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(audience applauds)
- Right, finally, we have Torsten Hoffmann,
who's the producer of the Cryptopia Film.
(audience applauds)
- Thanks, Peter.
Five years ago,
I made a film about the history of money,
banking, and Bitcoin.
Buckle up, we said, it's gonna be a bumpy ride.
And now, some of the big brains and big egos
who championed cryptocurrency
claim they're building a crypto-utopia.
- Magical things will happen.
- [Torsten] With something called blockchain technology,
and it just might change your life.
- And they really could compete with,
if not take down the Facebooks
and the Googles, and the Amazons.
- My name is Torsten Hoffmann,
and I'm going to put some of these claims to the test.
Some critics say you kind of hurt the community.
What's your response to that?
This innovation has enabled lots of criminals and scammers.
But basically looking at it now, you lied to us.
Forget all the hype.
We'll explore the true potential of this new invention.
See who's already using it.
- Making it really easy and simple
for people to own a piece of a solar farm or wind farm.
(soft music)
- [Torsten] And go deep into a secret bunker
that holds billions in Bitcoin.
- [Christoph] We cannot talk too much about it
because it's pretty secret what is down there, right.
(soft music)
- And if Bitcoin succeeds,
it'll be at least $1 million per coin.
(soft music)
- [Torsten] We'll learn lessons from the past
and meet those building the future.
But there are those who want to kill it.
- Join with me in introducing
a bill to outlaw cryptocurrency
so that we nip this in the bud.
- [Torsten] Control it.
- Next year, people are going to start seeing
that we have hundreds of patents
and everything changes.
- [Torsten] Or change the world with it.
Welcome to ground zero
in the battle for the future of the Internet: Web 3.0.
- They wanted a science fiction dream,
what they actually did was build forthcoming disaster.
- A lot of people were not willing to learn
and were not willing to admit they were wrong.
- They're idiots.
- Why is this fraud allowed to speak at this conference?
- Stop telling me that I have no clue.
- That's just bullshit.
- If you don't support free speech,
you don't support Bitcoin.
You're an enemy of Bitcoin.
- [Tim Draper] This is bigger than the internet,
the Iron Age,
the Renaissance,
the Industrial Revolution.
This affects the entire world.
(electronic music)
- For years and years,
I've been researching blockchain technology,
cryptocurrencies, the market booms and busts,
and many have asked me to explain Bitcoin to them,
but I think this is why it's so difficult.
- Cryptocurrencies,
everything you don't understand about money
combine with everything
you don't understand about computers.
- [Torsten] Okay, let's start slowly
with the basics of money and it's creation.
- [Narrator] The total value of all the world's money
is about $120 trillion.
What you probably didn't know
is that each new dollar
is created by governments and banks as debt,
which needs to be paid back by someone in the future
with interest.
That's why there isn't enough money in the world
to repay all that debt.
And there never will be.
Oh, and almost all of the world's money
is already digital,
just entries in the ledger,
usually managed by a bank.
Only a small portion exists as physical currency
like cash or coins.
Think of it this way,
your employer deposits $1,000 into your bank account.
Then you pay $200 in taxes,
$500 for rent,
$200 for bills and shopping and so forth.
Whether you use credit cards,
debit cards, PayPal, or bank transfers,
they're all just pluses and minuses
in different digital ledgers.
That's why there's almost no need for physical money
in our daily lives.
- During the financial crisis in 2008,
a mysterious figure called Satoshi Nakamoto
published this nine page white paper.
It said with Bitcoin's open source software,
we can create our own money
without banks or Governments.
(electronic music)
This new nerd money, called cryptocurrency,
is created and stored in computers.
And before long, there was a growing fan club,
mostly guys like Roger Ver.
Today, he's a polarizing figure,
but back then, he gave away thousands of coins
to kickstart the movement,
and they all called him Bitcoin Jesus.
- I think that for may years,
he brought more people to Bitcoin than anyone else.
And we will forever be grateful to him for doing that.
