Bitcoin: The End Of Money As We Know It traces the history of money from the ancient world to modern Wall St. trading floors.
The documentary exposes the practices of central banks and other financial players that brought the world to its knees in the last crisis. It highlights the influence of government in the money creation process and how it causes inflation. In addition, this film explains how most of the money we use today is created out of thin air by commercial banks when they make loans.
Epic in scope, this film examines the patterns of technological innovation and questions everything you thought you knew about money. Is Bitcoin an alternative to debt-backed national currencies? Will Bitcoin and cryptocurrencies spur a revolution in the use of peer-to-peer money? Or is it simply a new tool for criminals and the next bubble about to burst? If you trust your money as it is, this movie has news for you.
Translated with www.DeepL.com/Translator (free version)
- [Voiceover] Look closely
What do we all have in common? No matter what corner of the world you live in, You need food, water, shelter and money
Half of every transaction involves money, in exchange for goods or services
Stocks, a loaf of bread, illegal drugs, You gotta pay for it
We spend much of our live chasing money to make a living, and accomplish our dreams
But it's also an instrument of destruction
Some might say evil
Driving criminals to lie, steal and even murder
- The existing banking system, extracts enormous value from society and it is parasitic in nature
- [Voiceover] Money is a catalyst for the worst and the best of human endeavor
Before civilization, we created currency
Fuel for wars
The path to power
Champion and enemy of innovation
Money is so integral to our society, and our global economy, that its true nature remains a mystery to most
This is the story of money
Perhaps the end of money as we know it
No matter how fat your bank account, or how thin your wallet
To us it's all cold, hard cash
There are some who want to kill it
Get rid of it
Burn your dollars, your euros, your yen, and transform every penny you have, into ones and zeros
Digital currency entrusted to the web and computers spread across the planet
Magic internet money
It's called cryptocurrency, Bitcoin
Invented in secret, it was a gift to the world
- It's not just a currency, but it's actually programmable money
- [Voiceover] A potential curse on bankers
- I mean, there's nothing that the big banks or politicians can do to stop it
- [Voiceover] Breaking every governments grip on money supply
- What the internet did for information, Bitcoin is doing for money
- Could it be the new gold? - No, you have to really stretch your imagination, to infer what the intrinsic value of Bitcoin is
- Regulators, the Federal Reserve, the banking system, at least understand this is a thing that they have to take seriously
- This going to change the economic culture
- Bitcoin could be a micro-economic miracle worker and it could be a macro-economic wrecking ball
- [Voiceover] Is Bitcoin the currency of the future, a Godsend for criminals, or a recipe for financial disaster? If you trust your money just as it is, we have a little story to share
(dramatic instrumental music) Once upon a time there was a big party, with everyone standing around the punch bowl, drunk
Politicians credited the strong economy to their wise decisions
Businesses jumped into new profitable markets, ignoring risk
If fact the experts said there was no risk
Then, troubling market data from minor countries, spooked the markets
Rumors spread
More bad news rattled housing prices, at the heart of the financial world
A major bank went insolvent
Investors and businesses made a run on the other banks, demanding their cash deposits
The largest financial institutions in the center of the modern world were frozen
Assets were seized, banks foreclosed
A credit crunch threatened the entire world economy, and then finally, the government stepped in
The largest bank bailout ever
Swift action by the head of state had saved the day
Remember that? No you don't
It happened 2,000 years ago
Rome, 33 A
D
Ground zero for the first recorded liquidity crisis and government bailout in history
The largest empire the world had ever seen, was brought to its knees by a banking disaster
Emperor Tiberius used money from the National Treasury, to bail out the country's troubled banks and companies
History may not repeat itself, but it certainly rhymes, badly
People in power and their money, have always been at the very center of it
(violin instrumental music) The story of money is as old as civilization itself
When we lived in small tribes, keeping track of debt was easy
You owed somebody a load of firewood
A neighbor owed you a piece of meat
Credits and debits were kept in your head
A mental ledger
- Currency's a language that allows us to express transactional value between people
It's technology that's older than the wheel
It's as old as fire
- [Voiceover] When humans wanted to trade outside their tribe or village, they needed something, everyone could agree had value
Something scalable
Enter commodity monies
There were many kinds, but each had to embody the same five characteristics
A commodity money is relatively scarce, easily recognizable, can be cut into smaller pieces
You can substitute one piece for another of equal value
And you can carry it around without too much trouble
In ancient Rome, it was salt
The Aztecs used Cacao beans
It was whale teeth on Fiji
Yak dung in Tibet
Shells in Africa and China
Grains, metal, ivory, rare stones, leather, fish
If it had the five characteristics of commodity money, someone probably used it as currency
- And then you ask, what value did these currencies have? If you go into a primary school, you'll see children exchanging rubber bands and Tamagotchi and Poke-man cards and baseball cards and sweets and candy and any other form of currency
