Congress Investigates The Digital Currency Bitcoin

Thursday, August 15, 2013

Bitcoin. (Zach Copley/flickr)

It's been a huge month for the virtual currency Bitcoin, which is a form of cryptocurrency.

Bitcoins are digital coins you can send through the Internet. They can be transferred from person to person without going through a bank or intermediate financial authority. They can be used in every country, and shared through any computer or Internet-connected device.

This month, it seems, Bitcoin hit the big time. A federal judge declared that Bitcoins are in fact a recognized form of currency, and Bloomberg Terminal actually created a Bitcoin ticker.

Now, state and federal officials have launched investigations into regulating the currency. The Senate Committee on Homeland Security is said to be investigating the "threats and risks related to virtual currency," because digital dollars like Bitcoin which remain unregulated.

Joining us to discuss what regulation would mean for a currency based on anonymous exchanges of money is Jeffrey Robinson. Robinson is the author of "The Laundrymen" and a leading expert on international financial crime.

To learn more about what Bitcoin is, watch this short video below.

Guests:

Jeffrey Robinson

Produced by:

Ally Harrison and Megan Quellhorst

Editors:

T.J. Raphael

Comments [5]

Bartiddu from London

'Lithuania, ha, ha, ha'. The arrogance of this... fellow (see I can be civil!) in the interview is topped only by his arrogance in his comment: 'Listen carefully to the interview' I'm sorry, I hadn't been listening carefully enough the first time round. When I listened again all the apparent misconceptions had disappeared. Instead was a knowledgeably presented introduction to the technology, its potential and it's pitfalls... Oh, no there wasn't. I'm sorry to say it was the same as the first time round!

But by all means believe the authoritative voice of this fellow and don't by any means do your own research because as the man implies, wikipedia and google will only give you false information whereas his is THE truth! Nice :)

Aug. 26 2013 10:22 AM
Joseph

Bitcoins are a great currency to invest to an the most unique, there are also physical bitcoins that can be bought that are real gold or silver.

Aug. 19 2013 10:53 PM
Jeffrey Robinson from New York

The default argument from the Bitcoin community, whenever anyone raises doubts about Bitcoins is to say, this person doesn't know what he/she is talking about. They have a very short trigger for criticism. They also don't like to hear anyone ask serious questions, so their default answer is Google or Wikipedia... both of which contain mountains of false information, half-truths and doubletalk. (In fact, Wiki no longer takes outside additions to the page because the sources are so unreliable.) Instead, listen carefully to the interview. I say, quite clearly, that the genie is out of the bottle when it comes to digital/virtual currency. That's here to stay. But the future of Bitcoin? Look up the term "Tulipmania." That will tell you everything you need to know./ JR

Aug. 15 2013 05:16 PM
A.R. from Austin, TX

On one hand I am happy that PRI/NPR/The Takeaway is covering this topic, I am extremely disappointed in the presentation.

In regards to the "big boys" getting into the virtual currency scene, the reporter overlooked the fact that Amazon, Apple and Microsoft already have virtual currencies. Amazon coins, Apple iTunes credit, Microsoft Points all have one huge issue - they can only be used with those companies. That alone puts them in their own category, much more like gift cards.

The draw to bitcoin isn't just that it is fast, or even "anonymous" (it isn't anonymous by design, by the way, though you can make it close to anonymous if you try). It is also because it is decentralized. It is free from government or bank control. It is deflationary in nature. You can use it like a commodity or a currency.

As far as mining goes... the reporter obviously had no clue what it was and honestly sounded very ignorant when describing it as "Super Mario meets Powerball".

What mining is doing is processing transactions. There is an incentive for people to mine, which is a block reward, and there are very nominal transaction fees (though they are not required and cost about 5 cents at the time of writing this) that the miners receive also.

The miners are processing the transactions using secure encryption algorithms. That uses large amounts of processing power and that doesn't come cheap. The network difficulty scales to the amount of network computing power in order adjust for advancements in technology. There are people who can explain mining better than I, as well as some of the other benefits to the network as it is a very technical process.

Any government will have a hard time forcing people to disclose their bitcoin addresses as anyone can make one without the help of another company. You can also exchange bitcoin with anyone in person for cash.

Speaking of cash, whenever so much attention is brought to bitcoins for being used for the drug trade it makes me laugh. What have people been using for drugs before bitcoin? The same green, anonymous, paper that we use for almost everything else.

Oh and when when he says "bitcoin the currency doesn’t even have the same punch for punch as the non-convertible Cuban peso", well "bitcoin the currency" has also been around for just a few years, using a method never been used for currency before. You can't expect to see the same level of use for something that is essentially a first of it's kind "experiment".

I highly suggest that if you want to produce a piece that shows credibility and can debunk some of these myths being spread (instead of helping to spread them), why don't you try to interview the CEO of Coinbase or (even better) the famous and very intelligent broadcaster Max Keiser? There are of course disadvantages to bitcoin, especially at this early stage, but the true advantages - and resilience - should not be ignored.

Aug. 15 2013 02:07 PM
Liam

Your guest host has a clear lack of understanding as to how bitcoins function. He at least knows bitcoin mining isn't super Mario, but its much more than a lottery. Bitcoin mining is used to validate the legitimacy of bitcoin transactions by using multiple computers to decrypt a code. This is similar to how banks do online transactions, however banks use a specific decryption number which is confidential, while the bitcoin number is randomly generated for each transaction. The lottery aspect is that you (your graphics csrd) only sometimes guess the correct number, however most mining is done in large pools, resulting in a steady, albeit minor, flow of bitcoins in return for insuring the security of the transactions. There are potential issues with bitcoins and it's not the perfect online currency, but the guest brought on did not address any actual issues, he only demonstrated that he was unaware as to how they work. I'm not an expert regarding bitcoins, but it bothers me that a guest was brought on to the show who lacked knowledge regarding his topic that could be researched through a simple Google search.

Aug. 15 2013 01:15 PM

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