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Showing Revision 75 created 07/17/2015 by Filipe Mendes.

  1. - [Voiceover] Look closely.
  2. What do we all have in common?
  3. No matter what corner of
    the world you live in,
  4. You need food, water,
  5. shelter and money.
  6. Half of every transaction
    involves money,
  7. in exchange for
    goods or services.
  8. Stocks, a loaf of
    bread, illegal drugs,
  9. You gotta pay for it.
  10. We spend much of our
    live chasing money
  11. to make a living,
  12. and accomplish our dreams.
  13. But it's also an
    instrument of destruction.
  14. Some might say evil.
  15. Driving criminals to lie,
    steal and even murder.
  16. - The existing banking system,
  17. extracts enormous
    value from society
  18. and it is parasitic in nature.
  19. - [Voiceover] Money is
    a catalyst for the worst
  20. and the best of human endeavor.
  21. Before civilization,
  22. we created currency.
  23. Fuel for wars.
  24. The path to power.
  25. Champion and enemy
    of innovation.
  26. Money is so integral
    to our society,
  27. and our global economy,
  28. that its true nature
    remains a mystery to most.
  29. This is the story of money.
  30. Perhaps the end of
    money as we know it.
  31. No matter how fat
    your bank account,
  32. or how thin your wallet.
  33. To us it's all cold, hard cash.
  34. There are some who
    want to kill it.
  35. Get rid of it.
  36. Burn your dollars,
    your euros, your yen,
  37. and transform every
    penny you have,
  38. into ones and zeros.
  39. Digital currency
    entrusted to the web
  40. and computers spread
    across the planet.
  41. Magic internet money.
  42. It's called
    cryptocurrency, Bitcoin.
  43. Invented in secret,
  44. it was a gift to the world.
  45. - It's not just a currency,
  46. but it's actually
    programmable money.
  47. - [Voiceover] A potential
    curse on bankers.
  48. - I mean, there's nothing
  49. that the big banks or
    politicians can do to stop it.
  50. - [Voiceover] Breaking
    every governments grip
  51. on money supply.
  52. - What the internet
    did for information,
  53. Bitcoin is doing for money.
  54. - Could it be the new gold?
  55. - No, you have to really stretch
  56. your imagination,
  57. to infer what the intrinsic
    value of Bitcoin is.
  58. - Regulators, the Federal
    Reserve, the banking system,
  59. at least understand
    this is a thing
  60. that they have to
    take seriously.
  61. - This going to change
    the economic culture.
  62. - Bitcoin could be a
    micro-economic miracle worker
  63. and it could be a
    macro-economic wrecking ball.
  64. - [Voiceover] Is Bitcoin
    the currency of the future,
  65. a Godsend for criminals,
  66. or a recipe for
    financial disaster?
  67. If you trust your
    money just as it is,
  68. we have a little story to share.
  69. (dramatic instrumental music)
  70. Once upon a time
    there was a big party,
  71. with everyone standing
    around the punch bowl, drunk.
  72. Politicians credited
    the strong economy
  73. to their wise decisions.
  74. Businesses jumped into
    new profitable markets,
  75. ignoring risk.
  76. If fact the experts
    said there was no risk.
  77. Then, troubling market
    data from minor countries,
  78. spooked the markets.
  79. Rumors spread.
  80. More bad news rattled
    housing prices,
  81. at the heart of the
    financial world.
  82. A major bank went insolvent.
  83. Investors and
    businesses made a run
  84. on the other banks,
  85. demanding their cash deposits.
  86. The largest financial
    institutions
  87. in the center of the
    modern world were frozen.
  88. Assets were seized,
  89. banks foreclosed.
  90. A credit crunch threatened
    the entire world economy,
  91. and then finally,
  92. the government stepped in.
  93. The largest bank bailout ever.
  94. Swift action by the head
    of state had saved the day.
  95. Remember that?
  96. No you don't.
  97. It happened 2,000 years ago.
  98. Rome, 33 A.D.
  99. Ground zero for the first
    recorded liquidity crisis
  100. and government
    bailout in history.
  101. The largest empire the
    world had ever seen,
  102. was brought to its knees
    by a banking disaster.
  103. Emperor Tiberius used money
    from the National Treasury,
  104. to bail out the country's
    troubled banks and companies.
  105. History may not repeat itself,
  106. but it certainly rhymes, badly.
  107. People in power and their money,
  108. have always been at
    the very center of it.
  109. (violin instrumental music)
  110. The story of money
  111. is as old as
    civilization itself.
  112. When we lived in small tribes,
  113. keeping track of debt was easy.
  114. You owed somebody
    a load of firewood.
  115. A neighbor owed you
    a piece of meat.
  116. Credits and debits
    were kept in your head.
  117. A mental ledger.
  118. - Currency's a
    language that allows us
  119. to express transactional
    value between people.
  120. It's technology that's
    older than the wheel.
  121. It's as old as fire.
  122. - [Voiceover] When
    humans wanted to trade
  123. outside their tribe or village,
  124. they needed something,
  125. everyone could agree had value.
  126. Something scalable.
  127. Enter commodity monies.
  128. There were many kinds,
  129. but each had to embody
  130. the same five characteristics.
  131. A commodity money is
    relatively scarce,
  132. easily recognizable,
  133. can be cut into smaller pieces.
  134. You can substitute one piece
    for another of equal value.
  135. And you can carry it around
    without too much trouble.
  136. In ancient Rome, it was salt.
  137. The Aztecs used Cacao beans.
  138. It was whale teeth on Fiji.
  139. Yak dung in Tibet.
  140. Shells in Africa and China.
  141. Grains, metal,
    ivory, rare stones,
  142. leather, fish.
  143. If it had the five
    characteristics of
    commodity money,
  144. someone probably
    used it as currency.
  145. - And then you ask,
  146. what value did these
    currencies have?
  147. If you go into a primary school,
  148. you'll see children
    exchanging rubber bands
  149. and Tamagotchi
    and Poke-man cards
  150. and baseball cards and sweets
  151. and candy and any
    other form of currency.
  152. People invent currency,
  153. when they have no
    other currency.
  154. And now they're going to
    invent digital currencies.
  155. - [Voiceover] But commodities
    that aren't durable,
  156. are a lousy store of value.
  157. A bad Cacao crop,
  158. or a huge new salt discovery,
  159. can throw your currency
  160. and economy into turmoil.
  161. A more stable system was needed.
  162. About 2,500 years ago,
  163. the first metal coins
    were minted in China,
  164. and in what is now Turkey.
  165. These coins shared the
    same five characteristics
  166. with commodity money,
  167. but were also very durable.
  168. In some cases,
  169. coins are the only thing left
  170. of entire civilizations.
  171. - Money does not originate
    with governments.
  172. Money arises naturally,
  173. as markets begin to develop.