People invent currency, when they have no other currency
And now they're going to invent digital currencies
- [Voiceover] But commodities that aren't durable, are a lousy store of value
A bad Cacao crop, or a huge new salt discovery, can throw your currency and economy into turmoil
A more stable system was needed
About 2,500 years ago, the first metal coins were minted in China, and in what is now Turkey
These coins shared the same five characteristics with commodity money, but were also very durable
In some cases, coins are the only thing left of entire civilizations
- Money does not originate with governments
Money arises naturally, as markets begin to develop
And as people with a division of labor realize, that if I have eggs, and you have a cow, we may need some medium of exchange, in order for you to buy my eggs, or for me to buy your cow
- [Voiceover] Coins were an objective and universal unit of account and they allowed people to buy and sell goods over vast regions
The market economy was born
Coins worked, but only if people trusted that the king or emperor, who issued them, wasn't cheating on the metal content
Using coins also meant, that an authority now controlled the supply of your currency
Money and political power, were inextricably linked, centralized
Minting coins in a steady and predictable manner, allowed economic growth and stability
The Wu Zhu coin in China, retained its value for 500 years
In Constantinople, the solidus lasted for 700 years
- But in those times, the coins didn't have the milled, this sort of milled edge
They were flat, and what used to happen, was as coins were passing from people to people, people would cut little bits off
And in fact, some of the taxation that the kings would do, would actually be take one eighth of the coin off
- [Voiceover] Taxes built castles, and financed military campaigns, expensive hobbies
Soon, royal mints were substituting cheaper metals, for silver and gold
This is called debasement
And Europe's kings made a habit of it
The currency of France was debased every 20 months, for 200 years
If no one can trust the gold or silver content of your coins, how can you trade with other countries? International merchants found a solution
They recognized that one persons debt, has value
It can be traded or transferred
When those IOU's came from reputable sources, they could be used as a form of money
Paper money
This money was not based on hard commodities, or metal, but instead, on someone's promise to pay
Merchant families like the Medici, in 15th century Florence, acted as clearing houses for these IOU's
It worked like this
An English trader ordered a shipment of Italian cloth, from the Medici for 100 gold coins
His promise to pay the Medici was put on paper
Meanwhile, the Medici owed 100 gold coins, to another trading partner, for delivery of wine from France
The parties didn't go to the expense of transporting and exchanging gold coins
Instead, the paper was transferred
Everyone agreed that the paper had value, 100 gold coins
But only because the everyone trusted the Medici, as solvent middlemen
They had created a paper money machine
Within a few generations, they rose from low crime to high finance
Their great wealth, helped fuel the Italian renaissance and elevated the family to levels of enormous political power
The power to marry into royal families and get elected as popes
The ties binding money to power, politics and influence now ran through church and state
Merchants had proven that creating paper currency could be wildly profitable
Goldsmiths wanted in on the action
- Imagine it like this, if the goldsmith had seen over a period of time that some of the coins he is storing for people were gathering dust
The people who own them, don't need them right now
So what if I go and lend them out into the community and I charge them interest on this loan
So he starts out lending some of these gold coins and then later he realizes, actually people don't even want the gold coins they just want the piece of paper that says that the gold coins are in the bank and with the goldsmith
So I can now make a loan with these pieces of paper
And whatever I write on the piece of paper, as long as the people trust me, they'll trust the paper
And effectively the goldsmiths, the early day bankers, they had literally acquired the power to print money
- [Voiceover] More and more such private paper money from merchants and banks circulated and began to rival the crown's coins
The power inherent in controlling and issuing money began slipping away from the rulers
They couldn't tax or de-base this new kind of money
But they had bigger ambitions than ever with trading posts, colonies, and empires that now stretched across the globe
For centuries, European countries would take turns building massive fleets and waging war on each other to rule the world
(yelling) - Government wanted to take the people's money in order to finance its wars
That's essentially the history of money
Money and warfare go together
- [Voiceover] War is expensive
One year's income taxes simply aren't enough
Kings and queens had to borrow money against future taxes
They needed a ground breaking financial innovation, government bonds
The loans came from rich merchant families and goldsmiths, who by now had become powerful financiers and bankers
Sovereign debt and deficit spending had been born
(upbeat instrumental music) In 1694, the bank of England was established to fund a war against France
England's central bank was privately owned and granted the monopoly to issue banknotes, paper that could be redeemed for an equal amount of gold from the government's coffers
The central bank soon also managed the entire debt of the crown
- Money has been a tool of sovereignty for centuries
Being able to issue currency gave you the power but it also gave the value to that monetary supply by backing it with the force of state with essentially the debt of state
- [Voiceover] When the U
S
