Articles

Cryptocurrency: The Future of Money?

February 24, 2020


– Even if you don’t really
understand what it actually is, you might still be feeling
some serious Bitcoin FOMO. Remember those headlines from 2017? Like that teenager from Idaho who bought a bunch of
Bitcoin with birthday money from his grandma and became one of the youngest Bitcoin millionaires. And yeah, he’s being super
modest about it, too. Bitcoin’s value exploded in 2017. It wasn’t all that long ago that you could buy a single
Bitcoin for less than 10 cents. Then, fast forward seven years and that one little digital nugget was worth more than $10,000. Of course, right after that it took a pretty serious nose dive, losing about half its value
in the next six weeks. But even so, that ridiculous spike put Bitcoin on people’s radar. And suddenly there was a huge bump in the number of everyday schmoes who wanted in on the
action and were willing to gamble real dollars on a
pretty darn abstract concept. ♪ Bitcoin, sell me some Bitcoin ♪ ♪ You better get it currently ♪ ♪ It’s worth more than your currency ♪ – So I sold all 60 of my Bitcoin which gained me about
1.1 mil before taxes. – He was at 13 grand
yesterday, today it’s at 17, tomorrow it could be 100,
let’s go get some money. – Today there is still lots
of big name techy-types out there who believe Bitcoin
is the future of money. Some even say it will
completely revolutionize our global financial system, like Twitter co-founder Jack Dorsey, who recently declared that Bitcoin would become the world’s single
currency within a decade. Bold claim, my friend. So, is Bitcoin really the future of money? Or is it just another
bubble destined to pop? Okay, first things first. What the heck is Bitcoin anyway? – We can help with that. I’m Philip. – And I’m Julia. We are the hosts of the PBS
Digital Studio Show, Two Cents. All about personal finance. – Bitcoin is a kind of cryptocurrency, which is really just
a fancy sounding name for digital cash that can
be bought and sold online. There are no bills or even coins
involved, despite the name. And it’s not based on any
physical asset like gold. Also, transactions are
tracked by Bitcoin users without going through any
financial institutions like banks or credit card companies. – And unlike the digital
dollars in your bank account, cryptocurrencies aren’t highly regulated or backed by their government, so there’s no guarantee about
how much they’ll be worth from one day or even
one minute to the next. – Nowadays there’s a lot of
different cryptocurrencies out there that you can buy
online or even at certain ATMs. They all have weird names, too, like Ethereum, Litetcoin and Ripple. But Bitcoin was the first, the one that launched
the whole crypto craze. And it’s still by far the biggest and most popular of the bunch. Bitcoin was mysteriously
introduced in 2009 by an anonymous programmer, or more probably a group of programmers, using the alias Satoshi Nakamoto. It came just a year after a huge economic crisis shook a lot of people’s faith in the stability of our major global
financial institutions. And like all cryptocurrencies,
Bitcoin operates on an open source technology
called Blockchain. Think of it sort of like a massive shared Google
doc in view-only mode. Basically, a continuously
updated online record of transactions that every
user can keep track of, but no one can change. Each group of transactions called a block then has to get validated and added to the public record. And that’s done without the need for any middle men like banks
or credit card companies. It happens through this crazy
process called Bitcoin Mining where independently owned
computers around the world compete to solve super complex math problems that somehow prove the
validity of the transactions. The computer that solves the puzzle first adds the newest block to
the chain and as a prize, that computer gets to mine a handful of spanking new Bitcoin,
increasing the total amount of Bitcoin in circulation. Pretty crazy, right? But your identity and what
you’re actually buying and selling is all encrypted, hidden behind layers of computer code, which is why you’ve probably heard stories about Bitcoin being used for all kinds of illicit activity like money
laundering, drugs and sex. And for all the Bitcoin
evangelists out there, there are a lot more skeptics
who think this whole thing is little more than a short-lived fad that’s gonna leave many unsuspecting folks with a whole lot of digital nothing. For one, they argue the value of Bitcoin and other cryptocurrencies is incredibly erratic and unpredictable. In econospeak, this is
known as volatility. Remember that Bitcoin’s value is based entirely on speculation. It’s really just how
confident people feel about it at any given time, for
whatever real or imagined reason. So, it’s pretty common for its value to surge or plunge over the
course of even a single day. And that doesn’t make it
particularly functional as an everyday form of payment. Since the end of the boom in 2017, fewer and fewer businesses
are accepting Bitcoin as a form of payment. Even the North American
Bitcoin conference stopped letting people pay for tickets with, wait for it, Bitcoin, because
of high transaction fees and long processing times. Ironically, Bitcoin was
invented to avoid stuff like that from happening in the first place. Alright, so now you might be thinking, what makes a dollar bill any
more real than a Bitcoin? I mean sure, a dollar physically exists, but what makes this flimsy
green piece of paper with a headshot of old
G.W. any more reliable? I mean, it’s not based
on any physical asset like gold anymore and
it’s value also rises and falls over time, although
never as fast as Bitcoin. The big difference, of course, is that the dollar is
the official currency of the United States. That means it’s backed
by the U.S. Government which can control circulation
and adjust interest rates to keep things relatively stable and make sure that the cash in your wallet is still worth something
at the end of the day. Yay economics! So yeah, it’s pretty unlikely that Bitcoin will replace the old greenback in the U.S. or currencies in other stable economies. But even if Bitcoin
falls short of sparking a full-on financial revolution, some advocates argue
that it’s already proven to be a useful payment system in places with really unreliable economies. Countries like Zimbabwe and
Venezuela have been dealing with hyperinflation for years, making their official
currencies close to worthless and even more unreliable than Bitcoin. The Venezuelan Bolivar, for instance, has lost something like 99.9% of its value in the last two years. And that’s led to massive
national shortages of food, medicine and
other crucial supplies. – [Reporter] One in four
Venezuelans is unemployed. Inflation could hit 700% this year. – The Venezuelan currency devalued so much that people are using banknotes to make things like soccer
balls or works of art. – In late 2017, the Venezuelan
government went as far as introducing the 100,000 Bolivar note, worth all of about $2.50. In these countries, some people have already started using Bitcoin and other cryptocurrencies as alternatives to cash for purchasing basic supplies. And although that’s not
likely to be a longterm fix, it’s better for now, at
least, than lugging around a wagon full of Bolivars
just to buy some bread. So, what do you think? Is Bitcoin a real alternative or just a digital load of hype? And would you be willing to invest in it? And if you like this video, check out the one I did recently about free speech on college campuses. And, one more thing, this is gonna be my last Above the Noise episode. I’m moving on to pursue my journalism and filmmaking career,
but I’ll be leaving you in very good hands with
my friend Myles here. – Ooh, we’re gonna miss you Shirin, but at least we’ll still
have the memories, right? Best of luck to you, it’s been really fun and watch out, Scorsese. – Bye for now, everyone, and don’t forget to cut through the hype. – And stay Above The Noise! And subscribe. See you back here in two weeks, bye.