  174. And as people with a
    division of labor realize,
  175. that if I have eggs,
  176. and you have a cow,
  177. we may need some
    medium of exchange,
  178. in order for you to buy my eggs,
  179. or for me to buy your cow.
  180. - [Voiceover] Coins
    were an objective
  181. and universal unit of account
  182. and they allowed people
  183. to buy and sell goods
  184. over vast regions.
  185. The market economy was born.
  186. Coins worked,
  187. but only if people trusted
  188. that the king or emperor,
  189. who issued them,
  190. wasn't cheating on
    the metal content.
  191. Using coins also meant,
  192. that an authority now
    controlled the supply
  193. of your currency.
  194. Money and political power,
  195. were inextricably
    linked, centralized.
  196. Minting coins in a steady
    and predictable manner,
  197. allowed economic
    growth and stability.
  198. The Wu Zhu coin in China,
  199. retained its value
    for 500 years.
  200. In Constantinople, the solidus
  201. lasted for 700 years.
  202. - But in those times,
  203. the coins didn't
    have the milled,
  204. this sort of milled edge.
  205. They were flat,
  206. and what used to happen,
  207. was as coins were passing
    from people to people,
  208. people would cut
    little bits off.
  209. And in fact,
  210. some of the taxation
    that the kings would do,
  211. would actually be
    take one eighth
  212. of the coin off.
  213. - [Voiceover] Taxes
    built castles,
  214. and financed military campaigns,
  215. expensive hobbies.
  216. Soon, royal mints were
    substituting cheaper metals,
  217. for silver and gold.
  218. This is called debasement.
  219. And Europe's kings
    made a habit of it.
  220. The currency of France was
    debased every 20 months,
  221. for 200 years.
  222. If no one can trust the
    gold or silver content
  223. of your coins,
  224. how can you trade
    with other countries?
  225. International merchants
    found a solution.
  226. They recognized that
    one persons debt,
  227. has value.
  228. It can be traded or transferred.
  229. When those IOU's came
    from reputable sources,
  230. they could be used
    as a form of money.
  231. Paper money.
  232. This money was not based
    on hard commodities,
  233. or metal, but instead,
  234. on someone's promise to pay.
  235. Merchant families
    like the Medici,
  236. in 15th century Florence,
  237. acted as clearing
    houses for these IOU's.
  238. It worked like this.
  239. An English trader ordered a
    shipment of Italian cloth,
  240. from the Medici
    for 100 gold coins.
  241. His promise to pay the
    Medici was put on paper.
  242. Meanwhile, the Medici
    owed 100 gold coins,
  243. to another trading partner,
  244. for delivery of
    wine from France.
  245. The parties didn't
    go to the expense
  246. of transporting and
    exchanging gold coins.
  247. Instead, the paper
    was transferred.
  248. Everyone agreed that
    the paper had value,
  249. 100 gold coins.
  250. But only because the
    everyone trusted the Medici,
  251. as solvent middlemen.
  252. They had created a
    paper money machine.
  253. Within a few generations,
  254. they rose from low crime
  255. to high finance.
  256. Their great wealth,
  257. helped fuel the
    Italian renaissance
  258. and elevated the family
  259. to levels of enormous
    political power.
  260. The power to marry
    into royal families
  261. and get elected as popes.
  262. The ties binding money
    to power, politics
  263. and influence now ran
    through church and state.
  264. Merchants had proven that
    creating paper currency
  265. could be wildly profitable.
  266. Goldsmiths wanted
    in on the action.
  267. - Imagine it like this,
    if the goldsmith had seen
  268. over a period of time that some
  269. of the coins he is storing for
    people were gathering dust.
  270. The people who own them,
    don't need them right now.
  271. So what if I go and lend
    them out into the community
  272. and I charge them
    interest on this loan.
  273. So he starts out lending
    some of these gold coins
  274. and then later he
    realizes, actually people
  275. don't even want the gold
    coins they just want the piece
  276. of paper that says that the
    gold coins are in the bank
  277. and with the goldsmith.
  278. So I can now make a loan
    with these pieces of paper.
  279. And whatever I write
    on the piece of paper,
  280. as long as the people trust
    me, they'll trust the paper.
  281. And effectively the goldsmiths,
    the early day bankers,
  282. they had literally acquired
    the power to print money.
  283. - [Voiceover] More and more
    such private paper money
  284. from merchants and
    banks circulated
  285. and began to rival
    the crown's coins.
  286. The power inherent
    in controlling
  287. and issuing money began
    slipping away from the rulers.
  288. They couldn't tax or de-base
    this new kind of money.
  289. But they had bigger ambitions
    than ever with trading posts,
  290. colonies, and empires that now
    stretched across the globe.
  291. For centuries,
    European countries
  292. would take turns
    building massive fleets
  293. and waging war on each
    other to rule the world.
  294. (yelling)
  295. - Government wanted to
    take the people's money
  296. in order to finance its wars.
  297. That's essentially
    the history of money.
  298. Money and warfare go together.
  299. - [Voiceover] War is expensive.
  300. One year's income taxes
    simply aren't enough.
  301. Kings and queens had to borrow
    money against future taxes.
  302. They needed a ground breaking
    financial innovation,
  303. government bonds.
  304. The loans came from
    rich merchant families
    and goldsmiths,
  305. who by now had become powerful
    financiers and bankers.
  306. Sovereign debt and deficit
    spending had been born.
  307. (upbeat instrumental music)
  308. In 1694, the bank of
    England was established
  309. to fund a war against France.
  310. England's central bank
    was privately owned
  311. and granted the monopoly
    to issue banknotes,
  312. paper that could be
    redeemed for an equal amount
  313. of gold from the
    government's coffers.
  314. The central bank soon also
    managed the entire debt
  315. of the crown.
  316. - Money has been a tool of
    sovereignty for centuries.
  317. Being able to issue
    currency gave you the power
  318. but it also gave the value
    to that monetary supply
  319. by backing it with
    the force of state
  320. with essentially
    the debt of state.
  321. - [Voiceover] When the U.S.
    won independence from Britain,
  322. the first article of
    the new constitution
  323. gave congress the exclusive
    right to "coin money".
  324. This currency's value was tied
    to gold in government vaults.
  325. From 1781 until
    the panic of 1907,
  326. the financial system of the
    U.S. was an economic Petri dish.
  327. Brief central banks, state
    banks, private banks,
  328. private currency,
    government currency,
  329. depressions, strong
    growth, recessions,
  330. regular boom and bust cycles.
  331. - The long term, as far
    as capital is concerned,
  332. people want predictability,
  333. people want stability.
  334. From the back of
    that they can plan
  335. and it is very hard to
    plan in the long term
  336. with it such a
    level of volatility.
  337. - [Voiceover] In 1913, bankers
    and politicians decided
  338. that it was in the country's
    best interest, and theirs,
  339. to have a permanent
    central bank.
