Bitcoin sounds like what it is–a type of money.
But it’s a special kind of money that could not exist without the Internet. It is digital and virtual; people can’t carry it around in their pockets or keep it in a bank.
Despite these differences from traditional money, there are places around the world that are starting to accept bitcoins to pay for things. Some restaurants and shops in New York and San Francisco accept bitcoins, and so does WordPress, a blogging website. A man in Alberta is offering to sell his house for bitcoins instead of Canadian dollars.
Bitcoin has been around for a few years but it is becoming more popular. Part of the reason is that banks and governments around the world that use dollars, euros and other forms of traditional money — or currency — are having problems with their lending and spending.
The value of bitcoins got a boost in March when countries in Europe that use the euro had to “bail” out a country called Cyprus. To get the bailout, Cyrus had to agree to make changes to its banks. The bailout deal included forcing people with deposits in those banks to give up some of their money.
The situation in Cyprus made people around the world nervous, because they don’t want to lose the money they have in the bank.
Bitcoin isn’t distributed by a central bank, or stored in banks at all. The currency is virtually “mined” by computers solving difficult math problems, and bitcoins are then traded from one person to another.
There are about 11 million bitcoins in circulation, and even with more bitcoins expected to be “mined” in the future, there is a limited supply. As with any rare product, such as gold, that is actually mined from the ground, the more people want it, the higher the price goes.
Last autumn, a bitcoin could be purchased for around $10 (U.S.), but the value shot up to more than $200 in April. It didn’t stay that high, though, dropping back to around $80 before beginning to climb again. Each bitcoin is now worth more than $100 once again.
Another reason for the recent popularity is thought to be the purchase of bitcoins by a pair of well-known American brothers. The Winklevoss twins are perhaps best known for suing Facebook founder Mark Zuckerberg after claiming he stole their idea for the social networking website. Their story was told in the movie The Social Network, which was about the creation of Facebook.
The Bitcoin currency is available through the bitcoin website.
This video (1:44) talks about what bitcoins are.
By Kathleen Tilly
Before reading this article, had you ever heard of Bitcoin?
What did you learn from the article and the video?
What questions do you still have about this new type of currency?
Reading Prompt: Demonstrate Understanding
Read the article carefully and compare the Bitcoin to our common currency. How is the Bitcoin similar? How is it different?
Demonstrate understanding of increasingly complex texts by summarizing important ideas and citing a variety of details that support the main ideas (OME, Reading: 1.4).
Grammar Feature: M-dash
An m-dash is a punctuation mark that allows you to separate one idea from another. An m-dash can look like two two hyphens or a long dash.
For example: “Bitcoin sounds like what it is–a type of money.”
If you rewrote the sentence above without an m-dash, what would it say? How does an m-dash affect how someone reads and understands a sentence?