Speaker 1: Got a whale of a tale to tell you, lad,
Speaker 1: a whale of a tale about bitcoin. I'm Jonathan Strickland,
Speaker 1: and this is tech stuff Daily Seen. Has been a
Speaker 1: pretty phenomenal year for the cryptocurrency bitcoin. For those unfamiliar
Speaker 1: with the concept, bitcoin was created to be a decentralized
Speaker 1: digital currency that doesn't depend upon any governmental authority to
Speaker 1: regulate it. Bitcoin are released in chunks through a process
Speaker 1: called mining, which involves computers working on what amounts to
Speaker 1: complicated math problems. There's a finite number of bitcoins twenty
Speaker 1: one million in fact, that will ever be released to
Speaker 1: the world. Once that last fraction of a bitcoin pops
Speaker 1: out in a chunk, the supply stops. At the beginning
Speaker 1: of twenty seventeen, the value of a bitcoin in US
Speaker 1: currency was just shy of one thousand dollars. In November,
Speaker 1: the currency's value shot up to ten thousand dollars per bitcoin,
Speaker 1: and it didn't stop there. The value continue to rise
Speaker 1: above seventeen thousand dollars before experiencing a dip in December.
Speaker 1: Bloomberg Business Week reported in December that of all the
Speaker 1: bitcoins in circulation belong to just one thousand people. Bitcoin
Speaker 1: communities call these people whales. Whales have the potential to
Speaker 1: really upset the bitcoin apple cart. If a whale starts
Speaker 1: to sell off bitcoin, others might take this as an
Speaker 1: indication that the value of the currency will decline, and
Speaker 1: it could lead to a digital equivalent of a run
Speaker 1: on the banks. To make matters more complicated, bitcoin is
Speaker 1: considered a currency, not a security or commodity. Because of that,
Speaker 1: there are few rules in place to prevent these whales
Speaker 1: from colluding with one another. Nothing is stopping them from
Speaker 1: agreeing to buy up bitcoins to drive up the value
Speaker 1: before dumping a ton of them on the market to
Speaker 1: make a profit. The value of the currency could plummet
Speaker 1: as a result, but that would happen after the whales
Speaker 1: had cashed in. This so far hypothetical scenario is another
Speaker 1: argument against calling bitcoin a currency in the first place.
Speaker 1: For a currency to really be useful, it needs to
Speaker 1: have a steady value. It's impossible to have a practical
Speaker 1: currency if the value fluctuates frequently and in large amounts.
Speaker 1: Imagine this situation. You walk into a candy shop. You
Speaker 1: want to buy a candy bar. The price is one dollar,
Speaker 1: so you pull out a crisp dollar bill, PLoP it
Speaker 1: on the counter, take your candy bar, and wish the
Speaker 1: proprietor a jolly good day. The next day, you find
Speaker 1: out the value of a dollar has increased tenfold. The
Speaker 1: dollar you spent yesterday on one candy bar could buy
Speaker 1: you ten candy bars today. Worse yet, you find out
Speaker 1: the following day the value has increased again. Now you
Speaker 1: could have bought one hundred candy bars with that one dollar.
Speaker 1: You'd be terrified to spend any money. Your dollars wouldn't
Speaker 1: really be currency. They'd be a security or a commodity,
Speaker 1: something you'd hold onto as the value increases before you
Speaker 1: got rid of it for something else. That's how bitcoin behaves,
Speaker 1: and while in the early days people would use bitcoins
Speaker 1: to buy stuff like pizza, today such an idea seems insane.
Speaker 1: You might pay the equivalent of twenty u s dollars
Speaker 1: and fractions of bitcoin today and find out the next
Speaker 1: day the amount of bitcoin you paid meant that Saint
Speaker 1: Pizza would have cost you two thousand dollars. This volatility
Speaker 1: has led some vendors to stop supporting bitcoin transactions entirely.
Speaker 1: One of those vendors is Steam the online computer game
Speaker 1: store and community Steam is run by a company called Valve.
Speaker 1: Valve recently pulled support for bitcoin transactions off of the
Speaker 1: Steam platform. Valve representatives said that the currencies value changes
Speaker 1: so quickly that you couldn't even complete an online transaction
Speaker 1: without the values changing first. Even if you have a
Speaker 1: dynamic system that matches price to currency value as it changes.
Speaker 1: That's an enormous headache, and it doesn't do anything for
Speaker 1: buyer's remorse once you've spent it. If whale illusion and
Speaker 1: value fluctuations aren't worrisome enough, there have also been some
Speaker 1: recent examples of mismanagement and criminal activity around bitcoin. On
Speaker 1: December seven, two thousand seventeen, Digital Trends reported that a
Speaker 1: website called nice hash was the virtual site of a
Speaker 1: digital bank heist. The company posted a statement acknowledging that
Speaker 1: it had been the target of an attack. That attack
Speaker 1: was a successful security breach that resulted in four thousand,
Speaker 1: seven hundred bitcoins being stolen. At the time of the story,
Speaker 1: that amounted to about sixty four million dollars worth of
Speaker 1: the digital currency. At the time I'm writing this, Due
Speaker 1: to the fluctuations in bitcoin value, it was more like
Speaker 1: seventy two point four million dollars. Both the revelation that
Speaker 1: so much money was stolen in a single heist and
Speaker 1: that the value of that heist changed by nearly ten
Speaker 1: million dollars over just two days are additional arguments against
Speaker 1: bitcoin being called a currency. As the value of bitcoin
Speaker 1: changes more than a few people have warned about an
Speaker 1: oncoming wreck ng in which the value quote unquote corrects itself.
Speaker 1: That's financial speak to say the currency itself is inside
Speaker 1: a bubble that will eventually burst and as a result,
Speaker 1: will see the market value for bitcoins drop. That may
Speaker 1: or may not be true. At the end of the day,
Speaker 1: we have to acknowledge that bitcoins have value because people
Speaker 1: want them. As long as people do want them and
Speaker 1: are willing to pay for them, bitcoins will have that value.
Speaker 1: Should people stop wanting them or stop paying for them,
Speaker 1: the value will diminish. Ultimately. This is true about any currency,
Speaker 1: though most state sponsored ones are backed by some other
Speaker 1: promise of value that gives the currencies more stability under
Speaker 1: normal circumstances. To learn more about bitcoins, cryptocurrency, and some
Speaker 1: of the craziest heights and tech, subscribe to the tech
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Speaker 1: a longer, in depth look at technology. I'll see you
Speaker 1: again soon, won