What is Bitcoin, and what do you think about it?

Episode 1054 (17:22)

Alvaro from West Palm Beach, CA

Alvaro is interested in what Leo thinks of Litecoin and Bitcoin. Leo says that Litecoin is a different technology than Bitcoin that makes it easier for users to buy into it. Bitcoin has a finite amount of currency and it is harder to "mine." Both are cyptocurrencies online, but the difference between that and actual physical currency is that it isn't backed by the government. It's fiat currency based on faith. Since the US government is now taking Bitcoin as payment for taxes, it has official value. However, that value can disappear in a heartbeat.

There can only be 21 million Bitcoins in "circulation." The harder it gets to solve the complicated math depends on how many Bitcoins are left. The value fluctuates like other currency. One Bitcoin, for instance, is worth $1,000. Litecoin is similar, but it can be efficiently and easily mined as opposed to mining Bitcoin.

MtGox.com is a site that exchanges Bitcoin for dollars. Right now, the value is $995 per Bitcoin. It's very volatile, much like the stock market. Leo doesn't recommend it, but if he's going to do it, he should understand that everyone is anonymous, so the potential for being ripped off is huge. And government could start banning it. China, for instance, is very suspicious of it.