I'd be worried about who runs the central database of credits. What if that somehow got corrupted? There has to be buy in at some point for the credit (i.e exchanging real money for it). What if lots of people wanted to withdraw that money.
It sounds like Paypal in a lot of ways except paypal has just stuck to using conventional currency notations rather then make up a word and (hopefully) has some real value behind the assets.
There is no central database. All nodes are part of the network, all the nodes authenticate the hash of all transactions, so it's not possible to double spend, a central authority isn't necessery, the rate of inflation is fixed. In 2017 or whenever it is, when the 750 new bitcoins randomly generated on the network every day finally add up to 21 million, that's all the bitcoins there'll ever be. In fact there's be less due to attrition, but no one can ever print more. If you hoard them, the rest will just be worth more, expanding in value to cover the demands of the active economy (8 decimal places remember), and anyway you have to spend them at some point to get any use of them. At the moment you can by 1 dollar with about 5 bitcoins. You can also buy roubles or gold or other currencies, there are bitcoin exchanges. You cazn also buy art or donate to charities or buy stuff from the websites that accept em so far.
When bitcoins take off in the 3rd world, and this is just my theory, when that happens we can all expect big changes. There was a case in China recently where a game currency called QQ coins were being used to denominate trade, gamblers, loansharks, traders, everyone was getting into it. The government had to clamp down (to control supply and interest rates effects that expanding amount of QQ coins being traded has on official currency, like an amflifier effect I think).
The games company behind the QQ game had to stop people trading QQ coins on their servers. Or something like that... here's an
article.
However with bitcoins there is no central server. Owning a bitcoin means owning a something-or-other.dat file, so you could store it on a usb drive, you caqn back it up and have copies all other the place but once it's spent, it's spent. As it's a public/private key authentication system, there's no way for the gurm't to stick it's nose into transactions. It's peer-to-peer authenticated cash backed by the value people have transacted in it. Not only is it control free from any central authority, it's also government immune from banning or come to think of it, prosecution, as they'd have to ban the internet to stop people using bitcoin and even then there'd be wifi network. And oh yes there are bitcoin trading apps. There's a load of techy stuff I'm not getting into but the result is untraceable un-fakable money backed by trade and exchnagable for other currencies. US sentators can hollar all they want, but there'll be nobody to close down bitcoin, nothing card companies or paypal or Amazon can do, and no way to tax you. You just need the internet.
If bitcoins took off like in say India or China or Nigeria or Somalia, and bearing in mind they don't need to 'take off' like paypal or facebook to be successful, not even in the West, there just needs to be a trade in them against other currencies (and there is) among the in-crowd. The market for bitcoins is worth just under 1.5 million dollars as it is, so this concept is no longer just a theory, it's an actual practiced but relatively small currency. But if bitcoins Took Off then it'll be the biggest thing for the global economy since the internet. In my opinion it's in iuncubation period, tipping point is within 10 years.
Governments and various powerful institutions will have to undego a serious and fundamental rethink of their role in society.
Bitcoin could be the Direct Action of the New Now! *giggles like a maniac* what with the situation of the economy right now... I'd buy btc. Bubbly market mind, by some accounts, at least for now.
