Reading Explorer 4: Unit 6 Lesson B

DIRECTIONS: Choose the best answer for each question.

The Rise of Virtual Money

It doesn't exist in any physical form, yet is increasingly used by people worldwide. Is virtual currency the
money of the future?

What Is a Virtual Currency?

[A] According to the European Banking Authority, a virtual currency is "a digital representation of value that
is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is
accepted [as] a means of payment and can be transferred, stored, or traded electronically." There are many
types of virtual currency, but the best known is probably Bitcoin.

[B] In online articles, or in newspapers or magazines, you may have seen pictures of gold or silver coins
marked with the Bitcoin symbol. However - since Bitcoins exist only as digital constructs - these are merely
representations. Bitcoin is a type of digital money known as a "cryptocurrency"; that is, it uses cryptography -
secure coding - to verify ownership of the money. The money can be sent electronically from one user to
another anywhere in the world.

[C] Unlike traditional currencies, Bitcoin is not controlled by a central bank or by a government agency. And
unlike credit cards, the Bitcoin network is not run by a company. There is no middleman between the parties
that are transferring money. It is operated by a global network of computers called a blockchain network,
which records every Bitcoin transaction in the world.

How Did Bitcoin Begin?

[D] The first reference to Bitcoin appeared in 2008, in a paper by a writer supposedly named Satoshi
Nakamoto. However, the name turned out to be a pseudonym 1 for a person or group who preferred to remain
anonymous. A year later, Bitcoin was released as open-source software.

[E] Bitcoin was not the first attempt at a cryptocurrency; others had existed in one form or another for nearly
50 years, but without much success. In a short space of time, though, Bitcoin became the first cryptocurrency
to be widely traded internationally. The first Bitcoins were mined in January 2009; within 200 days, one
million coins had been mined. By 2019, this had risen to over 17 million Bitcoins - worth a total of U.S. $65
billion - and more than 300,000 new transactions were taking place every day.

[F] In its early days, Bitcoin was known for its link with illegal drugs, such as those bought and sold on Silk
Road, an online black market set up in 2011. Silk Road connected customers and sellers on the Internet using
a network that concealed a user's location and identity - and it used Bitcoin for payments. Silk Road was shut
down by the FBI2 in 2013. According to some experts, the shutdown gave Bitcoin a chance to gain some
much-needed legitimacy. BitPay CEO Stephen Pair insisted that Silk Road's association would not prove fatal
to Bitcoin. He said that the shutdown "shows that just because you use Bitcoin doesn't mean you can evade
law enforcement."
 How Does Bitcoin Work?

[G] Each Bitcoin can be divided out to eight decimal places. That means you can send someone a minimum
of 0.00000001 Bitcoins. This smallest fraction of a Bitcoin - the penny of the Bitcoin world - is called a
"Satoshi."

[H] Like gold or other precious metals used as money, Bitcoins are scarce. But their scarcity is not natural or
accidental. New Bitcoins are added only by being "mined." Computer users on the blockchain network race to
solve increasingly complicated mathematical problems. The first to have a verified solution receives a
payment. It's like the high-tech equivalent of a gold rush. 3 The mined Bitcoin can then be traded using special
computer software.

[I] A useful analogy: Think of the blockchain network as an engine. Engines can be used to power all types of
vehicles: cars, boats, aircraft. Bitcoin is a vehicle that uses that engine. Because it was the first major virtual
currency to use blockchain, you could think of Bitcoin as an early model vehicle, like a Model T Ford. 4 More
sophisticated uses of this engine may occur in the future.

What Are the Benefits of Using a Virtual Currency Like Bitcoin?

[J] In most cases, financial transactions involve exchange fees, taxes, and payment delays to guard against
fraud. Virtual transactions, however, are speedy and cheap - and are settled immediately. And unlike a credit
card exchange, where credit card numbers and security information are handed over completely for any
transaction, a Bitcoin transfer is authorized only to pay a specific amount.

[K] Virtual currencies also make it possible to make a digital payment without needing PayPal or a credit
card. This is particularly useful in many parts of Africa, Latin America, and South Asia. Immigrants to
developed countries may find it a convenient way to send funds back home to their families.

[L] Bitcoin supporter Jonathan Mohan says, "The vast majority of [people on] the planet don't even own a
bank account … Just as in Africa, [people] went directly to cell phones. In these developing nations, you're
not going to see them start getting bank accounts. You're going to see them just going straight to Bitcoins."

What Are the Drawbacks of Bitcoin?