won independence from Britain, the first article of the new constitution gave congress the exclusive right to "coin money"
This currency's value was tied to gold in government vaults
From 1781 until the panic of 1907, the financial system of the U
was an economic Petri dish
Brief central banks, state banks, private banks, private currency, government currency, depressions, strong growth, recessions, regular boom and bust cycles
- The long term, as far as capital is concerned, people want predictability, people want stability
From the back of that they can plan and it is very hard to plan in the long term with it such a level of volatility
- [Voiceover] In 1913, bankers and politicians decided that it was in the country's best interest, and theirs, to have a permanent central bank
They created the Federal Reserve
Among its jobs, expand or contract the supply of a single national currency, the Federal Reserve note
The dollar was tied to gold and strategic control of it would avoid booms that lead to busts
At least that was the plan
Then came 1929
(yelling) The great depression would have a profound effect on monetary policy worldwide
- [Roosevelt] I shall ask the Congress for the one remaining instrument to me the president, broad executive power
- [Voiceover] Soon, the Fed had printed nearly all the money it legally could to pump life back into the economy
It needed gold to fire up the mint
So in 1933, President Roosevelt issued a controversial executive order, forcing all U
citizens to sell their gold to the Federal Reserve at a fixed price, or go to prison
The Fed offered far more cash to foreign governments for their gold
Many jumped at the offer
Gold flowed in, and dollars spread across the globe
World War II devastated nearly every major economy, except the United States
The military and industrial juggernaut emerged as the global financial super power
The dollar had become the world's most stable and trusted currency
Other countries pegged their currency to the dollar, which could still be redeemed for gold
In fact, the U
owned more than half of the world's gold reserves
In the next few decades, more dollars flowed to foreign countries
Governments began debasing their coins with cheaper metals and printing more of their own currency than they had in gold
The bond between precious metals and paper currency was cracking
- This is a 1966 50 cent piece
It was the last coin in regular circulation in Australia to contain silver
It contains 80% silver, so in 1966, this was 50 cents
Nowadays it's 8 dollars, roughly, in silver alone
- [Voiceover] By 1966, foreign nations had had enough of the U
collecting gold and printing cash
And they had more value in dollars than the U
had bullion in its vaults
They demanded gold in return for their paper dollars
Arguments about the value of the dollar versus their currency ensued
In 1971, President Nixon settled the matter
He severed United States' currency from the gold standard
- I directed Secretary Conelly to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and the best interest of the United States
- [Voiceover] Never again could anyone legally demand U
Government gold in exchange for paper dollars
For better or worse, the dollar was now backed solely by the full faith and credit of the United States Government
The wealthiest nation the world had ever known would bet its future on a single word, trust
- People have this mythology of money that is based on very little fact
And one of the nice things about Bitcoin is that it forces people to start to ask questions about the fundamentals of money
- A Bitcoin is an attempt to adopt the advanced computerized system that we have, the internet, to resurrecting to what money used to be all about
(upbeat instrumental music) - I think our dollar policies our monetary policies our fiscal policies have absolutely created a nation of debtors
Not just personal debt, not just corporate debt but government debt, you have to look at those all together as one big thing
What is the wealth of the nation? Well, the wealth of the nation is a gigantic hole of money that we owe to the rest of the world, that is never going to be paid back
- [Voiceover] Today the United States pays more than 400 billion dollars in interest to its creditors, every year
When a government spends more money than it collects in taxes, it simply borrows more or it creates more
At one time, every piece of paper money was backed by gold
Remember, for every 20 dollar bill, there was $20 worth of gold in a government vault
Not anymore
Today, governments create currency by first creating bonds or treasury-bills
These bonds are sold in the market, generating funds for the government that issued them
Large banks buy U
bonds to flip them, selling them to the Federal Reserve at a profit
This is the magic money machine
You see, the Fed is America's central bank
But it doesn't have any money, no cash on its balance sheets
When a bank buys a bond and takes it to the Federal Reserve, the Fed simply says "thank you Mr
Banker, "here's the principal and some profit
" (ching, ching) New money isn't exchanged, it simply appears on the bank's accounts
Magic
For 100 years and counting, the precise mechanisms of these bond purchases have remained a secret
Here's where it gets really interesting
The Federal Reserve is not a Government agency
It's a private entity and its shareholders are banks which earn a dividend
As much as 80 billion dollars per year, total, are paid out to some of the very same banks that sell the Government debt to the Fed
Which banks? Don't even bother asking
That's also a secret
In other words, the magic money machine answers to no one
The Fed also sets the bar for how much interest you pay for a car, home, or business loan
- The Federal Reserve has been given the impossible task of trying to run the credit and monetary system as though we are the Soviet Union
It's the central planner for the key aspect of capitalism which is how money and credit is allocated
