I read up over the weekend a bit about Bitcoin, the virtual currency that is run entirely through a peer-to-peer network over the Internet, thus bypassing the need for a central authority (like a government) that is responsible for “printing” money.

As with many topics related to economics, I first learned about Bitcoin through the EconTalk podcast, specifically the episode where Russ Roberts talks to Gavin Andresen, one of the principals of the Bitcoin open source project. The Economist also has a good overview of Bitcoin.

The idea of having the digital equivalent of cash is not new, but Bitcoin does have some interesting approaches which may prove to be more resilient than previous implementations of “electronic cash”. (See this page from the Internet Archive on an introduction to ecash from Digicash, a now defunct company that was a pioneer of electronic currency.)

My interest in Bitcoin was further piqued by a blog post from The Atlantic by Courtney Knapp, who was operating as a guest blogger for Megan McArdle, one of my favorite bloggers on economics (and other topics). The article refers to a “crash” on one of the most popular online exchanges that allows people to trade Bitcoins for US dollars. It will be interesting to see if these incidents erodes people’s trust in the Bitcoin concept, or if it matters much since very few people know much about Bitcoin yet.

A few more links:

• Ars Technica on the hacking of Mt. Gox
• DailyTech on the “Digital Black Friday”, with some good background info.
• Bitcoin forum on the theft of 25000 BTC. (Depending on the exchange rate, this could have been worth approximately $500,000.) Good info and insight from the Bitcoin community on the need for encryption, vigilance in backing up and protecting your Bitcoin “wallet”, etc.