The bitcoin value has soared recently and continues to rise as more and more people invest in the currency. NPR’s Michel Martin asks business writer Roben Farzad what’s behind the sudden skyrocketing value.
MICHEL MARTIN, HOST:
So while we’re talking about money, you may have heard over the last few weeks bitcoin is hot. As of today, one bitcoin is worth – well, I don’t even want to say because by the time we finish this conversation, it could have changed. But let’s just say for now that it’s been bouncing between $11,000 and $12,000 all day, which is quite a leap from yesterday or last week or even 2009 when the digital currency was created. We’re wondering what all this volatility means – if anything – so we called Roben Farzad. He is a business reporter and the host of Full Disclosure, which covers topics related to business and economics. Roben, thanks so much for joining us.
ROBEN FARZAD, BYLINE: Michel, how are you?
MARTIN: I’m great. Thank you. So as we just said, the bitcoin prices have been changing hour to hour. What do you make of all this?
FARZAD: You know, I’m like so many of those other people on the sidelines on the cheap seats, saying, oh, it’s a speculative bubble, it’s a speculative bubble and once it breaks – what was it? – $800 last year, breaks 1,000, 2,000, 3,000. At every step in the game even with crashes, it has managed to break $10,000. And increasingly, the cold-eyed observers on Wall Street can’t make sense of it. I mean, what does it represent? It’s kind of a Rorschach for whatever you want it to be.
MARTIN: Well, you know, it was created in 2009. But until pretty recently – I think I’m fair to say this – it had a somewhat of a negative reputation as the currency of cyber criminals. I mean, people – some people who’ve had the unfortunate experience of being hacked will say that, you know, that people offer to unlock their information if they’re paid in bitcoin. Has the reputation changed?
FARZAD: We do not see it accepted at many places. It’s not like you can walk into a Dairy Queen or something and pay with bitcoin. I mean, there are occasional Tech Crunch articles about a bitcoin atm. But it doesn’t have as much in the way of practical application right now. I think for people who are skeptical about currencies like the euro and the dollar, that those central banks have just been printing left and right to get out of the global economic crisis, they just want something that’s decentralized – in theory, that is person-to-person, that cuts out the man and the middle man.
In practice, it really hasn’t gotten there yet. It’s more something that’s really run ahead of itself. It reminds me of the Internet browsers like Netscape and Mosaic when they first came out in ’93 and ’94, and everybody just thought that they were going to lead to a brave, new world. And they had to crash several times for people to understand what the true business justification for a price was.
MARTIN: And I’m wondering if a number of people heard about bitcoin from family members over the Thanksgiving weekend or just because there’s been – there have been a number of stories in the media about it because of all these, you know, this wild kind of volatility. And so that makes me wonder if some of this sudden surge is from people jumping into it just because they’ve heard about it.
FARZAD: Indeed, Michel. I regret to inform your dear listeners that the Roben Farzad Iranian contrarian relative index has been triggered. When I hear from people I didn’t even know were related to me – Farzad, bitcoin is good. Should I buy it? That means you need to stay the heck away or get out. And we are close to that.
MARTIN: Before we let you go, what would it take to give this digital currency more legitimacy among professional investors and, frankly, users? I mean, what is the business case?
FARZAD: For a system to work like this, you really need a major economy or a major corporation to somehow be able to bring it online and show that it can work in real time. Right now, I think it remains something in theory that sounds great. You know, it sounds rebellious. It sounds like opting out of the system. It sounds like you’re being an iconoclast by adopting it. In practice, you are hardly seeing it anywhere but these headlines about it running up 1,000 percent in a year.
MARTIN: That’s Roben Farzad, business reporter and host of the podcast Full Disclosure on NPR One. He’s also the author of a book that has nothing to do with bitcoin called “Hotel Scarface.” Roben, thanks so much for speaking with us.
FARZAD: My pleasure, Michel.
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