The Federal Reserve, on balance, does not help the economy
On balance, it hurts the economy
And it's bound to make mistakes even with the best of intentions
- [Voiceover] The Fed is also supposed to boost employment with low interest rates
Encouraging people and businesses to buy more goods and services
- Governments getting involved in money is a good thing, and it's also a bad thing
It's a good thing because money is the arteries of the economy, the blood supply of the economy
Markets are subject to bouts of euphoria and despair
And it makes sense for governments to back currency and to manipulate it
Moving the money supply up and down is the most powerful way to sedate that boom and bust cycle
- [Voiceover] Manipulating the supply of money has short term and long term consequences
(instrumental music) Central banks aim to create new money carefully, strategically and very, very slowly
Releasing more money into the economy cause prices to rise, ideally by 2% every year
That's supposed to foster economic growth
But, 2% inflation means the buying power of one cash dollar in your pocket today, will be 98 cents next year
And less nearly every year to come
- Since 1913, when the Federal Reserve took over the United States dollar, we've seen that the United States dollar has decreased in value 98%
Inflation is a far higher tax because on your income you pay it just once
If inflation is 2%, you're paying a 2% tax on your net worth every single year
Your net worth that you held in currency
- [Voiceover] So, what does that mean? If you earned a dollar in 1913, you could buy 16 loaves of bread
Today, a dollar barely buys you one
That's not a quaint notion of how cheap things used to be
It's proof that the value of your cash is slowly withering away
That one dollar invested at 2% in 1913 would now be worth 7 dollars and 24 cents
More than a 600% return versus a near-total loss
- The U
dollar has gone from being worth one dollar to now being worth about 4 cents, so that's 96% of its original value
That's a direct result of government control
- [Voiceover] Governments don't create money from thin air all alone
You play a key role in the magic money machine
- It's not really the central banks that are the problem
They are part of the problem
But the real problem is that we've given the power to create money to the same banks that caused the financial crisis
- [Voiceover] We put our paychecks and savings into a bank account and draw from it as we need it
The banks are the custodians of our money, right? Wrong! It is now the property of the bank, on their balance sheets
They can do just about anything they want with it, for example create new money
Here's how, your bank account shows 100 dollars, but the bank only holds three and loans 97 to Bob to buy something
In the bank's computers, you still have 100 dollars in your account
But Bob now has 97 dollars of new virtual money in his account
Just digits on a computer screen
There's no cash, no gold, or anything else backing up the new numbers in Bob's account
Just his promise to pay it back
This is new money created as debt
When those 97 dollars are spent, say in a shop, the shop owner deposits it into another bank and it is lent out again and again and again
And each of these people have numbers in their accounts showing that they own this money
So your original 100 dollars has multiplied, now there are over 3,300 dollars in the system
This process of loaning out far more money than a bank actually has, as cash on hand, is called fractional reserve banking
- In the U
K
, 97% of the money that exists, is just numbers in the computer system
And those numbers have been created by the banks
- [Voiceover] Banks earn untold billions in interest every year by creating and lending virtual money
What's more, banks don't even need your deposit to create new money
If they consider someone credit-worthy for a loan, they can put new magic money into his or her account, and start charging interest
- So, reporters talk about Bitcoin as though it's the first digital currency
But actually we use digital currency every time you make a transaction through internet banking, or your bank card
Actually it's not only digital currency it's digital currency that is created by the banks, essentially, out of nothing
- [Voiceover] In other words, all new money is debt
This is the part of money creation that isn't taught in economics class
Money in paychecks, bank accounts, 401ks, that loan to Bob, credit card debt, your homeloan, all began life as virtual money created by the banks
The entire system is based on trust
Trust in the bank's solvency
Trust in the debtor's ability to repay their debt
If all bank customers demanded just 3% of their deposits right now, in cash, this "run on the banks" would reveal the truth
Almost none that paper currency you think is in your bank account exists
It never did
(birds chirping) Remember the drunken party? (rock instrumental music) Our financial crisis had everything to do with virtual dollars
Too many people, with very little income, borrowed a lot of money they could never repay
But the banks didn't care
They didn't have to
They quickly made and sold shaky loans to someone else, for a profit
- And I got them all approved
- Hey! (laughter) - Apply now
- [Voiceover] Selling bad loans was a good business, until the whole thing blew up in a global financial crisis
The magic money machine destroyed 30 million real jobs
The United States alone lost 16 trillion dollars in household wealth
And the banks foreclosed on more than 1 million homes
(angelic instrumental music) Selling subprime loans and betting they will fail, may not be sacred, but it is lucrative
As much as a quarter of our best and brightest are being lured by the siren call of the money machine
Instead of science, engineering, or medicine, they chose a career playing with, betting with, other people's money to get rich quick
