Are cryptocurrencies evil? Many think digital currency is doomed after China clamped down on Bitcoin yesterday – but others still believe they can revolutionise the global economy. In Liaoning Province, China is one of the biggest Bitcoin mines in the world. It can produce more than 700 Bitcoin a month – the equivalent of more than $22m.
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‘Mother of all crashes’ as Bitcoin slumps
In Liaoning Province, China is one of the biggest Bitcoin mines in the world. It can produce more than 700 Bitcoin a month - the equivalent of more than $22m.
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Are cryptocurrencies evil? Many think digital currency is doomed after China clamped down on Bitcoin yesterday - but others still believe they can revolutionise the global economy.
The money-making might end. Yesterday, China clamped down on cryptocurrency mining and instructed banks to stop trading the digital coins.
Investor Michael Burry, one of the few to predict the crisis of 2008, has warned that cryptocurrencies are heading for the "mother of all crashes", adding they will bring the economy with them.
As a result, the price of Bitcoin slumped. It has now lost more than half its value since its peak.
A Bitcoin is still worth almost $30,000.
The idea behind Bitcoin was to set up a decentralised currency beyond control of central banks. Its inventors thought people who owned Bitcoin would not see it undermined by inflation. It would be open: anyone with a computer would be able to mine it.
Criminals quickly recognised that cryptocurrencies are perfect for illegal transactions.
The biter bit
As the value of Bitcoin soared, it became less democratic. It is now expensive to mine Bitcoin.
The value of Bitcoin has fluctuated wildly, partly thanks to speculation.
Bitcoin uses more electricity each year than the whole of Argentina. In Iran, cryptocurrencies draw so much power that they have caused blackouts.
Are cryptocurrencies evil?
Yes. They are a haven for criminals. Because of the greed of enthusiasts, global electricity use is soaring and causing power shortages. There is no need for cryptocurrencies when state-backed digital currencies are becoming common.
No. Far more crime is carried out with conventional currencies, these are not labelled "evil". Only 1% of Bitcoin transactions involve illegal activity. This is just the beginning: cryptocurrencies could revolutionise the global economy.
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Keywords
Bitcoin mines - Cryptocurrencies have to be mined, which means that they appear when a computer solves a given number of equations.
Cryptocurrency - A digital currency in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority.
Michael Burry - An American investor most famous for his portrayal in The Big Short, a book (and later, a film) about the handful of people who saw the 2008 financial crash coming.
Central banks - A central bank manages its country's currency and usually handles its monetary policy.
Inflation - An increase in the price of goods in an economy.
‘Mother of all crashes’ as Bitcoin slumps
Glossary
Bitcoin mines - Cryptocurrencies have to be mined, which means that they appear when a computer solves a given number of equations.
Cryptocurrency - A digital currency in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority.
Michael Burry - An American investor most famous for his portrayal in The Big Short, a book (and later, a film) about the handful of people who saw the 2008 financial crash coming.
Central banks - A central bank manages its country's currency and usually handles its monetary policy.
Inflation - An increase in the price of goods in an economy.