As we know, most fiscal history has been dominated by a web of central banks.
The central banks are in a race to debase, a trend that's rapidly accelerated over the past decade.
There's a lot of money to be made by issuing money.
After a century of massively inflated fiat currencies worldwide, it's little wonder people have flocked to a totally independent form of new money.
Bitcoin's appearance and meteoric rise have galvanized the market for truly free money.
To quote Sir Richard Branson on CNBC last week, "Whoever was behind Bitcoin was brilliant…"
But the race for control of virtual currencies is heating up…
Understanding the Road to Virtual Currency
The precursor to virtual currencies is PayPal, established already 15 years ago.
It has come to dominate the electronic payments space, particularly after it was acquired by eBay in 2002.
The company essentially allows payments and money transfers through the Internet. Consumers and vendors link their bank accounts and/or credit cards to their PayPal accounts in order to send or receive payments.
Fees are charged for processing payments and receiving money, depending on the currency, payment option, countries involved, amounts, and account types.
But PayPal is a payment facilitator rather than a currency, as it uses the Internet to accomplish what's otherwise done through checks, money orders, and wire transfers.
Widespread acceptance of PayPal has moved the service from the edge of the "payment frontier" to the "go-to" source for web-based financial transactions.
The appearance of Bitcoin, however, has meant a quantum leap forward, from facilitator to currency.
Bitcoin is not issued by any government. It's a peer-to-peer payment system and digital currency that was introduced in 2009 as open source software.
Bitcoin is virtual money, as no actual physical "coins" exist.
They can be purchased using money, but they can also be produced. Users can mine them by employing their own computers to solve complex mathematical algorithms.
When a user pays with Bitcoin, a public transaction log called a blockchain is updated. It's a master list of all transactions worldwide that's chronologically ordered, and its validity is verified through a decentralized system using the Bitcoin protocol.
The beauty of this currency system is that a maximum of just 21 million Bitcoins will ever be produced, and it dramatically reduces the costs of financial transactions.
Without the need for banks, financial services companies or wire agencies, transaction costs can be substantially reduced, freeing up tremendous amounts of capital for far more productive purposes.
Historically Bitcoin has swung widely in value but has settled into something of a trading range recently. At the beginning of 2013, it traded around $15. By late November, it was at about $1,200. Most recently it's traded in the $900's.
As Bitcoin matures and its acceptance grows, it's likely to become a valid form of money.
And that's certainly helped to draw a lot of attention.
On Nov. 18, 2013, the Department of Justice (DOJ) said Bitcoin can be a "legal means of exchange." Bernanke himself even stated in a letter to the Senate panel that Bitcoin "may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system."
François R. Velde, senior economist of the Federal Reserve in Chicago, labeled it as "an elegant solution to the problem of creating a digital currency."
Acceptance of the virtual currency for payments is still in its infancy, but it is growing.
Businesses such as Reddit, Virgin Galactic, and Overstock.com now accept Bitcoin, with Zynga now in the testing phase. Even Congressman Steve Stockman, R-Texas, is glad to take Bitcoins as 2014 campaign contributions.
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.