BITCOIN brings banks buy in

Cryptocurrencies, such as bitcoin, work on a technology known as blockchain, a decentralized network of synchronized online registries that track the ownership and value of each token. They can be used as virtual cash and traded like currency. Private companies can issue their own virtual currencies to finance specific ventures, similar to crowdfunding or bonds. And their future value can also be traded, like options.

With approximately $70 billion in bitcoins in circulation and more than 100,000 merchants around the world—including Russia's largest online retailer, Ulmart—accepting similar forms of payment, "suddenly everyone has to take cryptocurrency seriously," says Richard Titus, an investor of cybermoney. Virtual currencies are also a potential bonanza for money launderers, online blackmailers and cybercriminals—especially in Russia. And with the market still basically unregulated, Titus warns, "it's definitely the Wild West." Even JPMorgan Chase CEO Jamie Dimon, usually a bull on tech innovation, warned in September that virtual currencies are "a fraud.… It won't end well. Someone is going to get killed. It will blow up."

There's even been talk of creating a supranational cryptocurrency for the emerging BRICS nations—Brazil, Russia, India, China and South Africa—as "a good alternative to the dollar," Kirill Dmitriev, head of the Russian Direct Investment Fund, told state-run news agency Ria Novosti in August. Though the entire sum of cryptocurrencies in the world remains under $100 billion, a long way off the estimated 10.2 trillion U.S. dollars, the idea of undermining America's dominion as owner of the world's chief reserve currency appeals to Putin, who recently called for the BRICS nations "to overcome the excessive domination of the limited number of reserve currencies."

China is the world leader in bitcoin mining, with miners deploying huge power-hungry computer server banks to crunch the necessary numbers—and Moscow is eager to get into that business.