  340. They created the
    Federal Reserve.
  341. Among its jobs, expand
    or contract the supply
  342. of a single national currency,
  343. the Federal Reserve note.
  344. The dollar was tied to
    gold and strategic control
  345. of it would avoid booms
    that lead to busts.
  346. At least that was the plan.
  347. Then came 1929.
  348. (yelling)
  349. The great depression would
    have a profound effect
  350. on monetary policy worldwide.
  351. - [Roosevelt] I shall
    ask the Congress
  352. for the one remaining
    instrument to me the president,
  353. broad executive power.
  354. - [Voiceover] Soon, the Fed had
    printed nearly all the money
  355. it legally could to pump
    life back into the economy.
  356. It needed gold to
    fire up the mint.
  357. So in 1933, President
    Roosevelt issued
  358. a controversial executive order,
  359. forcing all U.S. citizens
    to sell their gold
  360. to the Federal Reserve
    at a fixed price,
  361. or go to prison.
  362. The Fed offered far more cash
  363. to foreign governments
    for their gold.
  364. Many jumped at the offer.
  365. Gold flowed in,
  366. and dollars spread
    across the globe.
  367. World War II devastated
    nearly every major economy,
  368. except the United States.
  369. The military and industrial
    juggernaut emerged
  370. as the global
    financial super power.
  371. The dollar had become
    the world's most stable
  372. and trusted currency.
  373. Other countries pegged their
    currency to the dollar,
  374. which could still be
    redeemed for gold.
  375. In fact, the U.S.
    owned more than half
  376. of the world's gold reserves.
  377. In the next few decades,
  378. more dollars flowed
    to foreign countries.
  379. Governments began
    debasing their coins
  380. with cheaper metals
    and printing more
  381. of their own currency
    than they had in gold.
  382. The bond between precious
    metals and paper currency
  383. was cracking.
  384. - This is a 1966 50 cent piece.
  385. It was the last coin
    in regular circulation
  386. in Australia to contain silver.
  387. It contains 80% silver,
  388. so in 1966, this was 50 cents.
  389. Nowadays it's 8
    dollars, roughly,
  390. in silver alone.
  391. - [Voiceover] By 1966,
    foreign nations had had enough
  392. of the U.S. collecting
    gold and printing cash.
  393. And they had more value
    in dollars than the U.S.
  394. had bullion in its vaults.
  395. They demanded gold in return
    for their paper dollars.
  396. Arguments about the
    value of the dollar
  397. versus their currency ensued.
  398. In 1971, President Nixon
    settled the matter.
  399. He severed United States'
    currency from the gold standard.
  400. - I directed Secretary Conelly
  401. to suspend temporarily
    the convertibility
  402. of the dollar into gold
    or other reserve assets
  403. except in amounts and
    conditions determined
  404. to be in the interest
    of monetary stability
  405. and the best interest
    of the United States.
  406. - [Voiceover] Never again
    could anyone legally demand
  407. U.S. Government gold in
    exchange for paper dollars.
  408. For better or worse, the
    dollar was now backed solely
  409. by the full faith and credit
  410. of the United States Government.
  411. The wealthiest nation
    the world had ever known
  412. would bet its future on
    a single word, trust.
  413. - People have this
    mythology of money
  414. that is based on
    very little fact.
  415. And one of the nice
    things about Bitcoin
  416. is that it forces people
    to start to ask questions
  417. about the fundamentals of money.
  418. - A Bitcoin is an attempt
  419. to adopt the advanced
    computerized system
  420. that we have, the internet,
  421. to resurrecting to what
    money used to be all about.
  422. (upbeat instrumental music)
  423. - I think our dollar policies
    our monetary policies
  424. our fiscal policies
    have absolutely created
  425. a nation of debtors.
  426. Not just personal debt,
    not just corporate debt
  427. but government debt,
    you have to look
  428. at those all together
    as one big thing.
  429. What is the wealth
    of the nation?
  430. Well, the wealth of the
    nation is a gigantic hole
  431. of money that we owe to
    the rest of the world,
  432. that is never going
    to be paid back.
  433. - [Voiceover] Today the
    United States pays more
  434. than 400 billion
    dollars in interest
  435. to its creditors, every year.
  436. When a government
    spends more money
  437. than it collects in taxes,
  438. it simply borrows more
    or it creates more.
  439. At one time, every
    piece of paper money
  440. was backed by gold.
  441. Remember, for every
    20 dollar bill,
  442. there was $20 worth of
    gold in a government vault.
  443. Not anymore.
  444. Today, governments
    create currency
  445. by first creating bonds
    or treasury-bills.
  446. These bonds are
    sold in the market,
  447. generating funds for the
    government that issued them.
  448. Large banks buy U.S.
    bonds to flip them,
  449. selling them to the Federal
    Reserve at a profit.
  450. This is the magic money machine.
  451. You see, the Fed is
    America's central bank.
  452. But it doesn't have any money,
  453. no cash on its balance sheets.
  454. When a bank buys a
    bond and takes it
  455. to the Federal Reserve,
    the Fed simply says
  456. "thank you Mr. Banker,
  457. "here's the principal
    and some profit."
  458. (ching, ching)
  459. New money isn't exchanged,
  460. it simply appears on
    the bank's accounts.
  461. Magic.
  462. For 100 years and counting,
  463. the precise mechanisms
    of these bond purchases
  464. have remained a secret.
  465. Here's where it gets
    really interesting.
  466. The Federal Reserve is
    not a Government agency.
  467. It's a private entity
    and its shareholders
  468. are banks which earn a dividend.
  469. As much as 80 billion
    dollars per year, total,
  470. are paid out to some
    of the very same banks
  471. that sell the Government
    debt to the Fed.
  472. Which banks?
  473. Don't even bother asking.
  474. That's also a secret.
  475. In other words, the magic money
    machine answers to no one.
  476. The Fed also sets the bar
    for how much interest you pay
  477. for a car, home,
    or business loan.
  478. - The Federal Reserve has
    been given the impossible task
  479. of trying to run the credit
  480. and monetary system
  481. as though we are
    the Soviet Union.
  482. It's the central planner
    for the key aspect
  483. of capitalism which is how money
  484. and credit is allocated.
  485. The Federal Reserve, on balance,
  486. does not help the economy.
  487. On balance, it
    hurts the economy.
  488. And it's bound to make mistakes
  489. even with the best
    of intentions.
  490. - [Voiceover] The Fed is also
    supposed to boost employment
  491. with low interest rates.
  492. Encouraging people and
    businesses to buy more goods
  493. and services.
  494. - Governments getting
    involved in money
  495. is a good thing, and
    it's also a bad thing.
  496. It's a good thing because money
  497. is the arteries of the economy,
  498. the blood supply of the economy.
  499. Markets are subject to
  500. bouts of euphoria and despair.
