From its involvement in recent cyber attacks against global corporations to its passing of $60,000 in value in April 2021, bitcoin is becoming a focal point in business and the public. Some say that bitcoin is the future currency, replacing credit and debit cards as well as cash. Some are more skeptical, seeing bitcoin as highly volatile and too risky of an investment. However, a majority of the population doesn’t know the basics of cryptocurrency.
According to Forbes, bitcoin, and cryptocurrencies in general, is a decentralized digital currency that can be bought, sold and exchanged directly without need for an intermediary (i.e., a bank). Bitcoin itself is code that is recorded on a ledger.
The cryptocurrency’s alleged inventor(s), using the pseudonym “Satoshi Nakamoto,” state that there is a need for “an electronic payment system based on cryptographic proof instead of trust.” To overcome the need for trust, a new technology was utilized: blockchain.
A blockchain, according to Oxford Languages, is a “system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers.” That is a simplified definition. Euromoney states that those on the system, therefore, can check the record for any suspicious transactions, creating a system of strong financial security. For an expanded understanding of what blockchains are, Simply Explained’s video, “How does a block chain work,” is a great source.
Many wonder how bitcoin gained so much value. Anton Mozgovoy, CEO of Holyheld, a digital financial service company, said in an interview with Forbes, “The reason why it’s worth money is simply because we, as people, decided it has value—same as gold.” That isn’t the only reason.
Prominent figures in society―celebrities, social media influencers, tech magnates―can greatly affect the value of a cryptocurrency, both negatively and positively.The Economic Times states that Elon Musk, a businessman known as the CEO of Tesla, has an enormous influence on cryptocurrency. In April, Tesla stated it wouldn’t be accepting bitcoin payments anymore due to its high energy consumption. As a result, bitcoin fell to around $30,000 from around $58,000. Musk then tweeted that he’d help make the process greener. The value of bitcoin jumped from around $30,000 to $39,944, a 19% increase.
As you can see above, cryptocurrencies are volatile. Experts say the public should be cautious when considering cryptocurrencies. Others say that the public should embrace bitcoin, but they should be responsible about it. Depending on who is talking, bitcoin can be the great or it can be a scourge on the financial sector. This is where business reporters come in.
When reporting on cryptocurrencies, it is important to differentiate between opinion and fact. There are many financiers who have a genuine concern about cryptocurrency. That should be presented to the public. Nevertheless, it should be clear that it’s an opinion. It’s the same for financiers who are more open to the topic of digital currencies. They might say that it is a good step forward into the future. However, that is an opinion. Let the facts speak for themselves. Openly publish data on the goings-on of the cryptocurrency industry.
Additionally, while it is important to get the perspectives of both financial experts and bitcoin users, you should see what governments are thinking about cryptocurrencies. El Salvador’s government in June passed a law that made bitcoin legal tender. Meanwhile, the United States Treasury is cracking down on cryptocurrency, citing tax evasion risks. As a business reporter, you should gage the atmosphere and the trajectory of cryptocurrency. That includes taking into account the internal debates within national governments.
Lastly, as a business reporter you should openly give some sources for the audience to utilize. The topic of cryptocurrency can be so complicated that it is difficult to even grasp the basic definitions of its core tenets. To help the reader, direct them to some stories, articles or videos that can easily break the topic down. It’s one thing to tell the audience what’s going on. It’s another thing to explain it.
If you want more details on bitcoin, or cryptocurrencies in general, look at the infographic below. Sources used are underlined.