Boom or bust? A block of cryptocurrency users betting on long-term future
JIMMIE JOHNSON: IS THAT WHAT IT SOUNDS LIKE EVERY TIME SOMEONE TRIES TO EXPLAIN TO YOU WHAT CRYPTOCURRENCY IS?
LET’S CHANGE THAT…I’M GOING TO BREAK IT DOWN IN THE SIMPLEST OF TERMS AND THEN WE’RE GOING TO TAKE A LOOK AT IF IT’S HERE TO STAY. LET ME EXPLAIN.
THERE ARE MANY CRYPTOCURRENCIES, BUT I’M GOING TO USE BITCOIN SINCE IT’S THE MOST POPULAR.
IT FIRST STARTED IN 2009, WHEN A PSEUDONYMOUS PERSON OR GROUP BY THE NAME SATOSHI NAKAMOTO PUBLISHED THIS NINE-PAGE DOCUMENT.
IT OUTLINED THE CONCEPT OF BITCOIN AND THE USE OF THE BLOCKCHAIN.
SO WHAT IS IT?
BITCOIN IS A VIRTUAL CURRENCY, IN OTHER WORDS, NO CASH OR COINS TO SPEND.
BITCOIN’S VALUE HAS FLUCTUATED FROM A DOLLAR IN 2011 TO ITS HIGH OF MORE THAN 65-THOUSAND IN 2021.
ITS VALUE IS BASED ON HOW MANY OTHER PEOPLE WANT IT. THINK OF IT AS A PIECE OF ART. IF NO ONE WANTS IT, IT HAS NO VALUE, BUT IF LOTS OF PEOPLE ARE WILLING TO BID ON IT, ITS VALUE INCREASES.
YOU CAN PURCHASE IT ON ANY NUMBER OF BITCOIN EXCHANGES AND ITS PRICE VARIES BY HOW MANY PEOPLE ARE SELLING THEIR COINS AND HOW MANY PEOPLE ARE BUYING THEM. JUST LIKE A STOCK.
SO WHY DO PEOPLE WANT IT? A COUPLE OF REASONS.
FIRST, FINANCIAL TRANSACTIONS ARE DONE PERSON TO PERSON.
NO BANK, NO GOVERNMENTS, NO MIDDLEMAN. THAT MAKES IT CHEAPER, FASTER AND IT’S MORE SECURE.
THEN, THAT BLOCKCHAIN WE MENTIONED? JUST LIKE YOUR BANK STATEMENT RECORDS YOUR FINANCIAL TRANSACTIONS… BLOCKCHAIN DOES THE SAME FOR BITCOIN BUT DIGITALLY.
AND LOOK AT THIS, IT DOES IT AS A MATTER OF PUBLIC RECORD, MAKING IT IMPOSSIBLE FOR DIGITAL DOLLARS TO BE SPENT TWICE.
BACK TO OUR ART EXAMPLE, INVESTOPEDIA EDITOR IN CHIEF CALEB SILVER EXPLAINS IT THIS WAY:
CALEB SILVER, EDITOR IN CHIEF AT INVESTOPEDIA: So think about artwork if you own a painting, and you think it’s a unique painting say it’s a Michelangelo, you want a stamp of authenticity, on that painting that says it’s a one on one with a blockchain, does that for digital currencies, it shows who owns what, and at what price, and what the digital wallet is that owns these different assets.
JIMMIE: AND THOSE TRANSACTIONS YOU SEE BEING RECORDED THERE? THOSE ARE DONE BY SOMETHING CALLED BITCOIN MINERS. THERE ARE COMPANIES THAT DO IT BUT EVERYDAY PEOPLE LIKE YOU OR ME CAN MINE TOO. THOUSANDS OF THEM ARE OUT THERE, USING THEIR COMPUTER’S POWER TO SOLVE DIFFICULT MATHEMATICAL EQUATIONS TO CONFIRM BITCOIN TRADES.
EACH TIME A SET OF TRANSACTIONS BETWEEN BITCOIN BUYERS, SELLERS, AND USERS ARE CONFIRMED, A SO-CALLED “BLOCK” OF THE BLOCKCHAIN IS CREATED. AND WHEN THAT HAPPENS, MINERS GET A REWARD IN BITCOIN AND ANOTHER BITCOIN IS RELEASED INTO CIRCULATION.
