馃攳
Crypto: will the bitcoin dream succeed? - YouTube
Channel: The Economist
[1]
in 2021 the price of a single bitcoin
[4]
the leading cryptocurrency broke 60 000
[8]
[Music]
[9]
and the market value of all
[11]
cryptocurrencies reached a staggering
[13]
2.5 trillion dollars bitcoin's promise
[17]
to create a new decentralized financial
[19]
system
[20]
beyond the control of governments and
[21]
banks has captured the imagination of
[24]
the world
[25]
it's become a bit of a social phenomenon
[27]
mark zuckerberg the boss of facebook
[29]
has pet goats and he's named them max
[31]
and bitcoin
[33]
but so far the bitcoin dream has not
[35]
been realized
[37]
[Music]
[38]
rather than becoming a new form of money
[41]
bitcoin has become a highly volatile
[43]
investment asset creating big winners
[47]
investors have said its price
[49]
skyrocketing during the pandemic
[51]
and big losers the crypto valuation
[55]
lost a third of a trillion dollars just
[58]
overnight
[59]
for the believers bitcoin is still a
[61]
digital stepping stone towards a utopian
[64]
future
[65]
for the skeptics the crypto market is
[68]
nothing more than a digital casino
[70]
too volatile to be trusted
[74]
so what will become of the bitcoin dream
[79]
[Music]
[85]
it all started in 2009 somewhere in the
[89]
world
[89]
a shadowy figure hiding behind the name
[91]
of satoshi nakamoto
[93]
created the very first bitcoin
[97]
it was the start of a digital revolution
[100]
bitcoin and the thousands of
[102]
cryptocurrencies that have followed
[104]
are nothing like actual coins they are
[107]
code
[107]
recorded on a digital ledger that gets
[110]
longer and longer as more people use
[112]
them
[112]
and embedded in nakamoto's code for the
[115]
first batch or block of bitcoins
[117]
was a newspaper headline bitcoin's
[120]
creator put that headline in the first
[122]
block
[123]
because he wanted to send a signal he
[125]
wanted to show that people were looking
[127]
for alternatives after the financial
[129]
crash
[130]
and the question that people were asking
[132]
is can we trust
[133]
financial institutions with our money
[135]
and bitcoin was the response
[138]
trust is at the heart of the current
[140]
financial system banks and other
[142]
financial institutions
[144]
control how money flows around the
[146]
economy
[147]
faith that their ledgers are accurate is
[150]
vital
[151]
this is because money is simply a social
[153]
convention
[154]
it exists and has value because we agree
[157]
that it does
[159]
this agreement only works because we put
[161]
trust in financial institutions
[163]
such as banks bitcoin does not require
[166]
trusted institutions nakamoto
[170]
wanted to create a secure system that
[172]
did not rely on any trust at all
[175]
to achieve this the coins are registered
[177]
on a revolutionary technology
[179]
called a blockchain which is a ledger of
[182]
transactions
[183]
that is not held by a centralized
[185]
institution
[187]
instead transactions are verified and
[189]
logged by a network of computers
[192]
all over the world in a process known as
[194]
mining
[196]
we're combining this for two purposes
[198]
one is to put new bitcoin in circulation
[201]
and the second one which is also
[202]
essential is to verify transactions on
[204]
the network
[205]
[Music]
[206]
but it's a complex process if someone
[209]
wants to make a transaction
[211]
everyone on the network is alerted the
[214]
transactions are verified by so-called
[216]
miners first they check the transactions
[220]
are legitimate
[221]
once a miner has checked a few thousand
[223]
transactions
[224]
they group them together in a block
[227]
that's the easy part the miners then
[230]
race for the right
[231]
to add this block to a string of those
[233]
previously made
[235]
known as the blockchain to do this they
[238]
compete to solve a complex numerical
[240]
problem
[241]
the miner that solves it first sees
[243]
their block added to the chain
[246]
and they are rewarded in bitcoin this
[249]
whole process
[250]
is incredibly energy intensive and is
[252]
contributing to the climate crisis
[255]
as of may 2021 bitcoin mining used more
[258]
electricity annually
[260]
than the whole of the netherlands to
[262]
keep bitcoin scarce
[264]
and to help maintain its value the
[266]
number of bitcoins that can be
[268]
mined is capped at 21 million
[271]
to date almost 19 million bitcoins have
[274]
been mined
[275]
but it cannot yet be classified as money
[278]
for something to be considered money it
[280]
has to work in three ways
[282]
as a medium of exchange as a store of
[285]
value
[286]
and as a unit of account for
[289]
all the main functions of money that you
[291]
can think of actually so far bitcoin is
[293]
not superior to the
[294]
solutions that we already have which are
[296]
shared money and
[298]
other ways of paying and that's you know
[300]
the main reason why
[301]
it you can't really call it the currency
[303]
now
[304]
here's why fundamentally bitcoin is a
[307]
string of code with limited use
[310]
like a gold bar it doesn't produce any
[312]
revenue
[313]
but compared with the price of gold the
[315]
value of a single bitcoin is hugely
[318]
volatile
[319]
and a single tweet can change people's
[321]
faith in it as a future currency
[324]
as a result its price moves wildly up
