Cryptocurrency: The Future of Money?

– Even if you don’t really
understand what it actually is, you might still be feeling
some serious Bitcoin FOMO. Remember those headlines from 2017? Like that teenager from Idaho who bought a bunch of
Bitcoin with birthday money from his grandma and became one of the youngest Bitcoin millionaires. And yeah, he’s being super
modest about it, too. Bitcoin’s value exploded in 2017. It wasn’t all that long ago that you could buy a single
Bitcoin for less than 10 cents. Then, fast forward seven years and that one little digital nugget was worth more than $10,000. Of course, right after that it took a pretty serious nose dive, losing about half its value
in the next six weeks. But even so, that ridiculous spike put Bitcoin on people’s radar. And suddenly there was a huge bump in the number of everyday schmoes who wanted in on the
action and were willing to gamble real dollars on a
pretty darn abstract concept. ♪ Bitcoin, sell me some Bitcoin ♪ ♪ You better get it currently ♪ ♪ It’s worth more than your currency ♪ – So I sold all 60 of my Bitcoin which gained me about
1.1 mil before taxes. – He was at 13 grand
yesterday, today it’s at 17, tomorrow it could be 100,
let’s go get some money. – Today there is still lots
of big name techy-types out there who believe Bitcoin
is the future of money. Some even say it will
completely revolutionize our global financial system, like Twitter co-founder Jack Dorsey, who recently declared that Bitcoin would become the world’s single
currency within a decade. Bold claim, my friend. So, is Bitcoin really the future of money? Or is it just another
bubble destined to pop? Okay, first things first. What the heck is Bitcoin anyway? – We can help with that. I’m Philip. – And I’m Julia. We are the hosts of the PBS
Digital Studio Show, Two Cents. All about personal finance. – Bitcoin is a kind of cryptocurrency, which is really just
a fancy sounding name for digital cash that can
be bought and sold online. There are no bills or even coins
involved, despite the name. And it’s not based on any
physical asset like gold. Also, transactions are
tracked by Bitcoin users without going through any
financial institutions like banks or credit card companies. – And unlike the digital
dollars in your bank account, cryptocurrencies aren’t highly regulated or backed by their government, so there’s no guarantee about
how much they’ll be worth from one day or even
one minute to the next. – Nowadays there’s a lot of
different cryptocurrencies out there that you can buy
online or even at certain ATMs. They all have weird names, too, like Ethereum, Litetcoin and Ripple. But Bitcoin was the first, the one that launched
the whole crypto craze. And it’s still by far the biggest and most popular of the bunch. Bitcoin was mysteriously
introduced in 2009 by an anonymous programmer, or more probably a group of programmers, using the alias Satoshi Nakamoto. It came just a year after a huge economic crisis shook a lot of people’s faith in the stability of our major global
financial institutions. And like all cryptocurrencies,
Bitcoin operates on an open source technology
called Blockchain. Think of it sort of like a massive shared Google
doc in view-only mode. Basically, a continuously
updated online record of transactions that every
user can keep track of, but no one can change. Each group of transactions called a block then has to get validated and added to the public record. And that’s done without the need for any middle men like banks
or credit card companies. It happens through this crazy
process called Bitcoin Mining where independently owned
computers around the world compete to solve super complex math problems that somehow prove the
validity of the transactions. The computer that solves the puzzle first adds the newest block to
the chain and as a prize, that computer gets to mine a handful of spanking new Bitcoin,
increasing the total amount of Bitcoin in circulation. Pretty crazy, right? But your identity and what
you’re actually buying and selling is all encrypted, hidden behind layers of computer code, which is why you’ve probably heard stories about Bitcoin being used for all kinds of illicit activity like money
laundering, drugs and sex. And for all the Bitcoin
evangelists out there, there are a lot more skeptics
who think this whole thing is little more than a short-lived fad that’s gonna leave many unsuspecting folks with a whole lot of digital nothing. For one, they argue the value of Bitcoin and other cryptocurrencies is incredibly erratic and unpredictable. In econospeak, this is
known as volatility. Remember that Bitcoin’s value is based entirely on speculation. It’s really just how
confident people feel about it at any given time, for
whatever real or imagined reason. So, it’s pretty common for its value to surge or plunge over the
course of even a single day. And that doesn’t make it
particularly functional as an everyday form of payment. Since the end of the boom in 2017, fewer and fewer businesses
are accepting Bitcoin as a form of payment. Even the North American
Bitcoin conference stopped letting people pay for tickets with, wait for it, Bitcoin, because
of high transaction fees and long processing times. Ironically, Bitcoin was
invented to avoid stuff like that from happening in the first place. Alright, so now you might be thinking, what makes a dollar bill any
more real than a Bitcoin? I mean sure, a dollar physically exists, but what makes this flimsy
green piece of paper with a headshot of old
G.W. any more reliable? I mean, it’s not based
on any physical asset like gold anymore and
it’s value also rises and falls over time, although
never as fast as Bitcoin. The big difference, of course, is that the dollar is
the official currency of the United States. That means it’s backed
by the U.S. Government which can control circulation
and adjust interest rates to keep things relatively stable and make sure that the cash in your wallet is still worth something
at the end of the day. Yay economics! So yeah, it’s pretty unlikely that Bitcoin will replace the old greenback in the U.S. or currencies in other stable economies. But even if Bitcoin
falls short of sparking a full-on financial revolution, some advocates argue
that it’s already proven to be a useful payment system in places with really unreliable economies. Countries like Zimbabwe and
Venezuela have been dealing with hyperinflation for years, making their official
currencies close to worthless and even more unreliable than Bitcoin. The Venezuelan Bolivar, for instance, has lost something like 99.9% of its value in the last two years. And that’s led to massive
national shortages of food, medicine and
other crucial supplies. – [Reporter] One in four
Venezuelans is unemployed. Inflation could hit 700% this year. – The Venezuelan currency devalued so much that people are using banknotes to make things like soccer
balls or works of art. – In late 2017, the Venezuelan
government went as far as introducing the 100,000 Bolivar note, worth all of about $2.50. In these countries, some people have already started using Bitcoin and other cryptocurrencies as alternatives to cash for purchasing basic supplies. And although that’s not
likely to be a longterm fix, it’s better for now, at
least, than lugging around a wagon full of Bolivars
just to buy some bread. So, what do you think? Is Bitcoin a real alternative or just a digital load of hype? And would you be willing to invest in it? And if you like this video, check out the one I did recently about free speech on college campuses. And, one more thing, this is gonna be my last Above the Noise episode. I’m moving on to pursue my journalism and filmmaking career,
but I’ll be leaving you in very good hands with
my friend Myles here. – Ooh, we’re gonna miss you Shirin, but at least we’ll still
have the memories, right? Best of luck to you, it’s been really fun and watch out, Scorsese. – Bye for now, everyone, and don’t forget to cut through the hype. – And stay Above The Noise! And subscribe. See you back here in two weeks, bye.

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