Daily VideoOctober 7, 2013
Digital Currency Bitcoin Attracts New Mainstream Appeal
Bitcoin is a form of digital currency invented in 2009 to be used over the Internet, and is not tied to any one country or government. Bitcoin has been a favorite currency among libertarian techies skeptical of government-issued money, and global criminals who like the anonymity Bitcoin offers. However, mainstream investors and the public are taking notice of the so-called “crypto-currency”, especially after the fall of Silk Road, an online black marketplace for drugs and other contraband, payable in Bitcoin.
Bitcoins are strings of characters, like a password or code, and are generated all over the Internet by anybody running a free application called a Bitcoin miner. They are based on a mathematical algorithm, which advocates say is almost impossible to break. They are transferred directly from person to person without going through a bank or clearinghouse. And while governments can simply print more money when needed, Bitcoins were invented with an upper limit – no more than 21 million Bitcoins can be created.
Bitcoin users say these solid rules are what make the currency attractive, but skeptics are less sure of the system.
“I’m like Warren Buffett. I don’t buy something if I don’t understand it, said economic historian Richard Sylla. “And for all I know, the person who created Bitcoins would be like King Henry VIII in Britain, who decided suddenly to double the amount of British money units around, and there was a big inflation.”
Warm up questions
- What do you know about currency and inflation? Give an example of inflation.
- Definition from Merriam-Webster – a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services
- How do you pay for things online? Have you ever used Bitcoins?
- Why aren’t Bitcoins used by most people?
- Why is a currency not tied to a country or bank a riskier to use than one that is?
- Do you see a future for the Bitcoin or for currencies like it on the web?
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