Catherine: Hello. This is 6 Minute English,
and I'm Catherine.
Sam: And I'm Sam.
Catherine: Now, Sam, what can you
tell us about cryptocurrencies?
Sam: The word is a combination
of crypto, from cryptography, which is
to do with using
clever software codes to protect
computer information and systems,
and currency, which is the money
of a particular country. So cryptocurrency,
very simply, means code money.
We usually think of money as
notes and coins which come from a
country's bank. But a cryptocurrency
doesn't have physical money. It's purely
digital and is not controlled
by banks or governments but by
the people who have it and very complex
computer codes. Perhaps the most
well-known is Bitcoin.
Catherine: Well, you seem to know
a fair bit about cryptocurrency actually...
anyway, now a new player is joining
the digital money system as Facebook
have announced they are
launching their own digital currency. They
are calling it 'Libra'. And we'll be finding
a little bit more about this topic in the
programme, but first, a question.
Now, Sam, you mentioned Bitcoin
as being a well-known cryptocurrency.
It was, in fact, the first
cryptocurrency, but when was Bitcoin
created? Was it:
a) 2008, b) 2009 or c) 2010
Sam: I'm going to say 2010.
Catherine: OK. Well, I'll reveal the answer
later in the programme.
Now, Jemima Kelly is a financial
journalist. She was talking on the BBC
radio programme Money Box Live
about the plans for Libra. She says
it's not really a cryptocurrency
because it's actually
backed up by a number of real currencies.
So which currencies does she mention?
Jemima Kelly: A cryptocurrency
is normally subject to the whims
of crypto markets, which
are notoriously volatile, whereas Libra is
kept stable by being backed up
by a basket of currencies, in this case,
the dollar, the pound, the euro and
the Swiss franc.
Catherine: So which currencies
did she say were backing up Libra, Sam?
Sam: She said that the dollar, the pound,
the euro and Swiss franc were the
currencies that would be backing up Libra.
Catherine: And this is different
from regular cryptocurrencies, isn't it?
Sam: Yes, cryptocurrencies
are completely independent of
financial institutions and
other currencies.
Catherine: And this can make them risky,
can't it?
Sam: Yes, she says that
cryptocurrency markets are notoriously
volatile. Something that is
volatile can change very quickly. When it
comes to currency, it means that its value
can go up or down by a large amount over
a very short period of time.
Catherine: And it's described as
notoriously volatile because this
has actually happened
a few times in the past. Something that is
notorious is well known or famous but for
a negative reason. So the value of
a currency going up and down
in a volatile way - that's not positive.
Sam: If you want to take the risk you
could make a lot of money,
but you could also lose
a lot of money - more than you invested.
Catherine: So why are cryptocurrencies
so volatile?
Sam: Most currencies are reasonably
stable. This is the opposite of volatile.
They don't change a lot over a short
period of time. There can be big changes
but usually governments and banks
control currencies to prevent it.
Cryptocurrencies don't have
those controls.
What Jemima Kelly said was that
they are subject to the whims of the
crypto markets. A whim is
an unpredictable or irrational decision
or trend and if you are subject to
the whims of something, or someone,
it means that metaphorically you are
a passenger in a self-driving car
which may decide just to drive off
the edge of a cliff. So it might be
an exciting ride,
but it could end in disaster.
Catherine: Right, it's time now to get
the answer to the question I asked
at the beginning of the programme.
Bitcoin was the first cryptocurrency,
but when was it created? Was it:
a) 2008, b) 2009, c) 2010
Sam: I said 2010, but I'm not really sure.
Catherine: And you're absolutely wrong!
The correct answer is 2009, so no luck for
you this time, but congratulations
to everyone who did get that right.
Well, anyway, let's round off today
with a review of today's vocabulary.
Sam: First off there is cryptography
which is the use of special codes to keep
computer systems and content safe.
Catherine: A currency is the money
of a particular country, for example
in the UK we have the pound, in the US
there's the dollar and in many countries
in Europe the currency is the euro.
Sam: Cryptocurrency is a combination
of cryptography and currency and
it's used for a finance system that is
based on secure digital coins that are not
connected to banks or governments.
Catherine: We then had the expression
subject to the whims of. Whims are
unpredictable decisions
and if you are subject to them it means
you can't control them, you have
no choice but to go in the direction
those whims lead.
Sam: This means that the value of
cryptocurrencies are notoriously volatile.
They have a history of going up or down
in value by large amounts and very
quickly. And that's not good.
Catherine: Well, it might be good if it goes up!
Sam: True.
Catherine: But if you want less risk, if you
want your currency to be the opposite
of volatile, if you want it, in other words,
to be stable, then maybe
cryptocurrencies are not for you.
Sam: Well, we are subject to
the whims of the schedule
which means our 6 minutes are up.
We look forward to your company
again soon. Bye for now.
Catherine: Bye!