Explosion or Implosion for the World's Favorite Cryptocurrency?

It might not have been word of the year for 2013, but “Bitcoin” figured prominently in the shortlists. Known formerly only to true geeks, the mysterious cryptocurrency was in the news almost every day. Why all the fuss? Much of it has to do with Bitcoin’s pure novelty and its wild price fluctuations. But above all, it is because Bitcoin is an extraordinary idea.

Its foundational premise is that monetary systems do not need a central government. Instead, Bitcoin relies on clever mathematics to ensure that everyone plays by the rules. In theory, at least, no one can control Bitcoin. And this means, of course, that nobody can tell Bitcoin users what they should and shouldn’t be spending their money on -- for good or for ill. That presents regulating agencies with difficult questions: Should they try to control Bitcoin? Can they control it?

If all this sounds familiar, it should. The world faced these same questions in the early days of the Internet. Whether Bitcoin is more like AOL or Google, of course, is yet to be seen. Still, how governments choose to respond to it could change global finance for good...

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