Very rich
And sometimes, they take shortcuts
? Get by on a nickle and a dime, ? Money has a funny way of bringing us down ? They say it makes the world go round and around? - My ancestors in Greece talked about the corrupting influence of power
And nothing has changed in these 3,000 years
When you give control of a massive amounts of money to a few individuals, they will take advantage of that control
? Oh, oh, oh - Banks today are factoring in fines and money laundering and all the rules that they break into their cost of doing business
JP Morgan is today coming out and saying that Bitcoin is not a legitimate way of doing business
Banks today are tied into a system that is completely rigged to basically harvest money from the entire global economy and pump it into the hands of the very few
? Don't get consumed by your greed ? La la la la la la - The existing banking system is cozy
Its captured the regulators, it extracts enormous value from society without delivering anything in return and it is parasitic in nature
- The banks play a very pivotal role in an economy
You look at any successful economy it has successful banks
There is a very close correlation with banking profits and the economy as a whole
- [Voiceover] In Medieval Europe, a banker who couldn't repay depositors was hanged
Today, that same banker would get bailed out, paid bonuses and enjoy some tax benefits, too
To date, no senior U
banking executive has been charged for selling the bad loans that fueled the great recession
In December 2014, just 6 years after the last banking crisis brought the world to its knees, a Congressman snuck a last minute provision, written by Citigroup into a crucial funding bill
The provision allows the largest U
banks to once again make risky derivatives bets with bank deposits
But no need to worry, if the banks implode again, lost deposits must be paid back by U
taxpayers
(bell rings) Today's financial innovators package assets in ever more complex ways, slicing, dicing, securitizing, always using someone else's money
They sell debt, transfer risks, leverage bets
That's what they call innovation
- When you're talking about financial innovation, Bitcoin certainly is a very good example of innovation, but there's also been other innovations that people, a bit closer to the world of finance would cite as good examples
An example of that would be the original swaps market, from there moving on to the credit default swap
It is an excellent example of financial innovation
But also if it's used incorrectly, it can create a lot of problems as we've just seen
- [Voiceover] History teaches that the most revolutionary and disruptive innovation nearly always comes from the fringe, not from corporate cubicles
True innovators see the world differently
They see the big picture
Creating new products and entire systems that lead to new industries
Steve Jobs called them the "square cogs in round holes"
- It's unsurprising that new innovations always come from a niche group of early adopters because it is inherently very hard for many people to realize the benefits of new technologies
In 2011, most Bitcoin community people were either people from the technology space, the geeks and hackers, or people from the traditional financial industry
There are even some bankers and hedge fund traders using Bitcoinica at that time as well, which was really surprising to me
- [Voiceover] A radical new idea is often met with skepticism, ridicule, even hostility from those who stand to lose most from its success
Case in point, the automobile
In the late 19th century, Karl Benz and others built the first cars, contraptions that could threaten the stagecoach and railroad industries
These "self-propelled vehicles'" or road trains, would certainly scare horses, injure people and damage roads
Cars, the railroad barons said, were just too dangerous
And to protect us, they used their power to pass a law in 1865
It required every automobile in England to observe a four mile per hour speed limit and to be operated by a crew of three, a driver, an engineer and a flag man
This heroic flagman walked in front of the car to warn fellow citizens of the coming danger
The railroad tycoons, the lawmakers, the self-appointed gatekeepers used regulation to stifle innovation
But they didn't invent the flagman
He's been around for a long time
For centuries, very few could read
Books were copied by hand
The people in control, political and religious leaders, wanted to keep it that way
And they greeted Johann Gutenberg's printing press with licensing laws, publishing bans, taxes
In some parts of the world, printing was a crime, punishable by death
After all, they were just protecting us from dangerous ideas
Before the printing press, there were an estimated 30,000 books in all of Europe
50 years later, there were 10 million
As Gutenberg's invention flourished, the Dark Ages withered
Progress couldn't be stopped
But the flagman never stops trying
His masters set him loose on each of these innovations because they threatened someone's profits, someone's control
But remember, this is a story about money
What if a technological innovation allowed anyone in the world to be their own bank, to create a currency free from taxes and banking fees? The U
Constitution forbids citizens from printing or minting their own currency, competing with or undercutting reliance on the U
dollar
In 1998, Bernard von Nothaus decided to test the resolve of the federal government
- The Liberty Dollar was available in gold, silver, platinum, and copper
It was available in three forms, both in specie, in other words, gold and silver, in paper, as warehouse receipts and in digital form
Obviously, the government didn't like it
They arrested me and convicted me of counterfeiting, fraud, and conspiracy
And i'm currently awaiting 22 years sentence in federal prison
- [Voiceover] Lesson learned
