Host Mary Walden admits she’s not a tech person but knows that bitcoins are a type of cyber mobey. Where do they come from? Who controls the amount? And why would anyone use them? N.C. State University economist Mike Walden responds.
“Well, you are absolutely right, Mary. They are a type of cyber money. They are on the computer. They are sort of invisible. They are simply out there in cyberspace.
“In terms of your questions —which are excellent, by the way — they can be created by people who solve a complex math problem online. So, this is how they are created. In fact, the bitcoin people call it mining, so they’re making a reference to the old gold mining. So they just can’t be created sort of willynilly, they have to be crated through this complex problem.
“There is also a total limit that the creators of the bitcoin business, if you will, have put on the amount created. So they are not going to be zillions of these out there. There will be a limit.
“But once you have bitcoins and you have created them, the point is, you can potentially use them for payment. Now, not anyone and everyone is going to use them for payment, but increasingly we are seeing more online folks willing to take the coins in exchange for payment. Therefore, there’s become a market for bitcoins, and recently it has skyrocketed — the value of bitcoins has gone way up as some anticipate that the market for them will continue to expand.
“But what has gone up can certainly come down, and some people are also forecasting a big drop in the value of bitcoins.
“So, regardless, I’m not here to forecast where they’re going in their value. This is a very, very interesting phenomenon — one that we want to watch in the years ahead.”