Bitcoin

0:00On the phone with us, Dr. Mark Thornton, Senior Fellow at the Ludwig von Mises Institute. Dr. Thornton, good morning to you. Hello? Oh, I see what the problem is here. Somebody has tweaked my dealio. Okay, there we are. Can you hear me now? I sure can. All right, good. I don't know if Julie's like me. I'm a little vague on this whole idea of Bitcoin. I still use the coin of the realm. Would you explain how this works? Well, you're right, Ken. You know, Bitcoin is an electronic, it's a digital form of money, it's a virtual form of money, but that shouldn't be scary because, you know, your Word documents and your Excel files and, you know, those are virtual items as well, and they only become real when we print them out, and they actually become physical documents and physical spreadsheets, but Bitcoin is something that can be transferred around the world to anybody with Bitcoin accounts and so it has a lot of great features as a payment system. It's sort of the next advance in making payments like credit cards and debit cards. This is the next step in that process of improving payments and driving down the cost of making purchases around the planet and moving your wealth around the planet. And so it's an exciting development. It's something here at the Mises Institute that we've been working on for a long time.

1:25We've been looking forward to something along these lines whereby new forms of money come into existence naturally on the marketplace and start to compete with government money, which is depreciating over time. And we're in this world currency war right now where all the central banks are printing money like crazy and driving down the value of the dollar and the yen and the euro. They're all falling in purchasing power. So this new Bitcoin thing has come onto the scene as a new competitor, so we're excited about that. Dr. Thornton, the Bitcoin has had a little volatility in value itself, has it not? Whoa! Volatility, that is the greatest understatement I think in the world. A few years ago it was selling for like 20 cents.

2:12Now it's over, I think it's like $120 per Bitcoin. And back when we first ran an article about Bitcoin, that very day it reached its peak at over $260 per Bitcoin. We made some negative statements basically about Bitcoin, about its prospects in the near term and so we published this article on Mises.org and the price crashed and the government stepped in and started to take notice of Bitcoin once it reached that very

3:14create bitcoins, you have to have a computer network, you have to have a lot of energy. This one fellow was, the police showed up his house who was mining bitcoins because his electric bill had quadrupled and it was because he was running computers to the extent that he was running up a huge electrical bill. So it's difficult to make bitcoins and there's a limited number of them. So it gets more and more harder and harder to make bitcoins and eventually it will be Impossible to Make New Bitcoins and so what will happen is that the bitcoin theoretically will continue to appreciate in value and you'll be exchanging bitcoins within smaller and smaller denominations last week u.s. authorities seized assets of the world's largest bitcoin exchange but what is that done to the to this uh... such a whole situation apparently the government is not too big of a fan of what you all are doing here yeah that we anticipated this of course you know the the government's not going

4:15to allow an anonymous transaction to take place in and of course visa and MasterCard and all the banks don't want to do see this happen either and so they press the government and the government pressed Bitcoin they want Bitcoin users to be registered so they can't make illegal transactions right can't make or capital gains, you know, if I bought bitcoins at $0.20 and I sold them at $260, guess what, the government wants part of that, just like they want part of your income, they want part of your money you buy goods with, they want their take on your investment successes, they always want that.

5:00And I am so sorry here, we are out of time, but I want to tell people that your website is Mises.org, M-I-S-E-S. I'm sure you have more information about that on the website, right? M-I-S-E-S dot O-R-G. Very good. Thank you so much for joining us this morning. It is a pleasure.