Swings in the value of cryptocurrencies like Bitcoin in recent weeks have turned the media spotlight on digital money and left investors who were giddy from this winter’s rapid gains downcast as values came back to earth. Bitcoin, trading around $10,000 during the late summer and into the fall, reached a peak over $63,000 in April before losing nearly half its value in recent weeks.
For the uninitiated, cryptocurrencies are digital money that derive their name from the fact that encryption is used to keep them secure. They make use of blockchain technology, a massive, decentralized network of computers that keeps track of transactions. The currencies can be used to buy goods and services (although their acceptance is not widespread). They are, perhaps, best known as investment vehicles, with owners buying and selling as a currency’s value rises and falls. Individuals can get cryptocurrency by buying it or, in the cases of some, like Bitcoin, by mining it — miners use powerful computers to compete to win currency by being the first to solve complex math problems that verify transactions.
The potential volatility of digital money has recently been in the news as Bitcoin seemed particularly vulnerable to public comments by Tesla founder Elon Musk, raising questions about its stability. (In fact, Musk’s jokingly dismissive comments on “Saturday Night Live” sent cryptocurrency Dogecoin plummeting, as he had been viewed as an influential supporter of digital money.) To sort out what’s going on, the Gazette spoke with Primavera De Filippi, a faculty associate at the Berkman Klein Center for Internet and Society and co-author of the 2018 book “Blockchain and the Law: The Rule of Code.” De Filippi said despite its apparent instability, cryptocurrency is here to stay, though it perhaps shouldn’t be the first coin you reach for to buy a pack of gum.