Bye-Bye to Bitcoin?
Those using the cyber currency called bitcoin suffered a big shock recently: Apparently hackers were able to steal between 2 million and 3 million dollars’ worth of bitcoins. As a result, the value of a bitcoin in terms of dollars was cut in half, says host Mary Walden. She asks her husband, N.C. State University economist Mike Walden, “Is this the end of the cyber currency experiment?”
Mike Walden: I don’t think it’s the end, Mary, but I do think it points out an issue that any cyber currency — whether it’s bitcoin or something else down the road — has a hurdle it has to clear. And that is that the use of our money really fundamentally is based on trust. We trust that the money’s going to be there that we use. We trust that people will accept it as a payment. We trust that someone can’t get into our accounts and steal it, or that we’ve got insurance against that. And we also trust that the value of that currency will not fluctuate wildly. Now the bitcoin has yet to overcome all of these issues. We have seen big fluctuations in its value. Not everyone obviously accepts bitcoin as payment. Then the issue here that’s brought up with the hacking obviously gets to the point of trusting that your currency will be there, that someone can’t come in and steal it. So I think the cyber currency folks are going to have to try to overcome these issues down the road and deal with them and develop a system where you will have trust, where you will have more people using it and where you will also not have to worry about wild fluctuations in value. If you’re able to do that then I think cyber currency has a positive future.Category: Economic Perspective