- At a hacker's convention in Netherland, there was a young hacker there who used the alias of Satoshi Nakamoto, and he talked to a friend of mine and he identified the Liberty Dollar and me as inspiring him to create a new currency
- [Voiceover] Bernard von Nothaus's arrest for creating "private money", may also have inspired Bitcoin's inventor to keep a lower profile, publishing the invention under an alias and vanishing
- Part of me is interested to know who Satoshi is
Maybe that's part of the mystique of the story, it's completely irrelevant to the functioning of Bitcoin because we have the code to read
But it would be kind of fun to know
- Who is Archimedes? Who is Euclid? We don't know
We don't know if Euclid was one person or multiple people? And you know what? It doesn't matter
Euclidian geometry works whether i know who Euclid was or not
Whether Euclid was a moral and good person
Or whether he was a corrupt plutocrat and a bastard
Science and mathematics have essential truths that stands alone irrespective of its inventors and irrespective of their motives
Well, Bitcoin is a system based on mathematical truths
And these mathematical truths stand alone
We can read the source code in Bitcoin and understand it and it will be true whether Satoshi Nakamoto is a man, a woman, a collection of individuals, a government agency or aliens from the future
- [Voiceover] Bitcoin is digital currency and computer software
Capital b Bitcoin is the shared code that creates a global payment network, using computers connected to the internet
Bitcoins are virtual currency
Digital money created, stored and exchanged on that network
But unlike virtual dollars created by a banker, this new currency was created with math by an anonymous inventor
Bitcoin is an open-source software protocol, like much of the code supporting the internet and email
Open-source means anyone, everyone can use the protocol
No one person or company can control it
Every change to the software is public, open and transparent
The code was first developed by Satoshi
Then there were dozens, now hundreds of programmers constantly collaborating to improve Bitcoin's features and security
So what makes Bitcoin a breakthrough? It tackles an ancient human dilemma and solves a computer science problem
Any shared information, or data can be flawed, corrupted
Anything can be faked
How do we know that what we're receiving can be trusted? - In our traditional mindset, it's very important to know who is behind this currency because their reputation is significant in knowing that our funds in the true wealth is actually safe
- [Voiceover] In finance, we rely on trusted third parties like banks, credit card companies, remittance services
They keep track of money as it moves from one account to another
And they charge us handsomely for it
We trust that their digital ledgers of credits and debits balance
A financial system that cuts out these middlemen could be faster, cheaper and more secure
But Bitcoin is digital
Music and movies are easily pirated, copied, stolen
How can a digital currency retain value if anyone can make a million copies? The answer is at the core of Satoshi's invention
A Bitcoin is not a file on a computer
It's an entry in the publicly- distributed database called the blockchain
Just as the Medici kept a ledger of credits and debits
Today's banks record each transaction as a plus and minus in their ledgers
Now we call them databases
Bank accounts are replaced by a digital wallet that you alone control
Bitcoin's ledger is the blockchain
A record of every bitcoin in existence and every bitcoin transaction ever made
It always balances because no bitcoin ever leaves it
When a bitcoin is "sent" from one digital wallet to another, what they are really sending is control over that part of the database
Code that is a unique key for the new owner
As the network processes transactions, it constantly synchronizes the one ledger across the global network
Each computer, or Bitcoin miner, has a complete and identical copy
And because the blockchain is public, it cannot be controlled by any one person or computer
Owners of the Bitcoin mining computers are rewarded with new Bitcoins for processing transactions and keeping the network secure
In other words, the Bitcoin network replaces banks and bankers
Today, the combined computing power of this global network is greater than the 500 biggest supercomputers combined, times 10,000! And because every transaction is verified and recorded by the network, a bitcoin cannot be forged
Digital currency cannot be debased with cheap metals, or printed by the billion at will
Too much currency can unleash a monster, skyrocketing prices, trillion dollar bills that can't buy a loaf of bread
- There is a big movement in the U
demanding that the Fed be audited so that we can find out what they are doing
Nobody really knows how many dollars are in existence for example
Ben Bernanke created several trillions of dollars over the last several years
But nobody really knows where they landed
- At any time for any reason, the central banks can print as much money as they want
They call it fancy things like quantitative easing
And when they do that it makes the dollar or euros or yen that you and I have worth less
So if the world starts using bitcoin as their currency it can't be controlled by central bankers or politicians
- [Voiceover] Remember, central banks create money to boost the economy and try to pull it back out before inflation heats up
But no one knows how much magic money global banks are creating to boost their profits with questionable loans
- Bitcoin is completely the opposite
It's totally transparent
You know exactly how many exist
- [Voiceover] The computer code behind Bitcoin has a built in brake pedal, cutting the creation of bitcoins in half every four years
This ensures a transparent controlled scarcity and ultimately limits the total number of bitcoins to 21 million
No lobbyist, no politician, no banker can create more, or change the mathematical rules dictating their creation
