On Tuesday, October 31, 2017, Professor Werner Kristjanpoller of Universidad Tecnica Federico Santa Maria (UTFSM) in Chile came to speak to us at RMU. A professor of the Industrial Engineering Department at his school, Mr. Kristjanpoller gave an interesting lecture that demonstrated his vast financial knowledge and impressive linguistic skills, despite English not being his native tongue. Throughout his speech, he explained the history of currency, the concept of cryptocurrency, and the positives and negatives of using Bitcoin as a gold standard in the future.
Originally, when precious metals such as gold were discovered, they were used to create coins. However, because these coins were quite heavy to carry in large quantities, gold “stores” were established. This gold reserve was instigated to ‘back’ the coins in the market with a value everyone trusted; this method was essential to the survival of currency. During the Great Depression, however, many businesses had to declare bankruptcy and sell their gold reserves. When the Depression ended, trusts and bonds were created to replace the need for literal gold to supply the Gold Standard.
In 2009, the idea of cryptocurrency was proposed. This concept of virtual money creating an initiative for miners to enhance the currency was a breakthrough that sought decentralization. Passwords and codes specific to individuals cannot be traced to an organization or government. Cryptocurrency only generates a number of previously defined units at a rate that is limited by initially established and publicly known value; consequently, the Bitcoin will reach a maximum potential and cap out at some point. A fixed quantity of currencies could be used to avoid inflation. Since 2009, 800 currencies have been created.
Professor Kristjanpoller then discussed the advantages and disadvantages of using Bitcoin. Several positive aspects include payments that are easy, convenient, secure, irreversible and unaffiliated with any centralized organization or government control. Additionally, there is less risk of fraud because Bitcoin exchanges do not contain personal information or private data. Bitcoin exchanges are neutral and transparent as well, as all information is available in the block chain to anyone who wishes to access it. Some disadvantages of Bitcoin are that many people are still unaware of the concept of cryptocurrency, Bitcoin is still a developing system composed largely of still incomplete features and the total value of Bitcoins in circulation and number of businesses using Bitcoin is very small compared to the potential.
Overall, I greatly enjoyed this lecture because I was interested to learn more about what Bitcoin is, and I wanted to be more aware of how technology will change our future financially. Professor Werner Kristjanpoller did an excellent job explaining currency and Bitcoin in basic, logical terms to a group primarily composed of intrigued college students.
– Katie Bryant