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33 Comments

  • Reply TorabisuRandom August 15, 2018 at 6:06 pm

    First!

  • Reply Alan Kakareka August 15, 2018 at 6:14 pm

    real dollars on bitcoin, joke of the year? 😀

  • Reply · 0xFFF1 August 15, 2018 at 6:17 pm

    Bitcoin won't, because there's too many design flaws in it due to it being the first of its kind. In particular, people only use it as a means of storing wealth instead of as a vector to buy things with, kinda of like gold. To be fair, this is because there aren't really any places that adopted bitcoin because no one took it seriously until it actually became valuble and at this point it's far too late to get into it. Next, mining it doesn't have any protections against ASICs, specialized hardware that can compute bitcoin hashes far faster than any general purpose computer of the same caliber. Since mining difficultly inflates so rapidly, if an ASIC doesn't get used constantly, it'll fall behind the curve and never earn even a return on investment, and at that point, it's as useful as a brick, since it isn't capable of doing anything else. Next, the transaction speed is incredibly slow, so it wouldn't be able to keep up with people actually using it for commerce anyways. Mining is still profitable if you have huge facilities to cool and run your ASIC hardware, to the point that bitcoin mining takes up about a percent of the world's energy consuption itself. That's probably not ideal for the environment.

    As for cryptocurrency in general, there's still a ton of advancements in the field to be made, and a ton of use-cases to be explored. For example, if you were an artist, you could use an Etherium token to sell "signed and numbered copies" of your digital artwork. Using a business model such as this, you wouldn't have to care if people repost your art and you won't have to place a paywall over it such as through patreon. People would support you by buying a numbered copy, and could hold on to it and later resell that copy whenever. It could recreate the scarcity of the physical art marketplace, a feat that would've been otherwise impossible in the digital age.

    In fact, The Rare Pepe market could be a real thing by utilizing a blockchain.

  • Reply IsYitzach August 15, 2018 at 6:20 pm

    Bitcoin and cryptocurrencies for the time being are tulips. They bubbled and popped. They also take a large amount of power to maintain, so they aren't green. The designers of these currencies need to think long term, 10,000's transactions/min and consider power requirement to maintain. For now, the banks do all that better.