- Advancing accountability
And that's something that's the most exciting about Bitcoin and technology behind it
Is not so much that it will supplant the dollar or that it will supplant government itself
But all of a sudden there is a competitor to government
And that government itself now needs to look over its shoulder more than it did
- [Voiceover] This new digital currency can be purchased online with a credit card or in person with cash
And it has the five key characteristics of money
But is it a store of value? Is it stable or will it diminish over time, like a commodity rendered useless, or a crop that fails? The ultimate power of a cryptocurrency is unleashed by mainstream adoption and an ever-growing volume of transactions
- With bitcoin, the currency is being created much more slowly than other currencies
And the effect of that has been to turn it into what is essentially a speculative asset
If you ask a lot of Bitcoin enthusiasts whether they are spending the currency, they're not
They're sitting on it and waiting for the price to go up
It isn't a currency if you don't use it to pay people
The point is that the average person is quite happy to walk into a bar and hand over a five dollar note in order to get a drink
So you've got to realize that most people are happy with the money system they have
- [Voiceover] If most people are happy with cash, they're in love with plastic
In the U
two-thirds of in-person sales are done with debit or credit cards
That plastic is a 60 year old technology, created by a middleman
Never designed for the internet
Each transaction requires personal data like your name and address
Credit card databases are regularly hacked with fraudulent purchases charged to your account
Criminals buy and sell stolen credit cards by the thousands in dark corners of the internet
In some parts of London, one-third of all online credit card transactions are fraudulent
Card issuers don't hold you responsible for fraud but protection comes with a price, 2 to 4% in fees
That's 50 billion dollars a year
- The issue with credit cards from the merchant's perspective is there's a lot of risk
If they a take a credit card, there might be a chargeback, there might be fraudulent purchases
In fact there are hundreds of billions of dollars every year in fraudulent purchases
- [Voiceover] A bitcoin purchase is done for pennies but there are no protections
If you lose your passwords, or are fooled into paying the wrong person, you can never get your money back
It is like digital cash
For a seller, this means no chargeback risks
For an e-commerce companies like Expedia or Overstock, cutting credit card fees can double their profit margin
- You could not miss the point more effectively than by thinking of bitcoin as a currency and payment network that will make shopping easier for the first world
Bitcoin is about everything else, everywhere else
- [Voiceover] There are 2
5 billion people without a bank account
With Bitcoin, a mobile phone with an internet connection is now a bank, with access to the global market place
- What happens when Bitcoin services and infrastructure and Bitcoin wallets and payment processors start going into these countries
These people will be able to gain benefits from trade where they could not previously
These people will be able to send money home, international remittance, which is one of the major pain points of the current financial system
- Here, if i send 100 dollars
With banks it's going to cost me 20%
Western Union's going to cost 10%
Other options that are competing with Western Union are still going to be about 5%
And if you are sending to really remote areas it's going to be anywhere between 15 and 30%
- So in terms of money remittances it is going to be a game changer using Bitcoin
You do not need a bank account
You just need an internet connection and a wallet to get set up
It's a tool to give people an access into the global ecosystem and give them a promise for an economic future and specifically provide a way for them to not be dependent on a government that could shut down their bank accounts or even could go into their bank accounts and take out finances
- Goldman Sachs came out with a report and they basically looked at if you were to replace all transactions globally, so FX, bank to bank transactions with the Bitcoin protocol and still charging 1%, mind you, it would save the global economy 200 billion, not million, 200 billion dollars a year in saved transaction costs which ultimately goes back into the hands of the consumer
- [Voiceover] An international wire transfer can take up to four days
Yet the internet allows us to instantly and globally share text, pictures, videos, anything digital
Why not money? Money, which, we now know only exists as digits in a bank's database? - Wouldn't it be great, if you could send Bitcoin transactions just simply via a tweet? For example, you would say @theendofmoney one dollar worth of bitcoin and so we built just that
All you have to do is to hashtag it with tippercoin
Press send
And our twitterbot will process the transactions, notify you and give you a link and this will allow you to either withdraw your bitcoins or send it to someone else
- With Bitcoin, you can send one dollar or 1,000,000 dollars worth of value anywhere in the world
You can do it for free or you can pay the Bitcoin network fee, which is still just around a penny
And there is nothing that the big banks or the politicians can do to stop it
- [Voiceover] A cryptocurrency that can only be created and transferred with computer networks may be the next step of the digital revolution
The rise of machines
Self-driving cars, drones, robots that rely less and less on humans
- What I often think is that the future of Bitcoin or digital currency from a broader perspective is really about machine to machine payments
