What do you think about Crypto Currency?

Elia from Santa Monica, CA

Episode 1451 (1:09:33)

Bitcoin

Elia wants to know what Leo thinks about online currency, or crypto currency. Leo says to understand crypto currency, you have to understand how monetary systems work. Paper money represents the value it carries, but it isn't gold. It's called a "fiat currency." In the case of our dollar, it's backed by the government. But currencies don't have to be official government currency. "Disney Dollars" are currency at Disneyland.

Now there's digital, or crypto currency. It takes advantage of the digital monetary transactions that occur online. When you buy something on Amazon, you use a digital currency. Crypto currency is just the next step. Bitcoin is the most well known, but there's also Ethereum and many others. The problem is that Bitcoin has a volatile value that is very much like a "bubble." No one can really mine Bitcoin anymore either because it costs more to mine the Bitcoin than it's really worth. You'll have to be able to get your electricity for cheap or even free to be able to do it.