As digital currencies have become more popular and commonplace, the government has stepped up its efforts to make sure that transactions and offerings do not run afoul of established regulations.
In their simplest form, Bitcoin and other virtual currencies are digital representations of value that can be traded through an exchange and stored in digital wallets secured by 26-35 character long case sensitive account numbers that require a private key, similar to a password or pin to access. Virtual currency is not legal tender issued or guaranteed by any government. Rather, its value is determined by consensus within a community of users. Since these transactions are done on the internet and through exchanges using cash, wire transfers, or credit cards to a host of web-based businesses, the purchasers’ identities and source of funds are more difficult to uncover.