Recently, Bitcoin, the most famous of the cryptocurrencies, has soared to all-time highs (Fortune, May 2017), increasing the amount of press attention and internet searches (Google Trends, May 2017) surrounding the little-known digital currency. We’ve also heard this question from many of our users, “what is Bitcoin and what do my students need to know about cryptocurrencies”? You are not alone! 83% of respondents in a 2015 survey conducted by PwC were “slightly familiar/not at all familiar” with cryptocurrencies (PwC, August 2015).
Although a complex topic, we will attempt to shed some light through this brief primer:
Cryptocurrency Explained in One Paragraph: “Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Bitcoins [and other cryptocurrencies] can be used to buy merchandise anonymously. Transactions are made with no middle men – meaning, no banks! There are no transaction fees and no need to give your real name. More merchants are beginning to accept them. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.” (CNN Money)
What is Bitcoin (and how is it different from traditional currency)? Bitcoin and other cryptocurrencies, such as Litecoin, Ethereum, Zcash (Investopedia, 2017), are digital, de-centralized, and verified currencies.