  • Reply Charles Rosenbauer August 15, 2018 at 6:45 pm

    You really should have talked more about cryptocurrencies like Ethereum which support smart contracts, or the fact that cryptocurrencies use cryptography and game theory to make mostly trustless systems.

    For those out of the loop:

    Smart contracts are computer programs that run on a blockchain. Essentially, you can have digital assets aside from a currency that exist on a blockchain, and have them attached to a set of rules that determine what you are and aren't allowed to do with them. Unlike traditional laws, you can make it pretty much impossible for someone to break those rules in a way that isn't easily detected.

    In terms of cryptography, while I'll avoid the math here, the gist is that cryptocurrencies are designed so that every transaction on the blockchain uses cryptography to verify that it wasn't forged. If someone wants to forge a transaction under your name (for example, if they want to steal money from you), they either need to steal your private cryptographic key (which works a little like a password, except that it's just a number with several hundred digits, chosen because of some nice cryptographic properties) or they need to crack the encryption, which wouldn't even be feasible if you could pack the entire observable universe tight with computers and let them run until the heat death of the universe. There is the concern that people could forge transactions and then just ignore the obvious fact that they're forged, but the incentive systems built into the network are designed to either harshly penalize it, or make it practically impossible.

  • Reply S. Y. August 15, 2018 at 8:47 pm

    Here in Syria we also have a massive inflation rate (about %800), and in addition that, due to the harsh American trade restriction on our economy since the 1960s, we are not able to make any internet transaction or access any real monetary service, like MasterCard, Visa, Paypal, Patreon, eBay, Netflix, or even AdSense. So, we are really left with no choice but to use cryptocurrencies to preform any international transfer of money or any transaction online in general.
    To us, to many other poor countries, and to the rest of countries' economies harmed by the US, cryptocurrencies are a saver.

  • Reply zarboov88 August 15, 2018 at 8:53 pm

    So now it’s 55 likes, and 2 dislikes. Now wait till the bitcoin-circle sounds its horns… and get ready to “really get educated”… 😉

  • Reply Torilovem, the Jester August 16, 2018 at 1:23 am

    Who are those Two Cents folks? I can't find their channel 🙁

  • Reply KingHarsh August 16, 2018 at 4:24 am

    HODL GUYS!!!

  • Reply Asbjørn August 16, 2018 at 9:42 am

    Blockchain currencies can be very useful. Yea, in its current state its values is based on speculation and it is very volatile. But lets say that the national bank of a country launches their own proprietary blockchain based currency. This would mean that banks no longer has the ability to create money through debt (Money supply in western countries are controlled mainly by private banks), and the banking industry would have to revert back to their original function: Brokering between lenders and investors. Every citizen would have an account in the national bank, and therefore, the bank would have to make direct deals between people who invest and people who lend. They would no longer have free access to a huge amount of money, that they can use as they please. They would have to let the people that has the money decide who will get their money as a loan.

    Other than that the money supply would return to national hands making it more stable, easier to maintain and regulate. All huge bonuses for the free market, as the playing field would be more equal, fostering more startups as they would not have to fight as much against the big financial entities. And the big institutions would have a much harder time manipulating the financial markets through speculation.

    Right now the only thing national banks can to do help monetary issues in society, is to change interest rates. This is a good tool, but very limited in its possible effects.

    Yes, on paper it would mean a huge dip in the financial sector, but as it is now, it is wildly inflated. Just look at the housing bubble in 07-08.
    All due to big financial institutions getting wild on speculation and leveraging. Taking society as hostage and casualties when it goes too far.
    It would not remove the bubbles entirely, but it would make it harder for big financial institutions to spear-head these bubbles. The entire society of a nation would have to be in on a speculation bubble for them to be as big as the housing crisis.
    All in all, trade of stocks and investments would return to more closely resemble real world value, in turn making more real growth and value per invested dollar in the financial markets. This is good for society and the common man, as well as business owners as the market is now equalized and more fair for everyone. The more stable and fair a market is, and it's money supply, the more people are willing to invest.

    It would simplify a lot of financial trickery that banks and big financial institutions are doing at the moment, by making it impossible for them to mess with markets and stuff.

    This might sound really progressive, left wing. But think about it. It's actually really conservative. Bringing the private financial sector away from control over the markets, bringing it back to a neutral entity (national banks), giving countries back the opportunity to control how their markets function. This might sound scary to some, but remember: Without rules and laws, there is anarchy.
    That applies to the free markets as well. Free markets are only free as long as everyone plays by the same rules. National banks and governments are the source of these rules, and so it should be.

  • Reply of the earth August 16, 2018 at 11:06 am

    Maybe something like bitcoin. I appreciate the message. Good luck host ~>

  • Reply Spring Board August 16, 2018 at 4:04 pm

    Behind government regulations US dollars are still dependant on public faith.

