We are Tom Wilson and Anna Irrera and we cover fintech and cryptocurrency for Reuters. Ask us anything.

This might be a stupid question but what exactly drives the value of cryptocurrency? Is it simply a matter of demand and supply or is there something more to it?

There is no such thing as a stupid question! Actually, there is, but this is not one of them :-) It depends who you ask and what cryptocurrency you are talking about… For instance, with bitcoin, some analysts say that it is still hard to value bitcoin because it doesn’t have fundamentals as other more mainstream asset classes. Others base their price predictions on things like supply--how many bitcoins are likely to be mined/how difficult it will be to mine them-- vs. how much demand there is for it (are big companies signaling they’ll be buying?).
Bitcoins and other cryptos remain highly volatile, and it is often hard, even for us when we have to write stories to find someone with a definitive answer as to why the price has moved. Especially when the price crashes!

News certainly moves the price a lot. For instance, last week when Tesla said it had bought $1.5 million worth of btc, the price spiked. Negative news like the hack of a big exchange could potentially lead it to drop. - AI

Do you see a more mainstream future for privacy-enhanced crypto currencies such as Monero? Or will they continue to be on the fringe compared to Bitcoin and others?

Monero and Z-Cash have gained a lot of attention, because of exactly the word you mention: privacy! Bitcoin isn’t as anonymous as people think, with blockchain tracking allowing you to see how and where (up to a point) they move on the blockchain. A few people have said to me in the past that if bigger investors get more involved in crypto, they would be unlikely to enjoy the world seeing how and where their bitcoin move. That could present a chance for privacy coins… That said, regulators are likely to be opposed to them should they grow, because they are harder to track. I wrote about Monero a couple of years ago: https://www.reuters.com/article/us-crypto-currencies-altcoins-explainer-idUKKCN1SL0F0

- TW

Why do you think the crypto industry is so anti-transparency? The largest players like stablecoin Tether are very secretive about their operations. Is it because they are not complying with regulations?

The crypto sector has become more transparent over the years, but still has some work to do. I remember in 2017 when we worked on this special report that it was even complicated to understand who was running an exchange. There were no “about us” pages, and often the exchanges with the biggest volumes were the shadiest. The industry has come a long way since then, in part because of more focus from regulators around the world, as well as the entrance of more professional companies and investors. Still, as you mention, some companies remain more secretive than others. - AI

ok I'll bite... what even is a bitcoin?

Bitcoin’s a cryptocurrency - also known as a digital currency. It’s basically a string of numbers that exists on the blockchain - a digital ledger that records any transactions using bitcoin. So if you sent me some bitcoin, the time and date of the transfer, and other details, would be recorded.

The thing is, bitcoin is still not very widely used as a currency in the way that a dollar or a pound is. But that is changing, and many believe it will become more widely used. - TW

What are your thoughts on the upcoming Ripple v SEC and Tether v NYAG lawsuits?

Both will be very interesting to watch. The SEC case because it could help give more clarity to investors about what cryptos can be considered a securities or not, which, for some, has been a gray area/open question for a while. Depending on what the outcome is, it might make some investors/companies more comfortable/or less about certain crypto assets that have been in limbo.

It is worth keeping an eye out for the Tether case because of the long-standing theories some have expressed that it may be influencing price. It will be especially interesting now given where we are in the cycle. - AI

If cryptocurrencies are going to be used as currency, does that pose a threat to the USD, especially in regards to the USD being the default currency of the world?

Bitcoin is still barely used for commerce. But in theory, if a currency became big enough, it could threaten the dollar’s status as de facto currency of world trade. Already, it has rivals. China wants to make its yuan more international…. Russia would like to see the dollar’s power diminish. But we are still way off bitcoin being anywhere close to threatening USD. - TW

All cryptos work with the same system?

No, each cryptocurrency has its own blockchain, or ledger. - AI

I will like to know what has changed in the crypto world? Why is everyone embracing cryptocurrency now?

A lot - both inside crypto and out. Over the past few years, the crypto world has got more professional. Exchanges are more secure, and covered by stricter rules. That has made them more popular for bigger investors, who tend to be pretty risk averse. But then outside crypto… the pandemic happened! People think inflation is on the way - a dollar worth less tomorrow than it is today - after governments and central banks try to combat the economic hit from COVID-19. Bitcoin has a limited supply, so people think it will hold value better than traditional money, so have started buying it. And lastly… Elon Musk happened! Tesla buying $1.5 billion in bitcoin was a big deal - he’s got a huge following, and people and companies might go where he treads. Other big corporations like PayPal and Mastercard have also embraced crypto. - TW

Why are institutional investors against rather don’t approve of Bitcoins?

Bitcoin’s been around for about 12 years - and for most of that time rules and regulations around it haven’t been very clear. It’s also been associated for much of that time with crime and illicit use. Most big investors are pretty risk-averse, so have tended to steer clear.
But we’ve seen that starting to change over the last 18 months or so, especially since last autumn. Now, larger hedge funds, investment managers and even some old-school insurers like MassMutual are seeking exposure.
This story from December sets out what’s changing: https://www.reuters.com/article/us-crypto-currencies-insight/how-american-investors-are-gobbling-up-booming-bitcoin-idUSKBN28D0Q5. - TW

What are your thoughts on Doge? There’s so much information out there both good and bad but there doesn’t seem to be an authoritative perspective about viability, use or even value.

Dogecoin was created largely as a satirical critique of the 2013 crypto frenzy, so I am not sure there will ever be authoritative perspectives about its viability. It’s interesting to see how Doge keeps having a moment with every crypto rally, reviving some of that critique.
I’m not sure about its future prospects but I do love the memes. ;-) -AI

How does a regular Main Street buy and hold investor participate in Bitcoin?