- When I was a kid,
I was reading all these science fiction books.
They were talking about
how the world is gonna be
when we have this like anonymous digital cash
that people can use on the internet
that's not controllable by anybody.
And then when Bitcoin came along,
it was like: Wow, this science fiction money idea
that I'd been reading about as a kid
is finally here.
So I got so excited about it.
I heard about it at about 10 in the morning.
And I was planning to go to work that day, but I didn't.
I stayed home the entire day reading about it.
Didn't leave, I stayed up all night that night
reading about it.
Stayed up all night the next night reading about it.
- [Torsten] He went deep down that rabbit hole
to the point of physical exhaustion.
- So I called up a friend of mine,
said please help me, I'm so sick.
Can you bring me to the hospital?
- [Torsten] Yeah, Roger got bit bad
by the Bitcoin bug.
- Cause it's truly one of the most exciting inventions
ever in the entire history of human kind.
- [Torsten] But how does it work?
When my friends ask me to explain,
well I often start with this analogy.
- [Narrator] Imagine a bank vault
where you have a safety deposit box.
Your key opens one of the boxes
where you can securely store physical valuables,
like gold coins.
In Bitcoin, there are digital keys.
Think of them as very long passwords.
Your private key gives you access to a wallet,
which unlocks billions of unique Bitcoin addresses.
Each one is a virtual safety deposit box
that only you can open with your key.
And there are more addresses in this virtual vault
than atoms in the universe.
The doors to these boxes are transparent.
You can see inside them.
Here's one with digital money, 0.21 Bitcoins.
Sending them from one box to another
is what's called a Bitcoin transaction.
We'll explain that later.
But for now,
just remember that these digital coins
can only exist inside these transparent address boxes,
can't be copied,
and can't ever leave the vault.
And this vault is owned by no single entity.
You don't need permission from a government,
a bank, or a corporation to use it.
(electronic music)
- [Torsten] For most early adopters of Bitcoin,
it was all about global peer to peer electronic cash.
Room 77 in Berlin was one of the very first businesses
to accept Bitcoins as payment for physical things,
beers and burgers.
- Back in 2011, there were no mobile wallets, right.
So you had to go there, bring your laptop,
type in this long address,
risk losing the money if you didn't type it correctly.
So the first guy who built a mobile wallet
was some guy in Berlin
who built it in order to buy his beer
with his phone instead of his computer.
(speaking in foreign language)
- [Narrator] Credit cards are an old technology,
and actually pretty complex.
And you payment details are shared with many middlemen.
Each of these parties are also taking a cut of the action,
which is built into the price of nearly everything you buy.
If you purchase something internationally,
double the number of middlemen and triple the fees.
Credit cards handle almost $20 trillion
of transactions per year.
(upbeat music)
- [Torsten] Early Bitcoin adopters, like Room 77,
avoided paying credit card fees.
But Joerg's real beef was with the bankers
who collect them.
(upbeat music)
- [Torsten] Collapsing economies, murder,
I didn't sign up for this.
Let me get a drink.
Well, actually, I need to buy my German crew
some Gluwein
and explain why they won't get paid
until after Christmas.
You see, transferring money from Australia,
where I live,
to Germany can take several days,
and it will cost $30 plus exchange fees
just for updating numbers in digital ledgers.
After all, it's just moving data.
I can send a picture or video
to anyone on the planet almost instantly, for free.
We live in the age of the Internet,
but the banks won't send the data
after 5:00 p.m., or on a weekend?
That doesn't make any sense.
So what if those slow and expensive middlemen
with their multiple ledgers
could be replaced with a giant database
synchronised over the Internet?
That's the big idea behind Bitcoin.
And it's run by a decentralised global network
of powerful mining computers and regular laptops.
Here's how it works.
When I pay my cameraman,
what's really happening is that I use my key
to open my wallet,
and then instruct the network
to send Bitcoins to his address.
Most Bitcoin apps use QR codes
to identify and address.
You scan it,
then swipe to use your key,
and approve the transaction.
