(Last month, the Chilean webzine El Libero interviewed me about Bitcoin and other cryptocurrency topics. Here is the English translation of the conversation with Juan Pablo Couyoumdjian.)
1. Bitcoin is a class of “crypto-currency,” but what, exactly, are these crypto-currencies? How do they emerge? And why?
LHW: Cryptocurrencies — Bitcoin and its competitors — are digital assets, secured by cryptography, that can be circulated from peer to peer like currency.
Like government fiat money, they are not redeemable at a fixed rate for any commodity or other money. Unlike government fiat money, there is no issuer with discretion to increase the quantity at any time. In the case of Bitcoin, the number of Bitcoin units is programmed to increase at slow and known rate. In the case of Ripple, the top competitor, all the Ripple units to be made were made at the start.
Bitcoin originated (and remains) as a public-interest non-profit project by a programmer (who’s identity is not known) who wanted to create a tamper-proof private non-state currency. Some other cryptocurrencies arose similarly, by other groups of programmers who introduced improved designs (faster, more robust, more user privacy). Once Bitcoin rose to prominence and considerable market value at the end of 2013 (the total value of all Bitcoins currently held is about US$3.4 billion), private for-profit competitors like Ripple and BitShares and Nxt came along with advanced designs and full-time development and promotion teams.