← Skip Montreux – Down to Business English
Skip Montreux – Down to Business English
The Bitcoin Fork | D2B 115
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This is Skip Montreux in Tokyo, Japan and you are listening to down to Business English. Thanks for downloading D2B today. Due to circumstances beyond their control, I'm afraid that neither DEZ or Samantha are able to join me for today's episode. Honestly speaking, it's 100% my fault. Well, 90% my fault. The time differences between New Zealand, the UAE and Tokyo are a little bit to blame as well. But I promise that both Samantha Vega and DEZ Morgan will be back behind the microphones with me very, very soon. However, I didn't want to keep everyone waiting for a new episode. So today I will be reporting on a huge, huge business news story that has been in the headlines recently. Bitcoin. If you are a long time listener, you may remember that Des and I reported on Bitcoin way back In June of 2014, episode 69 aptly titled Bitcoin. If you are a new listener, by all means go back and search the archives on the D2B website and give it a listen. So why am I interested in revisiting this story now? Well, when we first reported on it, Bitcoin was just starting out as a digital cryptocurrency and since that time it has had its share of ups and downs. But if you do a Google search for news stories on Bitcoin today, here is a sample of some recent headlines from the Wall Street Journal. Why Bitcoin is Booming from Futurism Wall street predicts bitcoin will reach $55,000 in five years from CoinDesk bitcoin mining fund closes first year with 160% ROI and from Bloomberg, will Bitcoin tear itself apart? On top of being a very hot topic right here in Tokyo at the moment, the criminal trial of Mark Karpelis, former CEO of the now defunct Mt Gox Bitcoin exchange has just gotten underway. Karpelis is infamous for establishing and running one of the biggest and most successful early bitcoin exchanges. But back in late 2014, 800,000 bitcoin disappeared from MtGox and tens of millions of dollars were lost. Karpeles was charged with embezzling the money. Putting that aside, by far the biggest news story about Bitcoin these days is that on August 1, after two years of heated debate and discussion in the bitcoin community about how the currency needed to evolve, Bitcoin split or forked into two separate currencies. So let's do it. Lets get D2B down to business with the Bitcoin fork. How did it happen and what does it mean for the future of this cryptocurrency? Because some people have said, hey, bitcoin is the answer to those problems. Are you a believer? Well, bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don't have to be physically in the same place. And of course, for large transactions, currency can get pretty inconvenient. That was none other than Bill Gates, founder and former CEO of Microsoft, giving his take on Bitcoin. When the richest man in the world takes interest in a cryptocurrency like Bitcoin, one has to take note. So what exactly is a cryptocurrency? More specifically, what is bitcoin? To really get your head around Bitcoin, you need to have a clear understanding of the concept behind money. What exactly is money anyway? At the most basic level, money is a system that keeps track of debt between two parties. Lets say, for example, that you are a shoemaker and I am a fisherman. One day I decide that I want a pair of shoes. Maybe I could give you a nice big juicy salmon that I had caught for a pair of beautiful leather shoes you had made. That basic business exchange or transaction would work, but let's face it, it would be pretty inconvenient for me to carry this fish into your shop, drop it down on the counter, and pick up my shoes. Not only is it inconvenient, it would certainly leave a little bit of a fish odor in the air. So to solve this problem over time, money has evolved in societies so that a fisherman and a shoemaker can exchange products easily, conveniently, and with no smell. The fisherman gives the shoemaker some money, the shoemaker gives the fisherman the shoes, and the shoemaker can then turn around and exchange that money for another product or service from someone else, maybe a farmer, for some eggs or milk. The whole system is based on society recognizing and trusting that the paper or coins that they are exchanging have some kind of value. Traditionally, currency has been based on or tied to the value of a physical and quantifiable resource such as gold. The entire banking and financial industry has, in fact, evolved from the concept that banks stored gold in their vaults and issued currency based on its value. So fundamentally, money is a system to keep track of debts, and the central banks that issue currency are the record keepers of that debt. That US$100 or €100 or €10,000 paper note in your wallet is nothing more than a representation of a portion of gold stored somewhere. Of course, the US dollar untied itself from the gold standards almost 50 years ago. So today, the value of money is more based on society's faith in the economic system than anything tangible. What bitcoin and other cryptocurrencies do is digitally imitate this system, but with some major differences. Instead of being based on gold or some other finite and rare commodity, it is based on a mathematical algorithm that determines how often and how many bitcoin can be created. The other major difference is how it keeps