- [Narrator] This information is shared
throughout the global network within seconds.
Every 10 minutes or so,
one miner using a tremendous amount of energy
beats all the others in a contest
to solve a very difficult math problem.
That miner is authorised
to arrange the most recent transactions
into a structured block,
and is rewarded in Bitcoins for this work.
All the data contained inside each block
is represented by a check sum.
The miner now adds the new block
to the previous one.
That's why it's called the blockchain.
Now the ledger will be updated globally.
The check sums of the previous block
match the beginning of the new one,
which are baked together forever.
It's impossible to tanker with the data inside the block
without changing the check sums
and breaking the chain.
(soft music)
- [Torsten] This immutability is the first rule of Bitcoin.
It means one one can ever change
what was once recorded in the blockchain,
or spend the same coin twice.
That's also called censorship resistance,
and it's critical to Bitcoin being used as real money.
Awarded winning journalist Laura Shin
tells me a story about women bloggers in Afghanistan
being paid in Bitcoin.
- One of the women had an abusive husband,
and saved up here Bitcoins
and eventually was able to divorce him
because she was able to control her money
when she earned the Bitcoins.
- [Torsten] In my first film, the early adopters
said that this kind of financial freedom for everyone
was just around the corner.
- The world's most populous network is adopting Bitcoin,
that's the Internet.
The world's largest economy is adopting Bitcoin.
That's the internet.
We have transcended borders.
- It's totally failed as electronic cash.
- [Torsten] David Gerard says it has unbanked
the banked more than it has banked the unbanked.
He's an outspoken critic of this technology.
- It's not very good as a payment system.
There a small payment in this case
if you want to trade in things
the Government doesn't want you to trade in.
- [Torsten] That's David's polite way
of saying illegal stuff.
- In 2011, most of my partner colleagues
(soft music)
were saying three things. (soft music)
were saying three things.
It was either drugs, pornography, or arm sales.
- [Torsten] The Silk Road was a black market
on the dark web
where the buyers and sellers used Bitcoins
to fly under the radar of the authorities.
It had one million users
until the FBI showed up and shut it down.
They caught this guy for running it,
and confiscated the coins held in escrow
by snatching his computer.
And then they locked him away for life.
Seems like a pretty straight forward case
of law enforcement doing their job,
but in crypto, not everybody sees it that way.
(soft music)
- People have an absolute right
to put whatever they want in their own bodies
because their bodies belong to them.
That makes Ross Ulbricht
and the users of the Silk Road heroes,
not criminal law breakers in a bad sense.
They are criminal law breakers in a good sense
the same way that Harriet Tubman or Rosa Parks,
or you know, Thomas Jefferson,
or George Washington were.
- [Torsten] No doubt cryptocurrencies can be a tool
for criminal activity.
But so are dollar bills
or the banking system.
And let's not forget the blockchain is a public ledger.
- It's actually been quite useful
for uncovering crimes.
A former federal prosecutor named Kathryn Haun,
she was the one who discovered
that there were a couple federal agents that
were pilfering the Bitcoins that the Government had obtained
from the Silk Road case
for their own gain.
And what was interesting
was she got a tip that there might be one,
one agent that was doing this.
But from looking at the movements
on the blockchain itself,
she realised that there were two people.
- [Torsten] The prosecutor could see
those Bitcoins being moved.
And when the dirty cops tried to sell them for dollars,
they got busted.
(soft music)
But what makes Bitcoins worth stealing?
Why do they have value at all?
- [Narrator] Let's go back to where Bitcoins are stored
in transparent digital deposit boxes,
protected by strong cryptography.
They can never be copied or leave the vault
because any transaction of any Bitcoin,
down to a 100 millionth fraction
is recorded in the blockchain for eternity.
This synchronised global ledger
is shared among thousands of computers worldwide.
That's why it can't be compromised or altered.
Think about that.
We can make an infinite number of perfect digital copies
of a movie, a song, any file,
but for the first time in history,
this distributed record keeping
allows us to have a truly unique and fungible
digital object that is also scarce.
