Depending on whom you ask, bitcoins are a goofy geek invention with as much long-term value as Monopoly money - or a technology development that could transform currency the way email and texting have transformed correspondence.



A type of digital cash, bitcoins were invented in 2009 and can be sent directly to anyone, anywhere in the world. You don’t have to go through a financial institution, which means no fees and no one tracking your spending habits. With a current market capitalisation of $1 billion, bitcoins are beginning to be more widely accepted.



But bitcoins, and other digital currencies, have also come under scrutiny. Liberty Reserve, an online payment system, was shuttered in the spring by New York authorities, who said the company used its digital currency, known as LRs, to launder up to $6 billion. And law enforcement officials have voiced concerns that bitcoins could also abet illegal transactions. Bart Chilton, a commissioner on the Commodity Futures Trading Commission, suggested that bitcoins might be ripe for regulation.



Moreover, some critics say the bitcoin infrastructure is insecure, as hackable as any other computer-based system.



“The way the basic bitcoin system works is both incredibly solid and incredibly clever from a technical standpoint,” said Nicholas Weaver, senior staff researcher at the International Computer Science Institute in Berkeley, which studies and advances a range of emerging technologies. “The system’s security is fragile, however, and the economic model behind bitcoin is, well, crazy stupid.”



Nonetheless, paying with bitcoins can be a weirdly fun way to make transactions. Here is a primer on how to do it.



Like gold, bitcoins, which are both a currency and a commodity, are in limited supply (there is a cap of 21 million total) and have to be “mined” before they are put in circulation. Anyone can mine for bitcoins by downloading software, known as the bitcoin client, which algorithmically crunches a bunch of numbers to authenticate a sequence or “block” of past bitcoin transactions. So bitcoins are basically minted as a reward for contributing to the smooth operation of the system. Validating a block yields 25 bitcoins, which are currently worth $2,675.



The fluctuating price of bitcoins, also like gold, is a function of supply and demand, as well as psychology. “Bitcoins have value because people say they have value,” said Andrew White, a digital currency entrepreneur in San Francisco.



Unlike fiat currencies like the U.S. dollar and virtual currencies like Facebook credits and the one invented by Liberty Reserve, bitcoins are not created or controlled by a central authority. But with the blistering rate of bitcoin transactions these days, you need a pricey and complex computer rig to effectively run the bitcoin client and procure some bitcoin bounty. An easier way to get bitcoins is to just find someone willing to sell them to you.



Julian Tosh, an IT systems administrator in Las Vegas, for example, lets friends and family buy items on his Amazon wish list and pays them back in bitcoins. “This works well as long as I need stuff,” said Tosh, who also presides over a Wednesday “Bitcoin Lunch Mob” in Las Vegas, which gathers to discuss and trade bitcoins.



But maybe you don’t personally know any bitcoin enthusiasts like Tosh or the Winklevoss twins, Cameron and Tyler, who own around $11 million worth and have filed papers with the Securities and Exchange Commission to form a bitcoin investment trust. If so, you might try localbitcoins.com, which lists people in your area who are willing to exchange bitcoins for cold hard cash. The market price Tuesday afternoon was $107 for a bitcoin.



Be sure to check out sellers’ profiles and reviews to make sure they are reputable. And, of course, it’s always a good idea to meet in a public place to make the transaction.



Bitcoins can be easily transferred and stored using a digital wallet app on your Android mobile device. Popular wallet apps include BitcoinSpinner and Bitcoin Wallet. There are no iOS bitcoin wallet apps, and Apple did not respond to emails seeking an explanation. But Blockchain has an online wallet service that you can access using any Internet-connected desktop, laptop, tablet or smartphone.



You can also get bitcoins through Mt.Gox, the largest bitcoin exchange and where the currency is traded as a commodity. The company, which is based in Japan, also charges a 0.6 percent fee for all transactions.



Keep in mind that the US Department of Homeland Security in May seized Mt Gox’s U.S. accounts, saying it misrepresented the full extent of its financial operations. The company did not respond to requests for comment but continues to function as before the seizure.



Once you have your bitcoins, the fun part is spending them. Bitcoin. travel, BitcoinsInVegas.com, Spendbitcoins.com and Reddit have directories of businesses that accept bitcoins as payment. And Bitpremier.com lists high-priced luxury items (cars, jets, yachts, etc.) you can buy with bitcoins.



To make a purchase, all you have to do is type the receiver’s key code or scan their QR code into your bitcoin wallet and you’re done. Like cash transactions, you can’t cancel payment later, so be sure it’s what you want before you click “send.”



Brewster Kahle, a founder of the Internet Archive in San Francisco, said he routinely used bitcoins to pay for lunch at a local sushi restaurant. He’s interested in the technology and appreciates the libertarian aspect of it. “Bitcoin used to be just in the land of computer geeks, but not anymore,” he said.



More businesses are accepting bitcoins lately thanks to Bitpay, which supplies software for processing bitcoin payments. The merchant pays a 0.99 percent fee per transaction versus the 2 to 4 percent fees charged by credit card companies. Bitpay will also immediately convert bitcoins to dollars if the merchant desires.



Or maybe not. The legal trouble at Mt Gox sent a shiver through the market as did SEC charges last week that the founder and operator of the lesser-known Bitcoin Savings and Trust in McKinney, Texas, was running a bitcoin Ponzi scheme.



Still, bitcoin advocates point out that, despite some bad actors, the actual system has not had a major security breach. Nevertheless, even the most ardent bitcoin boosters urge caution. Bitcoins have appreciated more than 700 percent since this time last year - an increase some have compared to a bubble bound to burst.