track of the exchange of bitcoin between people and how many bitcoin a person or organization has. To accomplish all of this, there is a decentralized digital ledger known as a blockchain. Unlike the central banks, who in our modern currency systems keep track of debt through issuing and controlling the value of money, the bitcoin blockchain is updated regularly so that all transactions are transparent. The blockchain is like a financial ledger that is open to everyone, so that everybody knows exactly how many bitcoins have been created, how many bitcoins each person has, and and who has exchanged bitcoin. An added benefit of this blockchain is that bitcoin holders and transactions between them are identified only by an encrypted number. This means that there's a very secure layer of anonymity. Bitcoin truly is revolutionary because it removes the necessity of having a financial middleman, a role that is currently played by the world's central banks. In fact, many experts say that cryptocurrencies like bitcoin are a true democratization of the global monetary system. Since being introduced in 2008, Bitcoin has seen its good days and its bad days, the worst being after the mt Gox exchange based in Tokyo, declared bankruptcy. That scandal really tarnished bitcoin's image, and critics pointed to it as a good reason why economies and people could never trust a cryptocurrency. Around that time, the value of a bitcoin dropped from a high of just under $1,000 to as low as $200. Over the past few years, bitcoin has made quite the comeback. From late March to early June this year, bitcoin climbed from just over $1,000 to $2,850. That is an incredible skyrocket. But a major hurdle has been standing in the way over the last two years as the bitcoin community struggled to reach a consensus on where the future is headed for the cryptocurrency. The reality was that in order for bitcoin to be widely accepted, it needed to be able to scale its capacity so it could handle hundreds of millions, even billions of transactions a day. To do this, the size of blocks in the blockchain needed to be increased. And there has been a lot of heated discussion and debate in the community as they tried to figure out how to best accomplish this. The community divided into two camps over the issue. In one camp were the developers who wanted to keep the amount of information in each block the same as it is now. And in the other camp were the bitcoin miners who wanted to increase the size of the bitcoin network without getting too much into the weeds. A method was proposed that served as a compromise between the two groups. For it to take hold, 80% of the community needed to adopt it by August 1st. If an 80% adoption rate was not achieved, it would mean that, in essence, there would be two different bitcoins in circulation. In early July, there was a lot of speculation that it would not be adopted and that bitcoin would actually fork or split into two different types, one with the new software, one without. Of course, this type of uncertainty played havoc with the price of bitcoin. In fact, over one weekend in July, it lost over 20% of its value. Bitcoin exchanges here in Japan, where the marketplace has been highly regulated ever since the mtgaux embezzlement scand suspended trading. But by mid July, many of the big players in the bitcoin mining industry started to implement or announce their intention to start using the new system. And for a few days, it looked like bitcoin was going to avoid a split. But then as the August 1 deadline approached, some of those players lost confidence and switched to a third option. This new option, known as Bitcoin cash, increased the size of the blocks in the blockchain and allowed for greater transaction capacity. So on August 1st at 2:14 Eastern Time, Bitcoin cash created its first block of a blockchain based on bitcoin. And the cryptocurrency officially split into two branches, the original bitcoin and the new Bitcoin cash. Right off the bat, bitcoin cash was worth around US$700. But it quickly crashed to somewhere around $280, about 20% of Bitcoin's value. At the same time, the original bitcoin spiked. And right now, as I record this, bitcoin is at an all time high of US$3,239. However, over the past 24 hours, CoinDesk, the largest bitcoin exchange in the world, they had originally said they would not accept Bitcoin cash? Well, they have reversed their decision and have announced that they will start accepting it in January. This might give Bitcoin cash some wind under their wings, so to speak. So what does the future hold for this cryptocurrency? Well, for any currency to be universally recognized and accepted, there are three criteria it must safety, liquidity, and the ability to provide a return on an investment in it. At the moment, Bitcoin still has a long way to go to meet those three criteria. However, as upsetting as this hard fork seems to be, it is a step in the right direction. Maybe we will just have to see how all of this plays out over the next few months. Now that you are up to date with all the going ons with Bitcoin and the new Bitcoin Cash, it's time to get D2V down to vocabulary.
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Down to Business English audio scripts are a great learning tool. Be sure to visit the D2B website and download your free audio script of today's podcast, DowntoBusinessEnglish.com that's www.downtobusinessenglish.com.