So by the time you have an un-manned taxi driving you around New York, and then going to power up at an unmanned power station, or going to get repairs at an un-manned auto shop
You'll see the machine to machine payments done with some sort of digital currency
- We actually built this world that we live in over the last two or 300 years
We made some mistakes
We've learnt to make things better
The idea that there is this magic key that if you just sort of stop doing a few things, that they'll be perfect order that will settle, is a very childish, ideological delusion in my opinion
But that's not to say that Bitcoin isn't an exciting thing
It's an terrifically exciting thing
But we have to try and engage with it with working minds not with magical thinking
- People are suggesting that it's going to be another world currency rivaling the dollar, or the euro, or the yen
I think that's not going to happen
I prefer to trust the banks or the central government compared to the Bitcoin is because someone is accountable
Whereas with the Bitcoin it is completely deregulated
There is no central control
There is no one held accountable
It is a free float, purely demand and supply driven
- So, clearly, this is not a currency
Currencies don't behave like this
But what this is is a high-risk, speculative commodity
- So, for the entrepreneurs, the bankers, the governments and anyone else studying and watching Bitcoin, all i have to say is that there will probably be a lot of volatility in an upward trajectory and to buckle up
- [Voiceover] Criminals, scam artists, bad actors, are drawn to any kind of money like a moth to a flame
- Silk Road was a marketplace that was online
it existed in the underground web
Now this marketplace allowed people to sell things that were illegal to governments
- [Voiceover] Fake ID's, pirated music, bibles in North Korea
Are cryptocurrencies inherently bad or just the newest tool to acquire the forbidden? - Porn is illegal in Iran
Well, there was a few percentages of sales on Silk Road was to sell porn to Iranians
Now, a much broader one, that gets a lot of press for the guys at Silk Road is drugs
- I've been doing research over the past couple of years into the online drug marketplaces in the Dark net using TOR and Bitcoin as technologies to enable illicit drug transactions
We did a global survey of drug users and we had over 20,000 people respond to that and the majority of those people were buying traditionally illicit drugs
Ecstasy, cannabis
The F
B
I
brought down Silk Road
It certainly hasn't stopped the trading of illicit drugs online
- A lot of people want to criticize Bitcoin for the use for illegal things or illicit things
But if you look at it, the most popular currency in the entire world for doing bad things is the U
- If you think of Bitcoin as a platform instead of a currency then you really begin to see the potential it has
- The ledger which cannot be forged, it cannot be changed and is universally accepted is Genius
There will be Bitcoin technology forever and it will have applications for years to come
- [Voiceover] Creating a secure, global payment system may just be the beginning
Patents, contracts, land titles, proof of ownership can be baked into Bitcoin
Securely held in the public ledger
- I read up more about Bitcoin
I played with the source code
I built some things that I realized, this is a actually a very, very powerful protocol
It's not just a currency but it's actually programmable money
- [Voiceover] The digital age has fundamentally changed the world
We have embraced digitized music, film, medical records, communications, the internet
The free exchange of information and currency can fuel revolutions, help in a disaster
But our money is shackled to the 20th century, manipulated by governments and banks
The champions of Bitcoin ask us to imagine payments without a middle man
Investments without a broker
Loans without a bank
Insurance without an underwriter
Charity without a trustee
Escrow without an agent
Betting without a bookie
Record keeping without an accountant
Global, secure, nearly instant and free
Is it fantasy or the future of money and commerce? (intense instrumental music) - I love bitcoins
I'm really into bitcoins
? Well Satoshi Nakamoto ? That's a name I love to say ?And we don't know much about him ?But he came to save the day If you don't know what a Bitcoin is, right, usually the way people describe it is a digital cash
It's money for the internet
? Bitcoin as your going into the old blockchain ? Oh Bitcoin, I know you're going to reign, gonna reign
They were like, "oh, I love my bank
" I'm like, "really?" You ask a banker, "you know what's two plus two?" He's like, "well, I can tell ya but there's a fee
" (laughter) ? Down the road it will be told ? About the Death of Old Mount Gox ?About traitors trading alter coins ? And miners mining blocks Now Bitcoins is a new technology
I like to say it's banking (mumbling) All of the convenience, none of the evil
(laughter) ?Oh Bitcoin, as your going into the old blockchain ?Oh Bitcoin, I know you're going to reign, gonna reign ?Till everybody knows, everybody knows? You know when I go in line and I buy like, I don't know, a pair of socks
If I pay with a credit card I'm just buying socks
Right, if I buy those socks with bitcoin, it's a revolution
(laughter) I am sticking it to the man
?Oh Lord, pass me some more There's always people who are not ready to get into the new technology
You know, like when the internet came out, there was people going, "nah, I don't think this is going to be popular
" (laughter) And then e-mail came out and people were like, "nah, this isn't gonna catch on
" And now Bitcoin comes out, people are like, "I don't think," I'm like, "aren't you sick of being wrong? "Get on this train
"
Audio:
Subtitles:
Anandamayi Ma: Mother of the World
Saving the Life Keepers
Iluminati
Aldous Huxley And The Brave New World
The Future Makers
Dalai Lama
Becoming Animal
Secret societies
The sky is the limit
Cannabis