This document analyzes Bitcoin and virtual currencies. It provides an introduction to Bitcoin, explaining that it is a decentralized digital currency created in 2008 by Satoshi Nakamoto. Bitcoin uses cryptography and a peer-to-peer network to record transactions in a public ledger called the blockchain without a central authority. The document discusses how bitcoins are created through mining, obtained, and stored in digital wallets. It analyzes the advantages of Bitcoin like low fees and anonymity, but also disadvantages such as volatility, lack of consumer protections, and varying legal status around the world. In conclusion, the document discusses both the theoretical issues and practical problems with widespread adoption of Bitcoin.