  The internet era has generated a requirement for low cost, anonymous and
rapidly verifiable transactions to be used for online barter, and fast settling
money have emerged as a consequence. For the most part, e-money has fulfilled
this role, but the last few years have seen two new types of money emerge.
Centralised virtual currencies, usually for the purpose of transacting in
social and gaming economies, and crypto-currencies, which aim to eliminate the
need for financial intermediaries by offering direct peer-to-peer online
payments.
  We describe the historical context which led to the development of these
currencies and some modern and recent trends in their uptake, in terms of both
usage in the real economy and as investment products. As these currencies are
purely digital constructs, with no government or local authority backing, we
then discuss them in the context of monetary theory, in order to determine how
they may be have value under each. Finally, we provide an overview of the state
of regulatory readiness in terms of dealing with transactions in these
currencies in various regions of the world.
