Financial 411: All About Bitcoin
Thursday, June 30, 2011
Tuesday marks the last day of the Federal Reserve's QE2 or quantitative easing, a program to strengthen the U.S. economy through the purchase of $600 billion in bonds. As it comes to a close, QE2 is getting mixed reviews. The economy is growing, but at a lackluster pace. Stock are up, but the dollar is down.
That's part of the reason for the increasing interest in one currency that has recently skyrocketed in value. It's called bitcoin, and it's become the new "gold." It's a digital currency that exists outside government control — for now — and outside the U.S. banking system. A libertarian's dream. Bitcoin was trading at 10 cents last summer, when it first launched. Now it's trading at nearly $17.
NPR's Jacob Goldstein, who is part of the Planet Money team, said it's still a small, experimental currency. "It's a very technically-focused group of people who use these, so you can buy stuff online, you can buy coffee, you can buy alpaca socks, it's definitely not practical yet," he said.
Goldstein said you can buy and sell anonymously online using bitcoins. New York Senator Charles Schumer has called the bitcoin "an online form of money laundering," saying it fosters illegal activities.
Goldstein breaks down the "wild west" of the bitcoin world. A longer podcast version of this story will also be available at Planet Money.