If you thought PayPal revolutionised the way that you can send and receive payments online, the latest peer-to-peer currency exchange, Bitcoin, takes Internet payments to a whole new level.

As described on the site, Bitcoin is a digital currency that is completely distributed. When signing up for a free account and downloading the Mac, Windows and Linux compatible software, you get your own virtual wallet. To get you started, you’re provided with a small amount of bitcoins to get a feel for the service. Once you’re ready to take the plunge, you can purchase larger amounts at an online currency exchange.

So why would you want to use a service like Bitcoin? Its biggest selling point is the fact that Bitcoin transactions cut out banks, and any other middle man, allowing you to send and receive direct payments. The digital currency has other advantages including no bank-imposed limits and best of all, it’s an international currency, which can be used anywhere in the world. The Bitcoin’s current value stands at one US dollar, but like any currency this is open to change.

Bitcoins can be used as a form of payment for services rendered or for the sale of goods, making it the ideal, low-cost option for freelancers or small businesses. To find out where Bitcoins are accepted, a good place to start is the Bitcoin Marketplace, a user forum, the Bitcoin over-the-counter marketplace, and Bitcoin’s list of sites where the currency is accepted.

Bitcoin isn’t without it’s restrictions, since you are of course limited entirely to exchanging payments with other Bitcoin users, and the service is anything but mainstream at the moment.

For the time being, Bitcoin transactions are free, but eventually a nominal fee of one bitcent will be charged on all payments. In comparison to Paypal’s 2.9% transaction fee, Bitcoin’s transaction fee is negligible.

To learn more about Bitcoin, watch the short video which sums up what the service has to offer, or better yet, download the software to try it out for yourself.