The Planet Money team has done some excellent work this year in explaining some of the basics of money--especially in their What is Money? special for This American Life.  Today David Kestenbaum and Jacob Goldstein take a look at a relatively new currency: Bitcoin.  Bitcoin is a sort of online cash.  Daniel Lyons gave a brief description in a June article for Newsweek:

What if people could use the Internet to create a new kind of money, one that didn’t involve governments and central banks and could be used anonymously, like cash? That is the idea behind Bitcoin, a virtual currency that has caught the attention of computer geeks, financial speculators, and drug dealers. For the first time, you can buy anything online without giving your credit-card number or bank-account information—leaving no trace at all.

Hundreds of merchants accept Bitcoins for things like books, computers, and professional services. The currency trades on a handful of Bitcoin exchanges, where the price of a Bitcoin fluctuates based on demand. Not long ago a single Bitcoin sold for less than a dollar, but in recent months the price climbed to $8, then to $20, then above $30, before falling back to $18, the current level.

So is this a currency with a future?  With that question in mind, Planet Money gave Bitcoin a try: