Would you invest in cryptocurrencies? 6 Minute English

⏲️ 6 Minute English - Vocabulary & listening

15 Aug 201906:32

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

00:00

💡 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.

05:02

🔑 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

Cryptography is the practice of using mathematical techniques to secure communications in the presence of adversaries. It plays a crucial role in the creation of cryptocurrencies, as it involves the use of complex software codes to protect computer information and systems. In the script, Sam explains that 'crypto' in 'cryptocurrency' comes from cryptography, emphasizing the security aspect of digital currencies.

💡Currency

Currency refers to the money of a particular country, typically in the form of coins and notes that are issued by a country's bank. It is a medium of exchange and a measure of value. In the context of the video, Catherine mentions currency to contrast traditional money with the digital form found in cryptocurrencies.

💡Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. It is not backed by physical commodities like gold but by complex computer codes. The script introduces Bitcoin as a well-known example, and discusses the concept of cryptocurrencies being purely digital and not controlled by banks or governments.

💡Bitcoin

Bitcoin is the first and most widely known cryptocurrency, introduced in 2009. It serves as a benchmark for other cryptocurrencies and is often used to introduce the concept of digital currencies. In the script, Sam mentions Bitcoin when explaining the concept of cryptocurrencies and Catherine uses it to pose a trivia question about its creation date.

💡Libra

Libra is a digital currency proposed by Facebook, which aims to be a stable global currency backed by a basket of real-world currencies. Unlike traditional cryptocurrencies, it is not purely independent but is stabilized by being pegged to established currencies. The script discusses Libra as a new player in the digital money system and differentiates it from other cryptocurrencies.

💡Volatility

Volatility refers to the tendency of a market or asset's price to fluctuate dramatically over a short period of time. In the context of the script, Jemima Kelly explains that cryptocurrency markets are notoriously volatile, which is a key difference between cryptocurrencies like Bitcoin and more stable assets like Libra.

💡Backed

To be 'backed' by something means to be supported or guaranteed by it. In the script, Jemima Kelly mentions that Libra is backed by a basket of currencies, which means its value is supported by the stability of these currencies, unlike cryptocurrencies that are not backed by any physical assets or other currencies.

💡Dollar, Pound, Euro, Swiss Franc

These are all examples of real-world currencies that are used to back Libra, providing it with stability. The script specifically mentions these currencies as part of the basket that supports the value of Libra, contrasting with the lack of backing in traditional cryptocurrencies.

💡Risk

Risk is the possibility of losing something of value, such as money. In the context of the script, Sam and Catherine discuss the risks associated with investing in cryptocurrencies due to their volatility. The potential for high returns is balanced by the possibility of significant losses.

💡Financial Institutions

Financial institutions are organizations that manage financial transactions, such as banks, credit unions, and investment companies. The script contrasts cryptocurrencies, which are independent of financial institutions, with Libra, which is backed by a consortium that includes financial entities.

💡Whims

A 'whim' is an unpredictable or irrational desire or decision. In the script, Sam uses the term 'whims' to describe the unpredictable nature of crypto markets, which can lead to sudden and significant changes in the value of cryptocurrencies.

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.