Today, some of our presentations covered illegal online-gambling sites like Full-Tilt Poker and company. One of the topics that came up was the funding of accounts on these sites, and how money-laundering and off-shore accounts were a common practice for such sites.

I won’t name names, but someone mentioned that they had funds on such a site, and that the funds were basically lost/in some kind of legal limbo after one such site got shut down. I mentioned that one might avoid such a situation if they used BTC (bitcoins).

Bitcoins are a digital currency that have no central authority other than the authors who maintain the program/bitcoin protocol.

I’ll make a long story short… most people know torrents, which allow you to share whatever files over the internet… why not have the same concept for a currency?

Here are some simple facts about BTC:

• You keep the “money” in a small file on your computer. Whomever has access to that file “owns” the money, so keep it secret!
• To send money to someone, they only need to generate an address which is very easy. The address looks like a random string of numbers/letters like Sdlj43242dd34DSDF for example.

But wait, this sounds like complete crap right? A real bitcoin, just some file on my computer can’t be worth any money right? Actually, as of this writing, the latest price on a leading exchange is 1BTC for $4.90 USD. The price goes up and down according to various factors, and is actually quite unstable lately due to the currency being so young. (at one point in time, they used to be $30 each!!)

The concept of the bitcoin is a powerful idea, and you can find a lot of writings on the subject, and how the project is related to the origins of free cryptography on the internet (the U.S. government used to want to prevent all citizens from having their own private encrypted files until they realized it was impossible, see CypherPunk)

I’m not an advocate of money-laundering or illegal use of such software, but education about this concept is very powerful, and I think we’ve only just begun to hear about projects like bitcoin.