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First up on the down to Vocabulary list today is the expression to have your share of ups and downs. When you say something or someone has had their share of ups and downs, you are communicating that they have had many good times and many bad times. In the opening of my report, I said that bitcoin has had its share of ups and downs. In other words, in its short life it has had very good times when it was valuable and bad times when it wasn't worth very much. A famous entrepreneur who sure has had his own share of ups and downs would be Elon Musk. In his career, he has been close to bankruptcy at least once, but has also seen great successes with his companies Tesla Motors and SpaceX. Moving on, the next word I'd like to talk about is the phrasal verb to take note of something. When you take note of something, you recognize it for its importance or significance in the story. Right after we listen to Bill Gates commenting on his opinion of bitcoin, I said that when the richest man in the world gives his opinion on something, you have to take note. In other words, you should pay attention to what the man is saying. To take note is a very good phrase to use when you want your co worker to pay close attention to a key piece of information. For example, you could say, john, please take note that the deadline is 3 o', clock, not 5 o'. Clock. Make sure you get the report finished in time. Next, let's take a look at another idiomatic expression that I personally use quite a lot in conversations and discussions. The expression is to get your head around something, which means to understand something. I started today's report by saying, but to get your head around bitcoin, you need to have a clear understanding of the concept of money. In other words, to understand bitcoin, you need to understand how money works. When you are learning a second language, a solid understanding of that language's grammar is important. But sometimes, as many of you know, it is difficult to get your head around certain concepts because they are very different than the grammar in your mother tongue. I often experience this as I learn more and more Japanese. What about you? Do you find some English grammar concepts hard to get your head around? Don't worry, hang in there. Sometimes it's better not to over analyze grammar. Now let's study the adjective tangible. Something that is tangible is something that physically exists. You can touch it. In the report, I said that modern currency is based on society's faith in the economy, not anything tangible. You can't touch faith, it's just not tangible. Unlike gold, which you can touch, it is tangible. In the world of accounting, a company's assets are divided into their tangible and and intangible assets. Tangible assets would be things like a building or a piece of machinery or equipment. Intangible assets would be things that you can't touch, like a patent or copyright or even brand recognition. For example, a company like Uber doesn't have many tangible assets. They don't own any cars and probably rent all of their office space. But a company like the oil giant Exxon would have many tangible assets like drilling equipment, tanker ships, oil refineries and the like. From tangible, we move on now to the verb phrase to make a comeback. When you make a comeback, you return to a position of strength or power after losing it. Earlier in the story, I said that bitcoin had made a comeback over the past few years. In other words, since its value dropped dramatically after the Mt Gox scandal, the price of bitcoin did recover very well. If you download the audio script for today's episode, have a look in the extra material section. I will put a link to an article from Fast Company titled the biggest business comebacks of the past 20 years. It is a very good read and you can learn about 20 factors famous companies who have made comebacks. Of course, at the top of the list is Apple, who were only a few weeks from declaring bankruptcy in 1997 before Steve Jobs came back. But one company name that popped out at me was Marvel Comics. We all know how successful their current movie franchise is with the Avengers, Iron Man, Thor and the Hulk movies. But surprising to me the was that before they got into the movie business, the company actually had to declare bankruptcy in the 1990s. Considering the superpower of their brand name today, that is quite the comeback. Finally on the list today is the idiomatic expression to be divided into two camps. Let me break that down for you a little bit. A secondary meaning of the noun camp is is a group of people who share the same opinion. To divide means to separate something into two or more parts or portions. So when you say people have divided into two camps, you are saying that there are two different opinions on a topic. Some people have one opinion, other people have a different opinion. In the story I reported that as the bitcoin community discussed how to increase its transaction capacity, it divided into two camps. In other words, some members held the opinion to use Solution A, other members held the opinion to use Solution B. The topic of net neutrality has recently jumped back into the headlines in the United States on this topic. People have basically divided into two camps. In one camp are big businesses and ISP companies that want to treat access to data differently depending on what it is and charge different prices accordingly. In the other camp are people who want all data treated equally. For me personally, I am in this camp. How else would a small independent podcast like down to Business English be available alongside big companies like cnn, BBC and other iconic news outlets?
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And that is my report on the Bitcoin fork. I hope you found it informative and feel that you're up to date on the topic. I will be back very soon along with Samantha and Des with a new business report very, very soon. In the meantime, feel free to visit the down to Business English website to download a copy of the audio script for today's episode. In addition to being a great way to help you understand the podcast perfectly, there are also links to interesting websites and YouTube videos which related to today's topic. I promise that you will find it worthwhile and just before I go, I want to give all our D2B members a great big shout out and thank you for supporting the show. Des, Samantha and I really appreciate it. And for those of you who are not members, please consider becoming one. If you find down to Business English a valuable part of your language studies, why not become a D2B member? Whatever your budget, we have four membership levels to choose from. Your membership gives you access to the Entire library of D2B audio scripts, and every member has new audio scripts emailed to them as soon as new episodes are released. And most importantly, your membership will help us produce more shows. More often. That means more business news to help you improve your business English. Thanks for listening everyone. See you next time.
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Have a comment or question about today's show? Don't be shy. Visit the D2B website or the Facebook page and post any comments or questions there. Skip Des Orsomett there will be sure to leave a reply. Want to get even more down to Business English? Sign up for the D2B Newsletter and receive updates on some of the stories covered on down to business English. That's www.downtobusinessenglish.com down to business English Business news to improve your business English Sam.