  501. And it makes sense
    for governments
  502. to back currency and
    to manipulate it.
  503. Moving the money
    supply up and down
  504. is the most powerful
    way to sedate
  505. that boom and bust cycle.
  506. - [Voiceover] Manipulating
    the supply of money
  507. has short term and
    long term consequences.
  508. (instrumental music)
  509. Central banks aim to
    create new money carefully,
  510. strategically and
    very, very slowly.
  511. Releasing more money
    into the economy
  512. cause prices to rise,
    ideally by 2% every year.
  513. That's supposed to
    foster economic growth.
  514. But, 2% inflation
    means the buying power
  515. of one cash dollar
    in your pocket today,
  516. will be 98 cents next year.
  517. And less nearly
    every year to come.
  518. - Since 1913, when the
    Federal Reserve took over
  519. the United States dollar,
  520. we've seen that the United
    States dollar has decreased
  521. in value 98%.
  522. Inflation is a far higher tax
  523. because on your income
    you pay it just once.
  524. If inflation is 2%,
    you're paying a 2% tax
  525. on your net worth
    every single year.
  526. Your net worth that
    you held in currency.
  527. - [Voiceover] So,
    what does that mean?
  528. If you earned a dollar in 1913,
  529. you could buy 16
    loaves of bread.
  530. Today, a dollar
    barely buys you one.
  531. That's not a quaint notion of
    how cheap things used to be.
  532. It's proof that the
    value of your cash
  533. is slowly withering away.
  534. That one dollar
    invested at 2% in 1913
  535. would now be worth 7
    dollars and 24 cents.
  536. More than a 600% return
    versus a near-total loss.
  537. - The U.S. dollar has gone
    from being worth one dollar
  538. to now being worth
    about 4 cents,
  539. so that's 96% of
    its original value.
  540. That's a direct result
    of government control.
  541. - [Voiceover] Governments
    don't create money
  542. from thin air all alone.
  543. You play a key role in
    the magic money machine.
  544. - It's not really the central
    banks that are the problem.
  545. They are part of the problem.
  546. But the real problem is
    that we've given the power
  547. to create money
    to the same banks
  548. that caused the
    financial crisis.
  549. - [Voiceover] We put our
    paychecks and savings
  550. into a bank account and
    draw from it as we need it.
  551. The banks are the custodians
    of our money, right?
  552. Wrong!
  553. It is now the
    property of the bank,
  554. on their balance sheets.
  555. They can do just about
    anything they want with it,
  556. for example create new money.
  557. Here's how, your bank
    account shows 100 dollars,
  558. but the bank only holds
    three and loans 97
  559. to Bob to buy something.
  560. In the bank's computers,
    you still have 100 dollars
  561. in your account.
  562. But Bob now has 97 dollars
  563. of new virtual money
    in his account.
  564. Just digits on a
    computer screen.
  565. There's no cash, no
    gold, or anything else
  566. backing up the new
    numbers in Bob's account.
  567. Just his promise to pay it back.
  568. This is new money
    created as debt.
  569. When those 97 dollars
    are spent, say in a shop,
  570. the shop owner deposits
    it into another bank
  571. and it is lent out again
    and again and again.
  572. And each of these
    people have numbers
  573. in their accounts showing
    that they own this money.
  574. So your original 100
    dollars has multiplied,
  575. now there are over 3,300
    dollars in the system.
  576. This process of loaning
    out far more money
  577. than a bank actually
    has, as cash on hand,
  578. is called fractional
    reserve banking.
  579. - In the U.K., 97% of
    the money that exists,
  580. is just numbers in
    the computer system.
  581. And those numbers have
    been created by the banks.
  582. - [Voiceover] Banks earn
    untold billions in interest
  583. every year by creating
    and lending virtual money.
  584. What's more, banks don't
    even need your deposit
  585. to create new money.
  586. If they consider someone
    credit-worthy for a loan,
  587. they can put new magic money
    into his or her account,
  588. and start charging interest.
  589. - So, reporters
    talk about Bitcoin
  590. as though it's the
    first digital currency.
  591. But actually we use
    digital currency
  592. every time you
    make a transaction
  593. through internet banking,
    or your bank card.
  594. Actually it's not
    only digital currency
  595. it's digital currency
    that is created by
  596. the banks, essentially,
    out of nothing.
  597. - [Voiceover] In other
    words, all new money is debt.
  598. This is the part
    of money creation
  599. that isn't taught
    in economics class.
  600. Money in paychecks,
    bank accounts,
  601. 401ks, that loan to
    Bob, credit card debt,
  602. your homeloan, all began
    life as virtual money
  603. created by the banks.
  604. The entire system
    is based on trust.
  605. Trust in the bank's solvency.
  606. Trust in the debtor's
    ability to repay their debt.
  607. If all bank customers
    demanded just 3%
  608. of their deposits
    right now, in cash,
  609. this "run on the banks"
    would reveal the truth.
  610. Almost none that paper
    currency you think
  611. is in your bank account exists.
  612. It never did.
  613. (birds chirping)
  614. Remember the drunken party?
  615. (rock instrumental music)
  616. Our financial crisis
    had everything
  617. to do with virtual dollars.
  618. Too many people, with
    very little income,
  619. borrowed a lot of money
    they could never repay.
  620. But the banks didn't care.
  621. They didn't have to.
  622. They quickly made
    and sold shaky loans
  623. to someone else, for a profit.
  624. - And I got them all approved.
  625. - Hey!
  626. (laughter)
  627. - Apply now.
  628. - [Voiceover] Selling bad
    loans was a good business,
  629. until the whole thing blew up
    in a global financial crisis.
  630. The magic money machine
    destroyed 30 million real jobs.
  631. The United States alone
    lost 16 trillion dollars
  632. in household wealth.
  633. And the banks foreclosed on
    more than 1 million homes.
  634. (angelic instrumental music)
  635. Selling subprime loans and
    betting they will fail,
  636. may not be sacred,
    but it is lucrative.
  637. As much as a quarter of
    our best and brightest
  638. are being lured by the siren
    call of the money machine.
  639. Instead of science, engineering,
  640. or medicine, they chose
    a career playing with,
  641. betting with, other
    people's money
  642. to get rich quick.
  643. Very rich.
  644. And sometimes, they
    take shortcuts.
  645. ♪ Get by on a nickle and a dime,
  646. ♪ Money has a funny
    way of bringing us down
  647. ♪ They say it makes the
    world go round and around♪
  648. - My ancestors in Greece talked
  649. about the corrupting
    influence of power.
  650. And nothing has changed
    in these 3,000 years.
  651. When you give control of
    a massive amounts of money
  652. to a few individuals,
    they will take advantage
  653. of that control.
  654. ♪ Oh, oh, oh♪
  655. - Banks today are
    factoring in fines
  656. and money laundering and all
    the rules that they break
  657. into their cost
    of doing business.
