Robert Seigel host of NPR’s All Things Considered News program introduces the audience to bitcoins.
He interviews Slates’s economic and business reporter Annie Lowrey who explains the basics of Bitcoin.
MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. I’m Michele Norris.
ROBERT SIEGEL, host:
And I’m Robert Siegel.
If the traders on Mount Gox understand the future, we all may soon see prices online quoted in dollars and euros and BTC - bitcoins. What is bitcoin?
(Soundbite of video)
Unidentified Man #1: Bitcoin is the first de-centralized digital currency. Bitcoins are digital coins you can send through the Internet. Compared to other alternatives, bitcoins have a number of advantages.
SIEGEL: That’s from a video at weusecoins.com. Bitcoins are bought and sold on Mount Gox, which is also a website. Think of it as an online bitcoin exchange.
If you’re lost right now, I’m right there with you. And so, joining us to help us both out and explain the currency whose promoters say it will do to banking what the Internet did to publishing is Annie Lowery, economy and business reporter for Slate. Hi.
Ms. ANNIE LOWERY (Economy and Business Reporter, Slate): Thank you for having me.
SIEGEL: And first of all, how would one use bitcoins?
Ms. LOWERY: So right now, you can use bitcoins to purchase anything that people who are accepting bitcoins are selling. So there are some goods and some services that you can find on a number of bitcoin trading sites.
You can buy things like - everything from computer Web design to alpaca socks you can purchase. So there’s a small community of people who accept bitcoins, and they sell a pretty wide variety of things but mostly sort of tech products right now.
SIEGEL: So, so far, it’s kind of like an online digital scrip. There are no real coins. There are no physical coins that we’re talking about.
Ms. LOWERY: There are no physical coins, no. Basically, in order to possess a bitcoin, you have to have a program on your computer that can help trade the bitcoins. And then it’s stored on your computer in what’s called a digital wallet.
SIEGEL: And bitcoins have a value. One bitcoin, according to what it says on Mount Gox today, one bitcoin is a little bit over $7.
Ms. LOWERY: Exactly, so the coins are tradable on Mount Gox. You can take dollars and purchase bitcoins. Or you can simply purchase bitcoins from anybody who has a bitcoin.
There’s no central banking authority. There really is no banking system that supports this. It’s entirely peer to peer.
SIEGEL: And there’s also a method, too complex for us to go into here, called mining bitcoins, where by some algorithm you can get them in blocks of some predetermined size.
The whole point here is this is confidential. This is anonymous. And in theory, if I were somebody trying to launder money or sell a stolen painting, this is the perfect way to do it.
Ms. LOWERY: Indeed, there’s no record of the transaction. So say that you and I were drug dealers and we wanted to exchange some money internationally. If we were to try and do that through the banking system, all sorts of red flags would go off.
There would be a record of the transaction. Our banks might stop it. You know, the authorities in either of our countries might be able to stop it and they would also be able to track it.
That’s not true with bitcoins at all. It would just be me sending them to you directly, computer-to-computer. There’s no record afterwards. But the transaction would indeed be secure. You would receive my funds or I would receive yours.
SIEGEL: So this is ostensibly an advantage of dealing in bitcoins. Have you yet seen something for sale online, apart from doing your story about bitcoins, have you stumbled across a site where you’ve seen a price quoted in bitcoins?
Ms. LOWERY: I have not.
Ms. LOWERY: I would not be surprised if at some point, especially again for -you know, most of the trade in bitcoins right now is among people who are fairly sophisticated sort of computer programmer types. And so I wouldn’t be surprised if you started to see, you know, some very Webby companies start accepting bitcoins.
But right now, there’s so much volatility in the currency that it’s a kind of risky asset.
SIEGEL: Annie Lowery, thank you very much for talking with us today.
Ms. LOWERY: Thank you for having me.
SIEGEL: Annie Lowery is economy and business reporter for Slate.
There were som inaccuracies in the interview, such as there being no record of the transaction. All transactions are kept on every node of the network. Another inaccuracy might be that the banks might stop the illicit transaction used as an example. Obviously she isn’t talking about Wachovia.
"We’re working on a bitcoin podcast, but I wanted to post something now, because the exchange rate between dollars and bitcoins has been going haywire lately”.
Planet Money Tuesday Podcast: Bitcoin
Correspondents Jacob Goldstein and David Kestenbaum describe Bitcoin for the NPR Planet Money (@PlanetMoney) audience. As part of their exchange they interviewed Bitcoin’s technical lead Gavin Andresen and asked him for a response to the June rollercoaster ride that Bitcoin traveled.
Gavin: Short of some fundamental flaw found in the core Bitcoin system, it’s hard to think of another combination of events that would shake trust in the currency any more. Yet still people are still buying and selling bitcoins. It appears that it hasn’t killed bitcoin.
The two purchased bitcoins and had this to say:
Jacob: I have to say this part of the whole Bitcoin thing for us did seem really easy. Easier than using a credit card or wiring a friend some money.
More from the podcast:
David: We called Ronald Mann, professor at Columbia law school, and he said [Bitcoin] is legal.
Ronald Mann: I see its future as a real currency as being very limited. [In five years] I think bitcoin won’t exist.
This wouldn’t be the first economics professor to not understand what management professor and author Don Tapscott (@DTapscott) understands so well — that mass collaboration combined with open systems changes everything.
We’ll check back in with Professor Mann in five years to see if he will hve an explanation for why Bitcoin continued to succeed.
Podcast - The Rise Of Micro-Labor
NPR’s radio program On Point with Tom Ashbrook covered the Micro-Labor economy with guests from leaders in the space which would include Zaarly, TaskRabbit, Craiglist and oDesk.
As the Wall Street Journal describes the episode: “People can now farm out chores to a growing army of temporary personal assistants. These micro-employees are taking the division of labor to once-unthinkable extremes.”
Because of the person-to-person nature of these services, Bitcoin will naturally become a preferred payment method, particularly because of it having non-reversible transactions but also for the benefits of low fees and the ability to spend in the same day any funds received.
Length: 46 minutes
I was on NPR’s Morning Edition this AM talking with Cyrus Farivar about the legality of gambling using bitcoin. What I find telling is that the casino operators, who are making a tidy profit, are keeping everything in bitcoin and at no point converting to dollars or other currency.