, on Thursday, Aug. 19, 2010. Sony Corp. and Microsoft Corp. are introducting motion-activated products this year for their respective PlayStation 3 and Xbox 360 video game consoles to compete with Nintendo Co.'s industry-leading Wii gaming console. Photographer: Ralph Orlowski/Bloomberg

Ralph Orlowski/Bloomberg

Good as Gold

Activision Blizzard, the company behind the massively popular World of Warcraft online game, has fought the trade of virtual Warcraft gold as real money. However, the company clearly recognizes the currency's potential when it launched its Diablo III game this year, Blizzard added the ability to use real money. (Image: Bloomberg News)