Q. Why is Bitcoin so attractive to people in New York?
A. With New York only 30 miles from major American financial centers such as the New York Stock Exchange, Wall Street, and the NASDAQ, it has become apparent that much of Wall Street’s data and functioning is accessible to all New Yorkers.
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Now, many people find themselves with unprecedented freedoms, however intangible. Through Bitcoin, they can buy almost anything, pay less interest, make peer-to-peer payments and avoid banking fees. Just as importantly, they can travel between New York and other cities across the world, much more easily than with a credit card.
The price of Bitcoin rose for a second day on Tuesday, reaching a peak of $6,170 before falling back to $5,170.
The price of Bitcoin fell 2.5 percent to $5,060 on Sunday after reaching the latest record price of $6,160. Photograph: AP
Q. What is blockchain?
A. Blockchain is a kind of an internet-based database which dates back to the 1990s. One of its earliest uses was as a way of encrypting data in a bank vault. As a peer-to-peer network of computers, blockchain could be used to help verify the identity of users.
Lately, that role has expanded to include digital currency trading and services such as exchanges.
Q. Who owns Bitcoin?
A. People around the world, not just hedge funds and billionaires. According to Global Financial Integrity, an anti-corruption watchdog, more than 200,000 of the world’s poorest people who live in extreme poverty, earning less than $10 a day, own some 9% of the world’s outstanding Bitcoins.
Q. Is Bitcoin regulated?
A. Some banks, including Credit Suisse, have raised questions about Bitcoin, but the system is designed so that it does not put any individuals in danger. Anyone can use Bitcoin without becoming a “Bitstrips” user, and the transactions are kept secret, with miners or mathematicians approving transactions on a peer-to-peer network.
Goldman Sachs and JPMorgan, two of the most influential US banks, have invested in Bitcoin. The money-center banks in New York City are just starting to invest in Bitcoin as an investment opportunity.
Q. What is JPMorgan Chase doing with Bitcoin?
A. On Monday, JPMorgan Chase – the largest bank in the US – created a Bitcoin trading platform, noting that the cryptocurrency “has been successful as a store of value”.
Q. Who owns Coinbase, a New York-based platform that allows people to buy and sell Bitcoin?
A. Coinbase is perhaps the best-known of the new trading platforms. It made headlines recently with the launch of a Bitcoin service called Lucideus, which allows users to remit money overseas using Bitcoin.
Q. Will Bitcoin become the next Visa or MasterCard?
A. That is possible. But it would be more likely to be a successful interbank payments system like SWIFT, a major interbank payments system based in Brussels, Belgium.