[M] The most obvious drawback is a lack of stability in the value of the currency. Bitcoin's independence
makes it more stable in principle than traditional currencies. In reality, though, its value has fluctuated wildly
over the time it has been in existence. In 2012, the price of a Bitcoin was about U.S. $12; by December 2015,
it had reached U.S. $400. Two years later, it reached a peak of almost U.S. $20,000, but then lost almost 80
percent of that value within a year. Those are some wild swings.

[N] So it is worth thinking twice before putting all or a substantial amount of your assets into a virtual
currency like Bitcoin. The rule of investing in virtual currency is the same as investing in stocks: Never invest
more than you can afford to lose.
1
A pseudonym is a name that someone uses in place of their real name.
2
The FBI (Federal Bureau of Investigation) is a government agency in the United States that investigates
crimes.
3
A gold rush is a situation in which a lot of people move to a place where gold has been discovered to try to
find gold there (e.g., the California Gold Rush of 1849).
4
A Model T Ford was an early model automobile, first sold in 1908.
____ 1. What is the purpose of this passage?
 a. to give information on virtual currencies, in particular, Bitcoin
b. to explain why purchasing Bitcoin is a good investment
c. to describe how Bitcoin can be used in different situations
d. to talk about the benefits and drawbacks of Bitcoin
____ 2. Which of the following is true about Bitcoin?
a. It operates on a blockchain network.
b. It was developed by a bank.
c. It was shut down by the FBI.
d. It was the world's first cryptocurrency.
____ 3. Where is Satoshi Nakamoto from?
a. Europe
b. Japan
c. Africa
d. nobody knows his true identity
____ 4. Based on the information given in the passage, what is Silk Road?
a. a historical trade route connecting East and West
b. a company that sell silk products online for Bitcoin
c. an online marketplace used for illegal transactions
d. the code name for a law enforcement task force
____ 5. As of 2019, how many Bitcoins have been mined?
a. 300,000
b. 1 million
c. 17 million
d. 65 billion
____ 6. Which of the following events happened first?
a. Bitcoin was released as open-source software.
b. The price of Bitcoin reached U.S. $400.
c. The online black market, Silk Road, was set up.
d. Satoshi Nakamoto released a paper on Bitcoin.
____ 7. In the fourth sentence of paragraph I, what does it refer to?
a. a blockchain
b. Bitcoin
c. an engine
d. a vehicle
____ 8. What does Jonathan Mohan mean when he says: The vast majority of [people on] the planet don't even own a
bank account … Just as in Africa, [people] went directly to cell phones.
a. Most people in Africa use cell phones to transfer money; they do not have bank accounts.
b. Most people in Africa didn't get landline telephones; they only bought cell phones instead.
c. Most people in Africa own cell phones if they have a bank account.
d. Most people can now open a bank account by using their cell phone.
____ 9. Which of the following is NOT given as a benefit of Bitcoin?
a. independence makes it stable
b. lower transaction fees
c. greater security
d. convenient way of sending funds
____ 10. Which of the following statements is the author most likely to agree with?
a. Bitcoin is most useful for criminals who want to conceal their identity.
b. Virtual currencies are only useful to immigrants from developing countries.
c. The price of Bitcoin is highly volatile, hence it is a risky investment.
d. Virtual currency is the money of the future, and will soon overtake fiat currency.

DIRECTIONS: Choose the best answer for each question.

From Clams1 to Credit Cards

[A] What is money? In its usual definition, money is essentially anything that is accepted as a medium of
exchange because people have confidence in it. But at a market in Yemen, I found quite a few people who
kept a more traditional view on what sort of money can be considered sound.

[B] At Suq al Talh, a Saturday market close to the ancient city of Sadah, I found bearded money changers
sitting on concrete steps. In front of them were piles of bank notes - Yemeni rials - and silver coins. The coins
were all dated 1780, and the lady on them was the Austrian Empress 2 Maria Theresa. A man had just bought a
thousand of them for 75,000 rials. I asked him why.

[C] "It is the main currency," he said. He explained that in this area these coins are omla saaba, meaning hard
currency. He then walked off with 27 kilograms (60 pounds) of silver in a bag. "He bought them to make a
profit," another man told me - they'd been going up in price; or, one might say, the rial had been going down.

[D] In the 18th century, when French traders came to the port of Mocha to buy coffee, the Yemenis didn't
want French money, but they liked the Austrian coin, called a taler, because of its high silver content. The
official Austrian mint in Vienna continues to turn out Maria Theresa talers, still dated 1780, and they are still
the preferred form of money not just in Yemen, but in many other parts of the world today. (Dollar comes
from the word taler.)

