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Bitcoin, what is it good for?

A sticker on the window of a local pub indicates the acceptance of Bitcoins for payment in Berlin, Germany.

Just in time for tax season, the IRS released its first set of rules for Bitcoin. As the cryptocurrency has gotten bigger, there's been a lot of speculation over how best to use it.

One idea involves computer-to-computer transactions. Take email, for example.

"An example might be if it were really easy to attach a tenth of a penny to every email you send, it wouldn't add for the normal emailer very much. In fact you'd be getting a tenth of a penny as you get emails from people. So it'd basically be a wash. But if you're a spammer...looking to send out a billion emails to people and hope that one of them answers, having them attach a tenth of a penny to each of those emails would not make that cost effective anymore."

Aside from its function as a currency, the way in which Bitcoin functions could serve as a model for how the internet could become more efficient. In this example, provided by Jonathan Zittrain, co-founder of Harvard's Berkman Center for Internet and Society, the ease with which cryptocurrency is exchanged is used to deter spammers. It's an idea that some feel is an inevitability. Zittrain points to the the public journal that records the path of every bitcoin, and how this kind of practice could apply to other kinds of data.

"For my part, I think the interest in a distributed public journal of stuff could be used for all sorts of purposes that don't have to do with the exchange of currency. There might be ways to use bitcoin-style journaling so that when a company transfers sensitive data, it gets journaled over. And there'd be a way then for me to see where it's been. Then if it actually should leak, I can trace the source of the leak."

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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