  658. JP Morgan is today
    coming out and saying
  659. that Bitcoin is not a legitimate
    way of doing business.
  660. Banks today are
    tied into a system
  661. that is completely rigged
    to basically harvest money
  662. from the entire global economy
  663. and pump it into the
    hands of the very few.
  664. ♪ Don't get consumed
    by your greed
  665. ♪ La la la la la la♪
  666. - The existing banking
    system is cozy.
  667. Its captured the regulators,
    it extracts enormous value
  668. from society without
    delivering anything in return
  669. and it is parasitic in nature.
  670. - The banks play a very
    pivotal role in an economy.
  671. You look at any successful
    economy it has successful banks.
  672. There is a very close
    correlation with banking profits
  673. and the economy as a whole.
  674. - [Voiceover] In
    Medieval Europe, a banker
  675. who couldn't repay
    depositors was hanged.
  676. Today, that same banker
    would get bailed out,
  677. paid bonuses and enjoy
    some tax benefits, too.
  678. To date, no senior
    U.S. banking executive
  679. has been charged for
    selling the bad loans
  680. that fueled the great recession.
  681. In December 2014,
  682. just 6 years after the
    last banking crisis
  683. brought the world to its knees,
  684. a Congressman snuck a
    last minute provision,
  685. written by Citigroup into
    a crucial funding bill.
  686. The provision allows
    the largest U.S. banks
  687. to once again make
    risky derivatives bets
  688. with bank deposits.
  689. But no need to worry,
  690. if the banks implode again,
    lost deposits must be paid back
  691. by U.S. taxpayers.
  692. (bell rings)
  693. Today's financial
    innovators package assets
  694. in ever more complex
    ways, slicing, dicing,
  695. securitizing, always using
    someone else's money.
  696. They sell debt, transfer
    risks, leverage bets.
  697. That's what they
    call innovation.
  698. - When you're talking
    about financial innovation,
  699. Bitcoin certainly is
    a very good example
  700. of innovation, but
    there's also been
  701. other innovations that people,
  702. a bit closer to the
    world of finance
  703. would cite as good examples.
  704. An example of that would be
    the original swaps market,
  705. from there moving on to
    the credit default swap.
  706. It is an excellent example
    of financial innovation.
  707. But also if it's
    used incorrectly,
  708. it can create a lot of
    problems as we've just seen.
  709. - [Voiceover] History teaches
    that the most revolutionary
  710. and disruptive innovation
    nearly always comes
  711. from the fringe, not
    from corporate cubicles.
  712. True innovators see
    the world differently.
  713. They see the big picture.
  714. Creating new products
    and entire systems
  715. that lead to new industries.
  716. Steve Jobs called them the
    "square cogs in round holes".
  717. - It's unsurprising
    that new innovations
  718. always come from a niche
    group of early adopters
  719. because it is inherently
    very hard for many people
  720. to realize the benefits
    of new technologies.
  721. In 2011, most Bitcoin
    community people
  722. were either
  723. people from the technology
    space, the geeks and hackers,
  724. or people from the traditional
    financial industry.
  725. There are even some bankers
    and hedge fund traders
  726. using Bitcoinica at
    that time as well,
  727. which was really
    surprising to me.
  728. - [Voiceover] A radical
    new idea is often met
  729. with skepticism,
    ridicule, even hostility
  730. from those who stand to
    lose most from its success.
  731. Case in point, the automobile.
  732. In the late 19th
    century, Karl Benz
  733. and others built the first cars,
  734. contraptions that could
    threaten the stagecoach
  735. and railroad industries.
  736. These "self-propelled
    vehicles'" or road trains,
  737. would certainly scare
    horses, injure people
  738. and damage roads.
  739. Cars, the railroad barons
    said, were just too dangerous.
  740. And to protect us,
    they used their power
  741. to pass a law in 1865.
  742. It required every
    automobile in England
  743. to observe a four mile
    per hour speed limit
  744. and to be operated
    by a crew of three,
  745. a driver, an engineer
    and a flag man.
  746. This heroic flagman
    walked in front of the car
  747. to warn fellow citizens
    of the coming danger.
  748. The railroad tycoons,
    the lawmakers,
  749. the self-appointed
    gatekeepers used regulation
  750. to stifle innovation.
  751. But they didn't
    invent the flagman.
  752. He's been around
    for a long time.
  753. For centuries, very
    few could read.
  754. Books were copied by hand.
  755. The people in control, political
  756. and religious leaders,
    wanted to keep it that way.
  757. And they greeted Johann
    Gutenberg's printing press
  758. with licensing laws,
    publishing bans, taxes.
  759. In some parts of the world,
    printing was a crime,
  760. punishable by death.
  761. After all, they were
    just protecting us
  762. from dangerous ideas.
  763. Before the printing
    press, there were
  764. an estimated 30,000
    books in all of Europe.
  765. 50 years later, there
    were 10 million.
  766. As Gutenberg's
    invention flourished,
  767. the Dark Ages withered.
  768. Progress couldn't be stopped.
  769. But the flagman
    never stops trying.
  770. His masters set
    him loose on each
  771. of these innovations
  772. because they threatened
    someone's profits,
  773. someone's control.
  774. But remember, this is
    a story about money.
  775. What if a technological
    innovation allowed anyone
  776. in the world to
    be their own bank,
  777. to create a currency free
    from taxes and banking fees?
  778. The U.S. Constitution forbids
    citizens from printing
  779. or minting their own
    currency, competing with
  780. or undercutting reliance
    on the U.S. dollar.
  781. In 1998, Bernard
    von Nothaus decided
  782. to test the resolve of
    the federal government.
  783. - The Liberty Dollar
    was available in gold,
  784. silver, platinum, and copper.
  785. It was available in three
    forms, both in specie,
  786. in other words, gold and silver,
  787. in paper, as warehouse
    receipts and in digital form.
  788. Obviously, the government
    didn't like it.
  789. They arrested me
    and convicted me
  790. of counterfeiting,
    fraud, and conspiracy.
  791. And i'm currently
    awaiting 22 years sentence
  792. in federal prison.
  793. - [Voiceover] Lesson learned.
  794. - At a hacker's
    convention in Netherland,
  795. there was a young hacker there
  796. who used the alias
    of Satoshi Nakamoto,
  797. and he talked to
    a friend of mine
  798. and he identified the
    Liberty Dollar and me
  799. as inspiring him to
    create a new currency.
  800. - [Voiceover] Bernard
    von Nothaus's arrest
  801. for creating "private money",
  802. may also have inspired
    Bitcoin's inventor
  803. to keep a lower profile,
  804. publishing the
    invention under an alias
  805. and vanishing.
  806. - Part of me is interested
    to know who Satoshi is.
  807. Maybe that's part of the
    mystique of the story,
  808. it's completely irrelevant
    to the functioning of Bitcoin
  809. because we have
    the code to read.