If you could count all of these virtual coins,
you'd find about 18 million of them today.
The mining reward is the only way
new coins are created.
(soft music)
In the first years of Bitcoin,
miners competed for 50 Bitcoins every 10 minutes.
Then their reward for processing transactions
dropped to 25 Bitcoins,
then 12.5,
and then half again and again every four years.
It's good old fashioned supply and demand.
If investors or users of Bitcoin
create a higher demand than this decreasing supply,
the price will go up.
When the cap of 21 million is reached,
the protocol stops the network from creating any more.
It's the opposite of our traditional money supply,
which keeps growing and growing.
(soft music)
- Hmm, and unlimited amount of dollars
versus a very limited supply of Bitcoins.
You do the math!
If you use Euros or dollars,
you might not care about a little inflation per year.
But if your currency isn't stable,
you might be a trillionaire on paper,
and be dead broke.
(slow suspenseful music)
- I grew up in Patagonia
in the southern part of Argentina.
My parents are sheep ranchers there.
And I remember growing up in my childhood,
I saw my parents loose everything three times.
First because of a huge devaluation,
then because of hyperinflation,
and the last time because the Government confiscated all
our bank deposits.
I think that today,
there are billions of people,
at least four billion people
who would be a lot better off
by having access to a form of money
that is non-political and more democratic.
(soft music) (muffled speech)
- We think of finance.
We think of banking.
We think of money.
In terms of the experience and perspective
of Western European or developed nation person,
and that is really just a billion and a half people
who have a very privileged financial life.
What about the other six billion?
Every single country that is free
has essentially a legal status for cryptocurrencies
that is very open and permissive.
And every single country that is unfree
has restrictive or banned cryptocurrency status.
(soft music)
- This is the Berlin Wall,
still a powerful symbol
of a Government trying to control its citizens.
But this is what happens when people
want to be free.
The very first open crypto-war is playing out in Venezuela
where the local currency loses value every hour
due to hyperinflation.
- A lot of people in Venezuela
are trying to mine cryptocurrencies.
And the government views this as a threat obviously
because they're trying to keep the Bolivar propped up.
The government actually provided electricity
to a lot of people,
and if they perceive that your electricity usage
has gone up,
they will come and check if you have mining equipment
in your house, and they will confiscate it
if they find it.
- [Torsten] And that brings us to the big question,
can Governments or banks ban Bitcoin?
- So the title is "Jamie Dimon,
"Here's why you're wrong about Bitcoin".
- [Torsten] Dimon runs JP Morgan Chase,
one of the largest banks in the world
that moves $6 trillion every single day.
- Oh, you said of Bitcoin
eventually it will be closed.
And then I said to anyone who knows anything
about the technology, this is an incredibly absurd statement.
I even said it was a little bit hilarious
because I find it kind of funny
the idea that you thought you could close Bitcoin.
But you'd have to shut down the Internet,
which also doesn't make sense.
I could understand if you wanted Bitcoin shut down,
or hoped it was a fraud.
I mean if I were you,
and if I really understood the disruption
that crypto assets could bring to financial services,
I'd be very scared.
- And I think whatever Jamie Dimon
says or thinks about Bitcoin
is as relevant as whatever the Postmaster General
thought or said about email:
Who cares?
- Then I wrote sincerely, Laura Shin.
- [Torsten] But some politicians
still think they can stop open source software.
- I look for colleagues to join with me
in introducing a bill to outlaw cryptocurrency purchases
by Americans so that we nip this in the bud
in part because an awful lot of our international power
comes from the fact that the dollar
is the standard unit of international finance
and transactions clearing through the New York Fed
is critical for major oil and other transactions.
And it is the announced purpose
of the supporters of cryptocurrency
to take that power away from us.
- Cryptocurrency represents a litmus test for Governments.
It reveals how much your Government believes in,
in the fundamental freedoms and Human Rights
because if they don't trust their own citizens
to have control over their own money,
that says a lot about the government
and says very little about cryptocurrency.