AND BECAUSE THE TRANSACTIONS ARE BEING CONFIRMED BY THOUSANDS OF DIFFERENT PEOPLE, IT’S WHAT’S CALLED DECENTRALIZED…
AGAIN NO BANK, GOVERNMENT, OR AGENCY OVERSEEING WHAT YOU ARE DOING.
DESPITE ITS FOLLOWING, THE FUTURE OF CRYPTO IS VERY MUCH UP IN THE AIR.
CONGRESSMAN BRAD SHERMAN: Cryptocurrencies are a crock. What social benefit do they provide?
JIMMIE: CONGRESSMAN BRAD SHERMAN IS A MEMBER OF THE FINANCIAL SERVICES COMMITTEE, AND ONE OF THE FIERCEST CRITICS OF CRYPTO ON CAPITOL HILL.
HE DOESN’T LIKE HOW CRYPTO ENABLES BAD ACTORS BECAUSE THE MONEY CAN’T BE TRACED SINCE IT ISN’T THROUGH A BANK.
CONGRESSMAN BRAD SHERMAN: Well, they allow a few dozen men in my district to sit in their pajamas on the couch all day until their wives are going to be millionaires. They help terrorists. And criminals move money around the world. They help tax evaders. They help startup companies commit fraud.
JIMMIE: FOR SEVERAL YEARS, SHERMAN HAS BEEN PUSHING TO OUTRIGHT BAN THE USE OF CRYPTOCURRENCIES LIKE BITCOIN.
HE’S NOT ALONE. IN 2020, THERE’S BEEN AN INTERNATIONAL CRACKDOWN ON CRYPTO.
IN JUNE, CHINA ISSUED WARNINGS TO STOP USERS FROM MINING AND TRADING BITCOIN.
IN MEXICO, THE COUNTRY’S FINANCE MINISTER REAFFIRMED ITS BAN ON CRYPTO, ISSUING A STATEMENT HOURS AFTER A PRO-CRYPTO BILLIONAIRE ANNOUNCED PLANS TO ACCEPT BITCOIN AT HIS BANK.
AND THE U-S LOOKS LIKE IT’S POISED TO GO AFTER CRIMINALS WHO USE CRYPTO WITH THIS JOB POSTING LOOKING FOR A TRIAL ATTORNEY WITH EXPERTISE IN CRYPTO AND BLOCKCHAIN.
BUT, IT HASN’T BEEN ALL BAD NEWS FOR THE CRYPTOCURRENCY MARKET THIS YEAR.
EL SALVADOR BECAME THE FIRST COUNTRY TO ACCEPT BITCOIN AS AN OFFICIAL TENDER.
AND BITCOIN AND TWO OTHER CRYPTOCURRENCIES, ETHEREUM AND DOGECOIN HIT ALL-TIME RECORD HIGHS AND SOME OF THE COUNTRY’S TOP INVESTORS HAVE PREDICTED BITCOIN COULD HIT 500-THOUSAND DOLLARS.
DOGECOIN HAS CAPTURED THE ATTENTION OF BILLIONAIRES LIKE TESLA CEO ELON MUSK AND DALLAS MAVERICKS OWNER MARK CUBAN, BUT SILVER SAYS BUYER BEWARE:
CALEB SILVER, EDITOR IN CHIEF AT INVESTOPEDIA: Dogecoin is not something that people shouldn’t take seriously or put a lot of money in because it really is a joke, it was created as a joke by two software engineers that named after the Shiba Inu dog, thinking that it would just be a joke for fun, that people would play around and maybe trade it and people are trading it, but it is based on nothing but hype.
JIMMIE: WHILE THE VERDICT IS STILL OUT ON THE LONG-TERM FUTURE OF THESE COINS, HERE’S SOMETHING SILVER IS CONFIDENT ABOUT “BLOCKCHAIN.”
HE BELIEVES BANKS AND EVEN THE FEDERAL GOVERNMENT WILL USE THE TECHNOLOGY TO CREATE A DIGITAL DOLLAR.
CALEB SILVER: They are working on what a digital currency could look like, and in fact, they’ve hired people who are exploring what that could mean, in the next two to five years there will be a digital currency in the United States, it’s probably not going to be Bitcoin but it’s going to be something like that.
JIMMIE: NOW THAT YOU KNOW WHAT CRYPTO IS AND WHAT IT’S UP AGAINST.
IT’S TIME FOR YOU TO DECIDE. IS CRYPTO HERE TO STAY?
LET ME KNOW YOUR THOUGHTS IN THE COMMENTS BELOW.