Would you invest in cryptocurrencies? 6 Minute English
Summary
TLDRIn this episode of 6 Minute English, Catherine and Sam discuss cryptocurrencies, explaining their digital nature and how they differ from traditional money. They highlight Bitcoin as a well-known example and delve into Facebook's new digital currency, Libra, which is backed by real-world currencies like the dollar, pound, euro, and Swiss franc. The conversation touches on the volatility of crypto markets and the risks involved in investing in cryptocurrencies.
Takeaways
- 🔒 Cryptocurrency is a digital currency secured by cryptography, which involves complex codes for protection.
- 🌐 Unlike traditional money, cryptocurrencies operate independently of banks and governments.
- 💡 The term 'cryptocurrency' derives from 'crypto' for cryptography and 'currency' for the money of a country.
- 🚀 Bitcoin is the most well-known cryptocurrency and was the first of its kind.
- 📅 Bitcoin was created in 2009, not 2010 as Sam guessed in the script.
- 🆕 Facebook announced the launch of their digital currency called 'Libra', which is different from traditional cryptocurrencies.
- 💼 Libra is backed by a basket of real-world currencies, including the dollar, pound, euro, and Swiss franc, for stability.
- 📉 Cryptocurrency markets are described as 'notoriously volatile', meaning they can fluctuate greatly in short periods.
- 💰 The high volatility of cryptocurrencies can lead to high rewards but also significant risks.
- 🏦 Traditional currencies are more stable because they are controlled by governments and banks to prevent drastic changes.
- 🚗 Being 'subject to the whims of' the crypto markets means that the value of cryptocurrencies can be unpredictable and potentially risky.
Q & A
What is the definition of cryptocurrency according to Sam's explanation?
-Cryptocurrency is a digital form of money that uses cryptography for security. It is not controlled by banks or governments but by the people who have it and complex computer codes.
What is the origin of the term 'cryptocurrency'?
-The term 'cryptocurrency' is derived from 'crypto', which refers to cryptography, and 'currency', which is the money of a particular country.
What is the most well-known cryptocurrency mentioned in the script?
-The most well-known cryptocurrency mentioned in the script is Bitcoin.
What is the name of the digital currency announced by Facebook?
-Facebook announced their digital currency named 'Libra'.
What is the key difference between Libra and regular cryptocurrencies according to Jemima Kelly?
-Libra is not a typical cryptocurrency because it is backed by a basket of real-world currencies, which makes it more stable compared to regular cryptocurrencies that are independent of financial institutions and other currencies.
Which currencies are mentioned as backing up Libra according to Jemima Kelly?
-The currencies mentioned as backing up Libra are the US dollar, the British pound, the euro, and the Swiss franc.
What does it mean for a currency to be 'volatile'?
-A volatile currency is one that can experience significant changes in value over a short period of time, either increasing or decreasing in value rapidly.
Why are cryptocurrency markets described as 'notoriously volatile'?
-Cryptocurrency markets are described as 'notoriously volatile' because they have a history of experiencing large and rapid fluctuations in value, which is considered a negative characteristic due to its unpredictability and potential for loss.
What is the meaning of 'whims' in the context of the script?
-In the context of the script, 'whims' refer to unpredictable or irrational decisions or trends in the crypto markets that can affect the value of cryptocurrencies.
When was Bitcoin created, according to the script?
-Bitcoin was created in 2009.
What does the term 'cryptography' refer to in the script?
-In the script, 'cryptography' refers to the use of special codes to keep computer systems and content safe.
What is the opposite of 'volatile' as used in the context of currency?
-The opposite of 'volatile' in the context of currency is 'stable', meaning the currency does not change much in value over a short period of time.
Outlines
💡 Introduction to Cryptocurrency and Libra
The script begins with an introduction to the topic of cryptocurrencies by Catherine and Sam, hosts of the 6 Minute English program. They explain the concept of cryptocurrency as a digital form of money, not controlled by banks or governments, and discuss the significance of Bitcoin as the first and most well-known cryptocurrency. The conversation shifts to Facebook's announcement of their digital currency, 'Libra', and how it differs from traditional cryptocurrencies by being backed by a basket of real-world currencies, including the dollar, pound, euro, and Swiss franc. This backing is intended to provide stability, contrasting with the notorious volatility of cryptocurrency markets.
🔑 Understanding Cryptocurrency Volatility and Stability
In the second paragraph, Catherine and Sam delve deeper into the nature of cryptocurrency volatility, highlighting the unpredictable and often irrational market trends that can lead to significant fluctuations in value. They contrast this with the relative stability of traditional currencies, which are controlled by financial institutions to prevent drastic changes. The discussion emphasizes the risks associated with investing in cryptocurrencies, where potential for high returns is balanced by the possibility of substantial losses. The segment concludes with a playful reference to the program's schedule, indicating the end of their discussion on the topic.
Mindmap
Keywords
💡Cryptography
💡Currency
💡Cryptocurrency
💡Bitcoin
💡Libra
💡Volatility
💡Backed
💡Dollar, Pound, Euro, Swiss Franc
💡Risk
💡Financial Institutions
💡Whims
Highlights
Cryptography involves using clever software codes to protect computer information and systems.
Cryptocurrency is a digital money system not controlled by banks or governments.
Bitcoin is the most well-known cryptocurrency.
Facebook announced their own digital currency called 'Libra'.
Libra is backed by a number of real currencies unlike typical cryptocurrencies.
Libra is stabilized by being backed up by the dollar, pound, euro, and Swiss franc.
Regular cryptocurrencies are independent of financial institutions and other currencies.
Cryptocurrency markets are notoriously volatile, meaning their value can change rapidly.
Volatility in currency refers to large and quick changes in value.
Bitcoin was created in 2009.
Cryptocurrencies are subject to the whims of crypto markets, leading to unpredictability.
Being subject to the whims of something means having no control over its direction.
Cryptocurrencies are risky due to their volatility and potential for significant financial loss.
Most currencies are reasonably stable, unlike cryptocurrencies.
Governments and banks control currencies to maintain stability.
Cryptocurrencies operate without the control mechanisms of traditional financial institutions.
Investing in cryptocurrencies can lead to high profits but also high risks.
Libra aims to offer a more stable digital currency compared to traditional cryptocurrencies.
The 6 Minute English program explores the concept and implications of cryptocurrencies.
Transcripts
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!
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