  810. But it would be
    kind of fun to know.
  811. - Who is Archimedes?
  812. Who is Euclid?
  813. We don't know.
  814. We don't know if Euclid was
    one person or multiple people?
  815. And you know what?
  816. It doesn't matter.
  817. Euclidian geometry works
  818. whether i know who
    Euclid was or not.
  819. Whether Euclid was a
    moral and good person.
  820. Or whether he was a corrupt
    plutocrat and a bastard.
  821. Science and mathematics
    have essential truths
  822. that stands alone
    irrespective of its inventors
  823. and irrespective
    of their motives.
  824. Well, Bitcoin is a system based
  825. on mathematical truths.
  826. And these mathematical
    truths stand alone.
  827. We can read the
    source code in Bitcoin
  828. and understand it
    and it will be true
  829. whether Satoshi Nakamoto
    is a man, a woman,
  830. a collection of individuals,
    a government agency
  831. or aliens from the future.
  832. - [Voiceover] Bitcoin
    is digital currency
  833. and computer software.
  834. Capital b Bitcoin
    is the shared code
  835. that creates a global
    payment network,
  836. using computers connected
    to the internet.
  837. Bitcoins are virtual currency.
  838. Digital money created, stored
    and exchanged on that network.
  839. But unlike virtual dollars
    created by a banker,
  840. this new currency
    was created with math
  841. by an anonymous inventor.
  842. Bitcoin is an open-source
    software protocol,
  843. like much of the code supporting
    the internet and email.
  844. Open-source means anyone,
    everyone can use the protocol.
  845. No one person or
    company can control it.
  846. Every change to the
    software is public,
  847. open and transparent.
  848. The code was first
    developed by Satoshi.
  849. Then there were
    dozens, now hundreds
  850. of programmers
    constantly collaborating
  851. to improve Bitcoin's
    features and security.
  852. So what makes Bitcoin
    a breakthrough?
  853. It tackles an
    ancient human dilemma
  854. and solves a computer
    science problem.
  855. Any shared information, or data
  856. can be flawed, corrupted.
  857. Anything can be faked.
  858. How do we know that what we're
    receiving can be trusted?
  859. - In our traditional mindset,
  860. it's very important
    to know who is behind
  861. this currency because
    their reputation
  862. is significant in
    knowing that our funds
  863. in the true wealth
    is actually safe.
  864. - [Voiceover] In
    finance, we rely
  865. on trusted third
    parties like banks,
  866. credit card companies,
    remittance services.
  867. They keep track of
    money as it moves
  868. from one account to another.
  869. And they charge us
    handsomely for it.
  870. We trust that their
    digital ledgers of credits
  871. and debits balance.
  872. A financial system that
    cuts out these middlemen
  873. could be faster, cheaper
  874. and more secure.
  875. But Bitcoin is digital.
  876. Music and movies are easily
    pirated, copied, stolen.
  877. How can a digital
    currency retain value
  878. if anyone can make
    a million copies?
  879. The answer is at the core
    of Satoshi's invention.
  880. A Bitcoin is not a
    file on a computer.
  881. It's an entry in the
    publicly- distributed database
  882. called the blockchain.
  883. Just as the Medici kept a
    ledger of credits and debits.
  884. Today's banks record
    each transaction
  885. as a plus and minus
    in their ledgers.
  886. Now we call them databases.
  887. Bank accounts are replaced
    by a digital wallet
  888. that you alone control.
  889. Bitcoin's ledger
    is the blockchain.
  890. A record of every
    bitcoin in existence
  891. and every bitcoin
    transaction ever made.
  892. It always balances because
    no bitcoin ever leaves it.
  893. When a bitcoin is "sent"
    from one digital wallet
  894. to another, what they
    are really sending
  895. is control over that
    part of the database.
  896. Code that is a unique
    key for the new owner.
  897. As the network
    processes transactions,
  898. it constantly synchronizes
    the one ledger
  899. across the global network.
  900. Each computer, or Bitcoin miner,
  901. has a complete and
    identical copy.
  902. And because the
    blockchain is public,
  903. it cannot be controlled by
    any one person or computer.
  904. Owners of the Bitcoin
    mining computers
  905. are rewarded with new Bitcoins
    for processing transactions
  906. and keeping the network secure.
  907. In other words, the Bitcoin
    network replaces banks
  908. and bankers.
  909. Today, the combined
    computing power
  910. of this global
    network is greater
  911. than the 500 biggest
    supercomputers combined,
  912. times 10,000!
  913. And because every
    transaction is verified
  914. and recorded by the network,
  915. a bitcoin cannot be forged.
  916. Digital currency cannot be
    debased with cheap metals,
  917. or printed by the
    billion at will.
  918. Too much currency can
    unleash a monster,
  919. skyrocketing prices,
    trillion dollar bills
  920. that can't buy a loaf of bread.
  921. - There is a big movement
    in the U.S. demanding
  922. that the Fed be audited so
  923. that we can find out
    what they are doing.
  924. Nobody really knows
    how many dollars
  925. are in existence for example.
  926. Ben Bernanke created
    several trillions
  927. of dollars over the
    last several years.
  928. But nobody really knows
    where they landed.
  929. - At any time for any reason,
  930. the central banks can print
    as much money as they want.
  931. They call it fancy things
    like quantitative easing.
  932. And when they do that
    it makes the dollar
  933. or euros or yen that you
    and I have worth less.
  934. So if the world starts using
    bitcoin as their currency
  935. it can't be controlled by
    central bankers or politicians.
  936. - [Voiceover] Remember,
    central banks create money
  937. to boost the economy and try
  938. to pull it back out
    before inflation heats up.
  939. But no one knows how much
    magic money global banks
  940. are creating to boost their
    profits with questionable loans.
  941. - Bitcoin is completely
    the opposite.
  942. It's totally transparent.
  943. You know exactly how many exist.
  944. - [Voiceover] The computer
    code behind Bitcoin
  945. has a built in brake pedal,
  946. cutting the creation of bitcoins
  947. in half every four years.
  948. This ensures a transparent
    controlled scarcity
  949. and ultimately limits the
    total number of bitcoins
  950. to 21 million.
  951. No lobbyist, no politician,
    no banker can create more,
  952. or change the mathematical
    rules dictating their creation.
  953. - Advancing accountability.
  954. And that's something that's
    the most exciting about Bitcoin
  955. and technology behind it.
  956. Is not so much that it
    will supplant the dollar
  957. or that it will supplant
    government itself.
  958. But all of a sudden there is
    a competitor to government.
  959. And that government
    itself now needs
  960. to look over its shoulder
    more than it did.
  961. - [Voiceover] This
    new digital currency
  962. can be purchased online
    with a credit card
  963. or in person with cash.
  964. And it has the five key
    characteristics of money.