Clams, Coins, and Notes

[E] Money hasn't always been metal or paper. One of the oldest forms may have been a shiny clam shell, just
a couple of centimeters long, from the Indian Ocean. From it comes the Chinese character cai, representing
wealth or money. The earliest documented use of silver for payment appears around 2500 B.C. in
Mesopotamia. The coins were likely invented as a convenience to the state, to be used as a standard medium
for payments to officials and for public spending. But merchants, long used to settling accounts in precious
metals, must have found them useful, too; by using coins, they didn't have to do as much weighing for each
transaction.

[F] The earliest paper currency issued by a government appeared in China in the 11th century. A couple of
centuries later in Persia, the Mongol ruler Geikhatu tried to force people to use paper money, but merchants
refused to accept it. They closed their shops and hid their goods. Trade stopped. Geikhatu quickly revised his
policy. Despite these initial difficulties, paper money would eventually become common. The first European
bank notes were printed in Sweden in 1661, since coins were scarce. Soon after, paper notes were used
around the world.

The Value of Money

 [G] Back home I came across a formula3 that bankers and financial analysts know, that in fact everybody
should know - the rule of 72. The rule of 72 is quite simple: Divide any annual rate of return into 72 and the
answer is the number of years it will take for a sum to double. For instance, say your annual salary raise is 6
percent; that number goes into 72 twelve times, so in twelve years your salary will double. And what if, at the
same time, inflation runs at 6 percent a year? Then after a dozen years, your money will be worth half as
much! But look what can happen if inflation doesn't run at 6 percent, but rises at a much faster rate: when that
happens, inflation can run wild. That can occur when governments issue more and more currency to cover
increasing obligations as prices rise.

[H] The most extreme inflation ever? Hungary, 1946, after World War II, when Germany had taken away the
national bank's gold reserves. By June, the Hungarian pengo appeared in notes of
1,000,000,000,000,000,000,000. Then the gold came back, confidence returned, and in August, Hungary had
a stable new currency, the forint.

Toward a Cashless Society?

[I] Less than ten years after World War II, a new means for payment in place of currency began to spread
from the U.S. to much of the world - the use of so-called plastic money, meaning charge cards and credit
cards. ATM cards4 have since spread around much of the world, while charge card payments are now
common everywhere from gas stations to supermarkets.

[J] From metal to notes to plastic, money has come a long way since its early days in ancient Mesopotamia
more than four thousand years ago. Soon, perhaps, we will all be living in a world where money is virtual,
where notes, coins, and plastic cards are things of the past. In whatever form it takes, money will likely
continue to play a central role in our lives, providing the fuel that keeps society moving.
1
A clam is a sea creature with two hard shells.
2
An empress is the female ruler of a group of nations.
3
A formula is a rule used in math.
4
An ATM card is a plastic card that can be used to take money from a bank account (ATM refers to an
automated teller machine.)

____ 11. Which would be the best alternative title for this passage?
a. Coins Now and in the Past
b. From China to the World
c. A Brief History of Money
d. From China to the World
____ 12. What word is closest in meaning to sound in the last sentence of paragraph A?
a. distinctive
b. expensive
c. old-fashioned
d. reliable
____ 13. To the Yemenis in this article, what is omla saaba (hard currency) represented by?
a. Austrian talers
b. 18th-century French coins
c. U.S. dollars
d. Yemeni rials
____ 14. Which of the following is closest in meaning to this sentence from paragraph G?
 ... when that happens, inflation can run wild.

a. When that happens, inflation can go down quickly.

b. When that happens, inflation starts to go up little by little.
c. When that happens, inflation can go out of control.
d. When that happens, inflation will suddenly stop.
____ 15. Which of these forms of currency suffered the worst inflation?
a. the rial
b. the taler
c. the pengo
d. the forint
____ 16. What is the function of this sentence?

At Suq al Talh, a Saturday market close to the ancient city of Sadah, I found ...

a. quoting
b. cause-effect
c. condition
d. naming
____ 17. What is the function of this sentence?

"He bought them to make a profit," another man told me - they'd been going up in price; or, one might say,
the rial had been going down.

a. defining
b. classifying
c. quoting
d. reporting
____ 18. What is the function of this sentence?

The first European bank notes were printed in Sweden in 1661, since coins were scarce.

a. quoting
b. cause-effect
c. condition
d. naming
____ 19. What is the function of this sentence?