  • Reply Garbimba1900 August 16, 2018 at 5:31 pm

    Nooo, Shirin, don't goooo!!!

  • Reply How Much For A Gram August 16, 2018 at 7:49 pm

    Bitcoin is nothing but a market to be exploited by speculators. Look at the pattern of humps. It is pretty well stable now, with the hodlers locked in. Had its 15 minutes, it's the future of nothing.

  • Reply Gail Gayw August 17, 2018 at 12:11 am

    shirin plz link where we can watch your work!!!

  • Reply gotz work August 18, 2018 at 1:32 am

    check it out , all the things you need to know in crypto currency trading https://bit.ly/2nT704l

  • Reply Megakoresh August 18, 2018 at 6:32 am

    Bitcoin would have already become the world currency if people were more interested in what's in their best interests as opposed to what's easiest and familiar. An uncontrolled, transparent, yet private currency with very little environmental impact and nothing to influence it but pure value for customers? It's a win-win for everyone, but the US government, which is a double win in of itself.

  • Reply Tony Twoplates August 20, 2018 at 5:53 pm

    Hey Guys. I know the president of BlokTech. He's very wise to the bitcoin / altcoin game. Let's set up an interview. Here is article written about him.

    https://medium.com/@peterlandis87/miami-the-new-smart-tech-hub-spearheaded-by-bloktech-5d4cb6ef20df

    I'm also friends with;

    https://twitter.com/hodl_crypto
    https://www.instagram.com/hodlcrypto/

    Let's set up some interviews for your show!

  • Reply Tomi August 30, 2018 at 7:25 am

    Garbage propaganda.

  • Reply tsuchan1 September 7, 2018 at 11:05 pm

    But… you hardly got hold of the title subject of the video 🙁

  • Reply Boss Crypto September 9, 2018 at 5:43 pm

    👊

  • Reply Jake J September 12, 2018 at 7:06 am

    The people in these comments are stupid as shit.

  • Reply Jake J September 12, 2018 at 7:07 am

    Idiot American video.

  • Reply Daniel Cristian November 7, 2018 at 6:18 pm

    Cripto is not an investiment, it is protection; like gold, but with easier tracking and transfer technology

    Paper money is fake money, dive into some Hayek and Rothbard books to clear the noise

  • Reply Gumbo Clay November 18, 2018 at 4:24 am

    No way. Drugs will be the currency of the future.

  • Reply DJ RASHAD December 21, 2018 at 9:29 pm

    http://www.knolix.com/5a3857bda8c46/

  • Reply Lukáš Krtek December 24, 2018 at 9:09 pm

    Bitcoin is not optimal as currency, its mainly goal is store of value, for now. Later, when ever so decreasing volatility will be similar to forex fiat, then it will be world currency backed by DECENTRALIZED network run by consensus.

    Bitcoin is here to stay, only because you dont understand it doesnt mean that generations who grown on full digital world will have issue with its non-physical reprezentation.

    Think about how crazy must have sounds the idea in 1990 that people will do shopping on the internet.

    Love from Czech republic, birthplace of Trezor for your coins…

  • Reply Sustany Capital May 8, 2019 at 8:06 pm

    Cryptocurrencies will continue to fail in supplementing fiat currencies in a meaningful way until their use is friction-less for consumers. While stable-coins are likely part of the solution, a successful blockchain-based architecture must implement currency as protocol through consumer-facing applications that provide a seamless bridge to legacy fiat technologies. Just as the voice-over internet protocol (aka, voice-over IP, or VoIP) empowered Skype to challenge phone carriers worldwide, this final step — which legitimately defines "money-over IP" — will redefine money. – details here: https://www.forbes.com/sites/forbesfinancecouncil/2019/01/24/the-future-of-money-from-cryptocurrencies-to-money-over-ip/

  • Reply Sam Bliz June 4, 2019 at 11:42 pm

    No strategy outclasses that of mike harry trading, I keep making btc profit

  • Reply Roger Souza June 4, 2019 at 11:43 pm

    Bitcoin mining with mike harry trading is profitable and safe

  • Reply Alex K June 27, 2019 at 3:06 am

    If bitcoin became the main currency how many computers would it take to crack the block chain codes?

  • Reply Marvelous Lighting November 17, 2019 at 2:33 pm

    I love bitcoin, but I don't own any. I am more interested in his Grandchildren like XRP,ADA,TRX,XLM,VET and a few other Black sheep of the family.

  • Reply LiftedStarfish November 21, 2019 at 4:01 am

    I wish they wouldn't talk to us like we're fucking children.

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