Look at the picture on the right – do you recognise any of the currencies? Talk together. What do you know about cryptocurrencies? What do you think are their advantages and disadvantages? Make a list. Read the questions and try to answer them in groups. 1 What is the difference between cryptocurrencies and traditional currencies? 2 How are they generated? What problems can this cause? 3 Can central banks influence the value of cryptocurrencies? Why? / Why not? 4 Why might international transactions be suited to cryptocurrencies? 5 Who might be attracted to the secrecy of cryptocurrencies? 6 What could make people reluctant to use cryptocurrencies? Read the extract from an article on cryptocurrencies to correct and improve your answers. Make notes of any additional facts that are new to you. 23 a b 24 a b BITCOIN was the world’s first cryptocurrency, and was launched in 2009 by a mysterious person (or persons) known only by the pseudonym Satoshi Nakamoto. In April 2021 its value rose to a high of nearly $65,000. In 2011, one Bitcoin had been worth just one dollar. But what exactly are cryptocurrencies, and how do they work? Unlike traditional currencies, which are issued by central banks, cryptocurrencies have no central monetary authority. Instead they are underpinned by a peer-to-peer computer network made up of its users’ machines. They are mathematically generated as the computers in this network execute difficult number-crunching tasks, a procedure known as ‘mining’. The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to ‘mine’ Bitcoins over time, and the total number that can ever be mined is limited to around 21 million. Thus there is no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation. Later currencies, such as Ethereum, have no upper limit but only exist within their own network so they are self-contained. The entire network is used to monitor and verify both the creation of new currency through mining, and the transfer of currency between users. A log is collectively maintained of all transactions, with every new transaction broadcast across the networks. Participating machines communicate to create and agree on updates to the official log. This process, which is computationally intensive, produces what is known as a blockchain. For Bitcoin, this is the process used to do the mining: roughly every 10 minutes, a user whose updates to the blockchain have been approved by the network is awarded a fixed number of new Bitcoins. Later currencies update even faster – Litecoin updates every two and a half minutes. This has prompted people to build incredibly powerful computer networks, or even to hijack other people’s computers, for use in mining. Indeed, this has led to accusations of cryptocurrencies being environmentally harmful, as global Bitcoin mining, for instance, currently uses more electricity than the whole of Argentina. Cryptocurrencies can be bought and sold in return for traditional currency on several exchanges, and can also be directly transferred across the internet from one user to another using appropriate software, and stored in virtual wallets. This makes them a potentially attractive currency for settling international transactions, without messing around with bank charges or exchange rates, and also some internet services (such as web hosting and online gambling) can be paid for using cryptocurrencies. The complexity and secrecy of the systems mean they also appeal to those with more nefarious purposes in mind, such as money laundering or paying for illegal drugs. But most people will remain reluctant to adopt cryptocurrencies wholesale while the software required to use it is so complex, and their values are so volatile. Look back over the article and find words which match these definitions: 1 a national bank which sets a country’s monetary policies 4 likely to change suddenly 2 a public log of all a cryptocurrency’s transactions 5 existing only inside a computer, 3 the value of a currency when you swap it for another not in physical form 6 dishonest or criminal Talk together. 1 Look at your list of advantages and disadvantages from 23b. How many of them were mentioned in the article? 2 Do you think you will be using cryptocurrencies in the future? Why? / Why not? 25 26 69 Language skills Extras Explore 5 It’s an online world Nur zu Prüfzwecken – Eigentum des Verlags öbv
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