The rule of 72 is quite simple: Divide any annual rate of return into 72 and the answer is the number of years
it will take for a sum to double.

a. defining
b. classifying
c. quoting
d. reporting
____ 20. What is the function of this sentence?
 But look what can happen if inflation doesn't run at 6 percent, but rises at a much faster rate: when that
happens, inflation can run wild.

a. reporting
b. cause-effect
c. condition
d. naming

DIRECTIONS: Complete the sentences using the words in the box.

drug principle stocks supposedly verify

21. Bonds have an inverse relationship to interest rates, so when interest rates go up, bond prices should, in
____________________, fall.

22. He has a track record of always picking the best ____________________ to invest in.

23. The child's parents were both ____________________ addicts, so she was put in custody of the state.

24. The bank teller checked her passport to ____________________ her identity before letting her open a savings
account.

25. That old coin he keeps in his vault is ____________________ a very valuable ancient Roman artifact.

DIRECTIONS: Complete the sentences. Choose the correct word.

a. sophisticated
b. fraud
c. assets
d. scarce
e. drawback
____ 26. Food is _____________ during the winter, and bears have to hibernate to conserve energy.
____ 27. He invested a large amount of his _____________ into stocks.
____ 28. The job sounds great, but the _____________ is that the pay is low.
____ 29. He committed _____________ by lying about his income to avoid paying taxes.
____ 30. Dolphins have a very _____________ communication system.
Reading Explorer 4: Unit 6 Lesson B
Answer Section
1. ANS: A PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Purpose TOP: Money and Trade
2. ANS: A PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Detail TOP: Money and Trade
3. ANS: D PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Detail TOP: Money and Trade
4. ANS: C PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Detail TOP: Money and Trade
5. ANS: C PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Detail TOP: Money and Trade
6. ANS: D PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Sequence TOP: Money and Trade
7. ANS: B PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Reference TOP: Money and Trade
8. ANS: A PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Paraphrase TOP: Money and Trade
9. ANS: A PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Negative Detail TOP: Money and Trade
10. ANS: C PTS: 1 REF: Page 107 | Page 108 | Page 109
OBJ: Inference TOP: Money and Trade
11. ANS: C PTS: 1 REF: Unit 6 OBJ: Gist
TOP: Money and Trade
12. ANS: D PTS: 1 REF: Unit 6 OBJ: Unfamiliar Vocabulary
TOP: Money and Trade
13. ANS: A PTS: 1 REF: Unit 6 OBJ: Unfamiliar Idioms
TOP: Money and Trade
14. ANS: C PTS: 1 REF: Unit 6 OBJ: Paraphrase
TOP: Money and Trade
15. ANS: C PTS: 1 REF: Unit 6 OBJ: Supporting Detail
TOP: Money and Trade
16. ANS: D PTS: 1 REF: Page 103
OBJ: Understanding the Function of Sentences TOP: Money and Trade
17. ANS: C PTS: 1 REF: Page 103
OBJ: Understanding the Function of Sentences TOP: Money and Trade
18. ANS: B PTS: 1 REF: Page 103
OBJ: Understanding the Function of Sentences TOP: Money and Trade
19. ANS: A PTS: 1 REF: Page 103
OBJ: Understanding the Function of Sentences TOP: Money and Trade
20. ANS: C PTS: 1 REF: Page 103
OBJ: Understanding the Function of Sentences TOP: Money and Trade
21. ANS: principle

PTS: 1 REF: Page 112 OBJ: Vocabulary TOP: Money and Trade
22. ANS: stocks
 PTS: 1 REF: Page 112 OBJ: Vocabulary TOP: Money and Trade
23. ANS: drug

PTS: 1 REF: Page 112 OBJ: Vocabulary TOP: Money and Trade
24. ANS: verify

PTS: 1 REF: Page 112 OBJ: Vocabulary TOP: Money and Trade
25. ANS: supposedly

PTS: 1 REF: Page 112 OBJ: Vocabulary TOP: Money and Trade
26. ANS: D PTS: 1 REF: Page 112 OBJ: Vocabulary
TOP: Money and Trade
27. ANS: C PTS: 1 REF: Page 112 OBJ: Vocabulary
TOP: Money and Trade
28. ANS: E PTS: 1 REF: Page 112 OBJ: Vocabulary
TOP: Money and Trade
29. ANS: B PTS: 1 REF: Page 112 OBJ: Vocabulary
TOP: Money and Trade
30. ANS: A PTS: 1 REF: Page 112 OBJ: Vocabulary
TOP: Money and Trade