Here's how the Bitcoin economy works

Bitcoin is back in the news this year, and not necessarily for the best reasons. Early in the new year, the price of the virtual currency crashed by 30% in a matter of days. And more recently, a suspected Ponzi scheme disappeared with as much as $US386 million, leaving its Hong Kong customers in the lurch.

But there’s been good news too. Startup Coinbase had a record-breaking funding round for the industry, and established a US-based exchange. The Winklevoss twins also plan to launch their own competitor called Gemini in the coming months, aiming to take Bitcoin “mainstream.”

Either way, Bitcoin isn’t going away any time soon, so it’s important to understand how it works. Reuters has put together an infographic explaining the basics of the virtual currency, from transactions to mining.

Check it out:

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