Harford: Boom or bust for bitcoin?

Bitcoin appeals to libertarians on the basis that governments cannot arbitrarily make more of it

In a moment, I’ll gaze into the crystal ball and foretell the future of the world’s most famous cryptocurrency, bitcoin. I should first explain what’s happening now.

It was developed in 2008 by an unknown programmer or programmers. Confusingly, bitcoin is both a payment technology and a financial asset. The asset called bitcoin has no intrinsic value but it has a market price that fluctuates wildly. Like digital gold, it appeals to libertarians on the basis that governments cannot arbitrarily make more of it.

The payment technology called bitcoin is what you might get if you ran the Visa network over a peer-to-peer network of computers. In case that description doesn’t help, it’s a way of sending money anywhere in the world but instead of relying on the authority of a financial intermediary such as Visa or Western Union, it uses a decentralised network to verify that the transaction has occurred. The record of all previous transactions is called the blockchain; it, too, is stored on a decentralised network. The entire process relies on cryptographic techniques to prevent fraud, which is why bitcoin and other currencies like it are called cryptocurrencies.

This may all seem very esoteric but the internet was esoteric once and it turns out to have become important. So what lies ahead for bitcoin?

Preberite več v Tim Harford

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