  965. But is it a store of value?
  966. Is it stable or will
    it diminish over time,
  967. like a commodity rendered
    useless, or a crop that fails?
  968. The ultimate power
    of a cryptocurrency
  969. is unleashed by
    mainstream adoption
  970. and an ever-growing
    volume of transactions.
  971. - With bitcoin, the
    currency is being created
  972. much more slowly than
    other currencies.
  973. And the effect of that has been
  974. to turn it into what is
    essentially a speculative asset.
  975. If you ask a lot of
    Bitcoin enthusiasts
  976. whether they are spending
    the currency, they're not.
  977. They're sitting on it and
    waiting for the price to go up.
  978. It isn't a currency if you
    don't use it to pay people.
  979. The point is that the
    average person is quite happy
  980. to walk into a bar and hand
    over a five dollar note
  981. in order to get a drink.
  982. So you've got to
    realize that most people
  983. are happy with the
    money system they have.
  984. - [Voiceover] If most
    people are happy with cash,
  985. they're in love with plastic.
  986. In the U.S. two-thirds
    of in-person sales
  987. are done with debit
    or credit cards.
  988. That plastic is a 60
    year old technology,
  989. created by a middleman.
  990. Never designed for the internet.
  991. Each transaction
    requires personal data
  992. like your name and address.
  993. Credit card databases
    are regularly hacked
  994. with fraudulent purchases
    charged to your account.
  995. Criminals buy and sell
    stolen credit cards
  996. by the thousands in dark
    corners of the internet.
  997. In some parts of
    London, one-third
  998. of all online credit card
    transactions are fraudulent.
  999. Card issuers don't hold
    you responsible for fraud
  1000. but protection
    comes with a price,
  1001. 2 to 4% in fees.
  1002. That's 50 billion
    dollars a year.
  1003. - The issue with credit cards
  1004. from the merchant's perspective
  1005. is there's a lot of risk.
  1006. If they a take a credit card,
    there might be a chargeback,
  1007. there might be
    fraudulent purchases.
  1008. In fact there are
    hundreds of billions
  1009. of dollars every year
    in fraudulent purchases.
  1010. - [Voiceover] A bitcoin
    purchase is done for pennies
  1011. but there are no protections.
  1012. If you lose your passwords,
  1013. or are fooled into
    paying the wrong person,
  1014. you can never get
    your money back.
  1015. It is like digital cash.
  1016. For a seller, this means
    no chargeback risks.
  1017. For an e-commerce companies
    like Expedia or Overstock,
  1018. cutting credit card fees can
    double their profit margin.
  1019. - You could not miss the
    point more effectively
  1020. than by thinking of
    bitcoin as a currency
  1021. and payment network that
    will make shopping easier
  1022. for the first world.
  1023. Bitcoin is about everything
    else, everywhere else.
  1024. - [Voiceover] There
    are 2.5 billion people
  1025. without a bank account.
  1026. With Bitcoin, a mobile phone
    with an internet connection
  1027. is now a bank, with access
    to the global market place.
  1028. - What happens when
    Bitcoin services
  1029. and infrastructure
    and Bitcoin wallets
  1030. and payment processors start
    going into these countries.
  1031. These people will be
    able to gain benefits
  1032. from trade where they
    could not previously.
  1033. These people will be
    able to send money home,
  1034. international
    remittance, which is one
  1035. of the major pain points of
    the current financial system.
  1036. - Here, if i send 100 dollars.
  1037. With banks it's
    going to cost me 20%.
  1038. Western Union's
    going to cost 10%.
  1039. Other options that are
    competing with Western Union
  1040. are still going to be about 5%.
  1041. And if you are sending
    to really remote areas
  1042. it's going to be anywhere
    between 15 and 30%.
  1043. - So in terms of
    money remittances
  1044. it is going to be a game
    changer using Bitcoin.
  1045. You do not need a bank account.
  1046. You just need an
    internet connection
  1047. and a wallet to get set up.
  1048. It's a tool to give
    people an access
  1049. into the global ecosystem
    and give them a promise
  1050. for an economic future and
    specifically provide a way
  1051. for them to not be
    dependent on a government
  1052. that could shut down
    their bank accounts
  1053. or even could go into
    their bank accounts
  1054. and take out finances.
  1055. - Goldman Sachs came
    out with a report
  1056. and they basically looked at
  1057. if you were to replace
    all transactions globally,
  1058. so FX, bank to bank transactions
  1059. with the Bitcoin protocol and
    still charging 1%, mind you,
  1060. it would save the global
    economy 200 billion,
  1061. not million, 200
    billion dollars a year
  1062. in saved transaction costs
  1063. which ultimately goes back
    into the hands of the consumer.
  1064. - [Voiceover] An
    international wire transfer
  1065. can take up to four days.
  1066. Yet the internet
    allows us to instantly
  1067. and globally share
    text, pictures, videos,
  1068. anything digital.
  1069. Why not money?
  1070. Money, which, we
    now know only exists
  1071. as digits in a bank's database?
  1072. - Wouldn't it be great,
  1073. if you could send
    Bitcoin transactions
  1074. just simply via a tweet?
  1075. For example, you would
    say @theendofmoney
  1076. one dollar worth of bitcoin
    and so we built just that.
  1077. All you have to do is to
    hashtag it with tippercoin.
  1078. Press send.
  1079. And our twitterbot will
    process the transactions,
  1080. notify you and give you a
    link and this will allow you
  1081. to either withdraw your bitcoins
    or send it to someone else.
  1082. - With Bitcoin, you
    can send one dollar
  1083. or 1,000,000 dollars worth of
    value anywhere in the world.
  1084. You can do it for free
  1085. or you can pay the
    Bitcoin network fee,
  1086. which is still just
    around a penny.
  1087. And there is nothing
    that the big banks
  1088. or the politicians
    can do to stop it.
  1089. - [Voiceover] A cryptocurrency
    that can only be created
  1090. and transferred with
    computer networks
  1091. may be the next step of
    the digital revolution.
  1092. The rise of machines.
  1093. Self-driving cars, drones,
  1094. robots that rely less
    and less on humans.
  1095. - What I often think is
    that the future of Bitcoin
  1096. or digital currency from
    a broader perspective
  1097. is really about machine
    to machine payments.
  1098. So by the time you have an
    un-manned taxi driving you
  1099. around New York, and
    then going to power up
  1100. at an unmanned power station,
  1101. or going to get repairs
    at an un-manned auto shop.
  1102. You'll see the machine
    to machine payments done
  1103. with some sort of
    digital currency.
  1104. - We actually built this
    world that we live in
  1105. over the last two or 300 years.
  1106. We made some mistakes.
  1107. We've learnt to
    make things better.
  1108. The idea that there
    is this magic key
  1109. that if you just sort of
    stop doing a few things,
  1110. that they'll be perfect
    order that will settle,
  1111. is a very childish,
  1112. ideological delusion
  1113. in my opinion.
