Bitcoin: The Virtual Currency Bubble?

A recent episode of NPR’s Planet Money discussed a new currency, a virtual currency called Bitcoin.  Bitcoin is essentially a currency predicated on a peer-to-peer system (think: the now-defunct Limewire).  The podcast explores some metaphysical economic questions (what is money?). 

Here is Planet Money’s decription of the story: 

Since the start of the year, the Japanese yen has risen by about 12 percent against the dollar. The euro has fallen by about 1 percent.

 

Then there’s bitcoin, a virtual currency that doesn’t even exist in the physical world. In the past few months, the value of bitcoin has risen by more than 1,000 percent — from less than $20 per bitcoin a few months ago to more than $200 today.

 

On today’s show, we ask: Is a skyrocketing value a good thing or a bad thing for bitcoin?