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From the Heritage Foundation, I'm Michelle Cordero, and I'm Emily Vanderbush.

And this is Mass Ave.

Bitcoin. Have you heard of it? It's that magic internet money.

How does Bitcoin work and how does it reinvent our current currency? So are we

underestimating the potential threat from Bitcoin as it runs up in value? We want to turn to

Bitcoin. This has been the headline of the moment, certainly all weekend as well, as well as all

year. But how does Bitcoin actually work? Can you really buy stuff with it?

And our digital currencies here to stay?

Today we're tackling this issue and trying to break down the super complicated idea of cryptocurrencies.

We talked with Norbert Michelle, director of Heritage's Center for Data Analysis, who has written a lot about Bitcoin.

Hi, Norbert.

Hi, Michelle.

Thanks for joining us. Thanks for having me.

Okay. Let's take this at a really 101 level. What is Bitcoin? Bitcoin is the world's first

digital or electronic currency that was neither produced by a government nor backed by any physical commodity.

So it's a form of money and it's not produced by a government.

And it's not backed by anything.

How are Bitcoins created then, if they're not printed or produced by the government?

They're created by an underlying process called mining that verifies they're being legitimately used.

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