  1114. But that's not to say
  1115. that Bitcoin isn't
    an exciting thing.
  1116. It's an terrifically
    exciting thing.
  1117. But we have to try
    and engage with it
  1118. with working minds not
    with magical thinking.
  1119. - People are suggesting
    that it's going
  1120. to be another world currency
  1121. rivaling the dollar, or
    the euro, or the yen.
  1122. I think that's not
    going to happen.
  1123. I prefer to trust the banks
    or the central government
  1124. compared to the Bitcoin is
    because someone is accountable.
  1125. Whereas with the Bitcoin it
    is completely deregulated.
  1126. There is no central control.
  1127. There is no one
    held accountable.
  1128. It is a free float, purely
    demand and supply driven.
  1129. - So, clearly, this
    is not a currency.
  1130. Currencies don't
    behave like this.
  1131. But what this is is a high-risk,
    speculative commodity.
  1132. - So, for the
    entrepreneurs, the bankers,
  1133. the governments and
    anyone else studying
  1134. and watching Bitcoin,
    all i have to say
  1135. is that there will probably
    be a lot of volatility
  1136. in an upward trajectory
    and to buckle up.
  1137. - [Voiceover] Criminals,
    scam artists, bad actors,
  1138. are drawn to any kind of
    money like a moth to a flame.
  1139. - Silk Road was a
    marketplace that was online.
  1140. it existed in the
    underground web.
  1141. Now this marketplace
    allowed people
  1142. to sell things that were
    illegal to governments.
  1143. - [Voiceover] Fake
    ID's, pirated music,
  1144. bibles in North Korea.
  1145. Are cryptocurrencies
    inherently bad
  1146. or just the newest tool
    to acquire the forbidden?
  1147. - Porn is illegal in Iran.
  1148. Well, there was a few
    percentages of sales
  1149. on Silk Road was to
    sell porn to Iranians.
  1150. Now, a much broader one,
  1151. that gets a lot of press for
    the guys at Silk Road is drugs.
  1152. - I've been doing research
    over the past couple of years
  1153. into the online
    drug marketplaces
  1154. in the Dark net
    using TOR and Bitcoin
  1155. as technologies to enable
    illicit drug transactions.
  1156. We did a global
    survey of drug users
  1157. and we had over
    20,000 people respond
  1158. to that and the
    majority of those people
  1159. were buying traditionally
    illicit drugs.
  1160. Ecstasy, cannabis.
  1161. The F.B.I. brought
    down Silk Road.
  1162. It certainly hasn't
    stopped the trading
  1163. of illicit drugs online.
  1164. - A lot of people want
    to criticize Bitcoin
  1165. for the use for illegal
    things or illicit things.
  1166. But if you look at it,
    the most popular currency
  1167. in the entire world for doing
    bad things is the U.S. dollar.
  1168. - If you think of Bitcoin
    as a platform instead
  1169. of a currency then
    you really begin
  1170. to see the potential it has.
  1171. - The ledger which
    cannot be forged,
  1172. it cannot be changed and is
    universally accepted is Genius.
  1173. There will be Bitcoin
    technology forever
  1174. and it will have applications
    for years to come.
  1175. - [Voiceover] Creating a
    secure, global payment system
  1176. may just be the beginning.
  1177. Patents, contracts, land titles,
  1178. proof of ownership can
    be baked into Bitcoin.
  1179. Securely held in
    the public ledger.
  1180. - I read up more about Bitcoin.
  1181. I played with the source code.
  1182. I built some things
    that I realized,
  1183. this is a actually a very,
    very powerful protocol.
  1184. It's not just a currency but
  1185. it's actually
    programmable money.
  1186. - [Voiceover] The digital
    age has fundamentally
  1187. changed the world.
  1188. We have embraced
    digitized music, film,
  1189. medical records,
    communications, the internet.
  1190. The free exchange of information
  1191. and currency can
    fuel revolutions,
  1192. help in a disaster.
  1193. But our money is shackled
    to the 20th century,
  1194. manipulated by
    governments and banks.
  1195. The champions of Bitcoin ask us
  1196. to imagine payments
    without a middle man.
  1197. Investments without a broker.
  1198. Loans without a bank.
  1199. Insurance without
    an underwriter.
  1200. Charity without a trustee.
  1201. Escrow without an agent.
  1202. Betting without a bookie.
  1203. Record keeping
    without an accountant.
  1204. Global, secure, nearly instant
  1205. and free.
  1206. Is it fantasy or the future
  1207. of money and commerce?
  1208. (intense instrumental music)
  1209. - I love bitcoins.
  1210. I'm really into bitcoins.
  1211. ♪ Well Satoshi Nakamoto
  1212. ♪ That's a name I love to say
  1213. ♪And we don't know
    much about him
  1214. ♪But he came to save the day♪
  1215. If you don't know what
    a Bitcoin is, right,
  1216. usually the way
    people describe it
  1217. is a digital cash.
  1218. It's money for the internet.
  1219. ♪ Bitcoin as your going
    into the old blockchain
  1220. ♪ Oh Bitcoin, I know you're
    going to reign, gonna reign.
  1221. They were like, "oh,
    I love my bank."
  1222. I'm like, "really?"
  1223. You ask a banker, "you
    know what's two plus two?"
  1224. He's like, "well, I can
    tell ya but there's a fee."
  1225. (laughter)
  1226. ♪ Down the road it will be told
  1227. ♪ About the Death
    of Old Mount Gox
  1228. ♪About traitors
    trading alter coins
  1229. ♪ And miners mining blocks♪
  1230. Now Bitcoins is
    a new technology.
  1231. I like to say it's
    banking (mumbling)
  1232. All of the convenience,
    none of the evil.
  1233. (laughter)
  1234. ♪Oh Bitcoin, as your going
    into the old blockchain
  1235. ♪Oh Bitcoin, I know you're
    going to reign, gonna reign
  1236. ♪Till everybody knows,
    everybody knows♪
  1237. You know when I go in line
  1238. and I buy like, I don't
    know, a pair of socks.
  1239. If I pay with a credit card
  1240. I'm just buying socks.
  1241. Right, if I buy those
    socks with bitcoin,
  1242. it's a revolution.
  1243. (laughter)
  1244. I am sticking it to the man.
  1245. ♪Oh Lord, pass me some more♪
  1246. There's always people
    who are not ready
  1247. to get into the new technology.
  1248. You know, like when
    the internet came out,
  1249. there was people going,
  1250. "nah, I don't think this
    is going to be popular."
  1251. (laughter)
  1252. And then e-mail came out
    and people were like,
  1253. "nah, this isn't
    gonna catch on."
  1254. And now Bitcoin comes out,
  1255. people are like,
    "I don't think,"
  1256. I'm like, "aren't you
    sick of being wrong?
  1257. "Get on this train."