[326]
and down as people buy and sell it
[330]
and unlike the dollar there's no central
[332]
bank or government to defend its value
[335]
this volatility also makes bitcoin very
[337]
hard to use as a medium of exchange
[340]
so a seller on amazon is unlikely to
[342]
accept bitcoin for their goods
[344]
as the following day the price could
[346]
vary dramatically
[348]
as happened on may 19 2021
[352]
the price dropped almost 8 000 in less
[355]
than an hour
[356]
but that's not stopping el salvador the
[358]
central american country has become the
[361]
first to adopt bitcoin as legal tender
[364]
it's a major gamble bitcoin doesn't
[367]
really work as a means of payment
[368]
because it's very inefficient
[370]
it can process only 10 transactions per
[372]
second
[373]
when you know visa the credit card
[375]
company can do as much as
[377]
24 000 per second so if bitcoin doesn't
[381]
work as a way of paying for things
[383]
what gives it value like shares and
[386]
bonds
[387]
it's also traded as an investment this
[390]
has led to a speculative mania
[393]
where teenagers have become millionaires
[395]
it's not just
[396]
a maybe a get-rich-quick scheme as a lot
[397]
of people put it but i
[399]
see it as the future of currency and
[402]
others
[403]
have lost it all literally in 2013
[407]
one unlucky man in wales even scoured a
[409]
rubbish dump for a hard drive containing
[412]
7500
[413]
accidentally discarded bitcoins without
[416]
that
[416]
file there is no way of getting the
[419]
money back because there is no central
[421]
um
[422]
central server that records a log of it
[425]
today that hard drive would be worth 218
[428]
million dollars
[430]
if only he could find it
[434]
but investing in cryptocurrency is no
[436]
longer for early adopters and armchair
[438]
investors
[439]
it's attracting attention from some of
[441]
the world's biggest banks
[443]
including morgan stanley which now
[445]
offers investors access to bitcoin funds
[448]
but even cautious buy-in from some
[450]
financiers brings greater scrutiny
[453]
banks are taking tentative steps to get
[455]
into bitcoin
[457]
regulators are watching this closely and
[460]
so far they've only allowed a limited
[461]
set
[462]
of things that banks can do they can
[464]
provide access to the market to clients
[466]
but they can't bet on the market
[468]
themselves for example using their own
[469]
capital
[471]
and regulators are also wary because
[474]
bitcoin has a dark side
[475]
[Music]
[476]
so bitcoin has been used to fund
[479]
criminality or to launder money
[481]
uh if you venture on the dark web for
[483]
example which i did
[484]
for an article recently you'll find that
[486]
everything from
[488]
stolen credit card details to to drugs
[490]
is priced in bitcoin there's
[492]
has also been a lot of theft from crypto
[494]
exchanges
[496]
and a lot of fraud and it's not just
[499]
criminality that is ringing alarm bells
[501]
leading economists have warned that
[503]
bitcoin is a dangerous bubble
[506]
destined to burst and join the graveyard
[508]
of historically hyped-up
[510]
investments like the tulip mania of the
[512]
1630s
[514]
where the price of tulip bulbs rose
[516]
sharply before spectacularly crashing
[519]
or the dot-com boom in the late 1990s
[522]
in 2018 there was reason to believe the
[525]
skeptics
[526]
might be right the sharp surge and later
[528]
drop
[529]
in the price of bitcoin mimicked these
[531]
historic bubbles
[533]
a pattern which continued into the first
[535]
half of 2021
[537]
the price soared to over 60 thousand
[540]
dollars
[540]
only to fall again the bitcoin market is
[544]
very fragile in 2020 and 2021
[547]
we've seen these students you know sharp
[549]
drops in in price
[551]
on the basis of very little and then
[553]
they partially recover for
[555]
you know other bits of news that that
[556]
are completely unpredictable
[559]
supporters see cryptocurrency as a
[561]
burgeoning asset class with real value
[564]
more like gold than tulips but the jury
[567]
is still
[568]
out on whether the comparison is
[569]
accurate bitcoin
[571]
or another cryptocurrency might become
[573]
you know relatively
[574]
stable or trusted asset class like gold
[577]
but it's too early to tell
[579]
because you can see today as soon as
[582]
people think it's no longer a good
[583]
investment
[584]
then dumb and plummets and value with it
[587]
perhaps the biggest winner from its
[588]
climb
[589]
is bitcoin's mysterious inventor satoshi
[592]
nakamoto
[593]
assuming of course that nakamoto is a
[595]
real person who is still alive
[598]
they're thought to own more than 1
[599]
million bitcoin
[601]
currently worth around 37 billion
[603]
dollars
[605]
bitcoin may yet become a stable asset
[607]
like gold
[608]
or prove to be a bubble that bursts
[610]
spectacularly
[612]
but one thing is for certain the utopian
[615]
dream
[615]
of bitcoin becoming a new form of money
[618]
beyond the control of governments and
[620]
central banks
[621]
is still as elusive as the technologies
[624]
creator
[625]
[Music]
[628]
i'm matthew favaz finance correspondent
[629]
at the economist to read more for
[631]
coverage on bitcoin please click on the
[633]
link
[634]
thank you for watching
Most Recent Videos:
You can go back to the homepage right here: Homepage