There are lots of ways for retail investors to buy bitcoin and other cryptocurrencies. Most open an account with a crypto exchange (to do that, you usually have to submit some kind of ID and proof of address), and then deposit some dollars/pounds/euros etc. After that, you can buy and sell crypto as and when you like. In terms of holding it, many traders keep their crypto in their exchange account. That’s pretty simple, but does come with some risks - the exchange might go down, or get hacked (this happened lots in the earlier days of crypto and still does now, albeit less regularly). You can also withdraw your crypto from an exchange to your own digital wallet. In this case, it’s on you to make sure you keep it safe and don’t lose the “keys” - a string of code needed to open the wallet. -TW

This is unrelated to cryptocurrency. I am an aspiring journalist majoring in communications and I have a bit of an obsession with Reuters. Working there is my pipe dream. Can you talk about your time there? What the hiring process is like? How competitive it is?

Thank you for reading us!! Journalism can be tough to get into, but whenever you are passionate and motivated, there’s a good chance! I joined Reuters in 2014 on its trainee scheme. I’d graduated 9 years before, and had done a bunch of stuff before - I worked as a teacher, for an NGO, and as a researcher/reporter for a Japanese newspaper in London. I applied once, but missed out on a place, and then went back the next year and applied again. In part because of persisting, I was lucky enough to win a place. I worked in Tokyo, covering general news and financial companies, and wrote about crypto before applying for a job in London, and moved here. It is competitive, and often Reuters looks for languages, multimedia skills, or experience or interest in new areas like data journalism. Happy to chat more, DM me: https://twitter.com/tomwilson1983 - TW

Hey! :-) I first joined Reuters in 2012 on its internship program and worked in Brazil. I’d just finished journalism school in NY, and had previously worked briefly at a paper in Italy after studying law there. After my internship I moved to London where I worked for Dow Jones for a few years and then was lucky to be hired by Reuters in NY to cover fintech. Yes, journalism can be very competitive and a tough industry to break into, especially these days with the pandemic affecting how much companies are hiring. But as Tom said it’s not impossible! I’m happy to connect on this directly. DM me at twitter.com/annairrera -AI

Could bitcoin actually function as a currency in the real world that gets used like the dollar or the pound or is it's future solely in acting as a hedge like gold like many have said?

That is a timeless question and one that we have been asking sources about for years. Again, as with a lot in crypto, depends who you ask. True bitcoin believers think it will have a future as viable form of payment, and as a hedge like gold. It has clearly struggled to become a mainstream form of payment for now.

Others point out that it is hard for bitcoin to emerge as a form of payment in the short term because it is too volatile, making it unattractive for merchants and consumers. And if a bitcoin holder sees it as something that will appreciate in value, then why would they use it to buy a coffee?? Or even a house?

It will be interesting to see what happens once PayPal enables consumers to spend their bitcoins at their merchants, as they’ve created a system where merchants don’t touch the bitcoins and so are protected from the volatility risk. Will consumers spend them or HODL? -AI

Is there a limit on bitcoin? What gives it value? Would this become just an inflated currency?

Bitcoin was designed to be created at a fixed rate and the number of bitcoins created annually automatically decreases over time and issuance will end with a total of 21 million bitcoins in circulation. There are currently more than 18.6 million bitcoins in circulation. -AI

Is regular currency (I guess call it fiat) based on faith? Same goes for bitcoin and other cryptos?

You’re right! All currencies depend on people giving them a value - lending some kind of faith. The major difference between crypto and fiat money - dollars, euros, the yen - is that fiat money is supported by central banks, and can be used in the real world. Enough people believe in dollars… that’s not yet the case for bitcoin and the like. - TW

Do you think cryptocurrency could continue to disrupt traditional structures of the global financial system and what do you think would be some key catalysts for that to happen on larger scales that could change day to day life for all people?

Many of the people in the crypto world we speak to are convinced that this is going to happen! I started looking at crypto about 5 years ago, when I worked for Reuters in Tokyo. Then, people in traditional finance tended to write it off as a fad, saying it had no hope of becoming more widely used. And while the traditional structures of world finance are still firmly in place, the GameStop episode has shown us that the digital world can and does impact traditional finance. Bitcoin hasn’t gone away, despite big opposition from some central banks and regulators, and it’s become more accepted by the mainstream. The more major companies and household names that back it, it’s likely to gain more and more traction. - TW

Hi, whats the relation between CBDC and crypto?

Good question! I wrote about this on Monday.

In short, central banks want to keep control over money. Crypto could weaken that control, so central banks want to launch digital versions of traditional money to help people with the areas that crypto might make easier, like electronic payments. -TW

From my understanding, any Crypto coin can't really be used as a serious currency until the volatility of the coins settles down. Do people actually have an idea when volatility will become more stable?

Some experts think volatility will decrease when more institutional investors hold bitcoin and the sector continues to mature. They think institutions will be in it for the longer term and so less inclined to buy and sell frequently. This should help stabilize the price. The question is when will there be enough institutions for that to happen? -AI

Why have governments allowed cryptocurrencies to exist, even flourish, when they can so easily launder ill-gotten money and skirt around tax laws?

Governments and regulators around the world are really aware that bitcoin and other crypto are used by criminals. They have started to crack down, and tighten rules in some places. But it’s still the case that bitcoin and others are very, very small in terms of the global economy. They don’t yet pose any ‘systemic’ risk to real economies, so many say that governments won’t intervene until they grow bigger…. And also, because bitcoin lacks any central oversight, it’s likely that even if governments did come down hard on bitcoin, it would still exist. - TW