- [Torsten] You see, the reason why some Governments
and most banks are threatened by this technology
is simple, your private key and your wallet
can replace your bank account.
The network is run by software
and its currency is made and maintained
by computing power and electricity.
It can't be manipulated
by central bankers, Wall Street lobbyists
or politicians.
But with new freedom comes new responsibility.
- Simple rule, if you control the keys, it's your Bitcoin.
If you don't control the keys, it's not your Bitcoin.
Your keys, your Bitcoin.
Not your keys, not your Bitcoin.
Your keys, your Bitcoin.
Not your keys, not your Bitcoin.
- [Torsten] Got that?
If you lose your key,
you will never be able to access your coins again.
And if someone hacks your computer
where you store those passwords,
your coins will be stolen in a second.
And remember how Wences's family
had their money stolen by their own government?
Well, maybe that's why he built the Fort Knox
of Bitcoin security, Xapo.
- Most of our seven million customers
are in emerging markets.
In countries where there is problems with the currency,
we have explosions in activity like Venezuela
right now or Turkey.
And we develop this system of vault
where we have five private keys
for each one of our Bitcoin addresses.
We keep those private keys
in an offline server that has never been online,
will never be online.
It's inside the vault.
The vault is inside a bunker,
usually deep underground.
Our main one is in Switzerland
in a decommissioned military bunker.
- [Torsten] I just had to see it for myself
even though it took months for us to get cleared for a tour.
(soft music)
We were met by Christoph Oschwald,
a former military commander who runs the place,
and a representative from Xapo.
Christoph said the guards would rather shoot us
than show us around.
I hope he was kidding.
- They need to bring in the material
to the other side of the personal lock.
- [Torsten] First up, one more check of our IDs,
a pat down for weapons or any other monkey business,
and gear inspection.
Even the boss was searched.
It took nearly an hour to get my team through security,
but it was worth it.
No other film crew has been allowed access.
- We are the largest custodian of Bitcoin in the world
because a lot of the largest holders in the world
use us for security.
- [Torsten] Rumour has it
that 10% of all Bitcoins are stored here
and in their four other secret locations.
(soft music)
- Unfortunately, I can't confirm any of those numbers.
- From the mountain,
we are getting a lot of benefits, right?
Earthquake proof,
flooding proof,
but on the other side,
you're facing a lot of additional costs.
- [Torsten] Like maintaining seven independent
backup power supplies.
The labyrinth of tunnels deep into the mountain
is interrupted by nuclear grade doors.
(soft music)
It's a level of security
applied to all of the data Christoph protects here,
not just for Xapo.
- We cannot talk too much about it
because it's pretty secret what is down there.
- Are we allowed to film there?
- No.
- [Torsten] There were doors that remained shut
and security measures we weren't allowed to see.
- And some of those checks may be biometric
including the eye and the finger print scan
and the fingerprint scanner
also makes sure that you are alive
so that you didn't cut someone's finger
and you're just using it to open the gate.
- So you must have a pulse.
(soft music)
- Don't touch the racks.
- [Torsten] These aren't Xapo's actual servers,
but if you've ever wondered what cryptocurrency thieves
dream about, it's sitting somewhere down here
unplugged from the Internet.
- There is absolutely no way,
zero way to attack the data on the cold storage site.
- [Torsten] But here's my question,
why do I need the cold offline servers
to be inside a mountain?
Why can't it be in my basement?
- While the server is in the basement,
it still can be stolen, right?
So this is like money.
It is data, yes,
it's bits and bytes,
but it is money at the end,
and a lot of money.
This is why this data centre here
is more a bank than a data centre.
(soft music)
- [Torsten] Okay, let's do a quick recap.
We now have billions of dollars worth of data
secured in digital banks
deep inside secret military bunkers.
If you don't think Bitcoin
is already changing the world's concept of money,
you haven't been paying attention.
Remember Mervyn?
He used to be a senior executive at Deutsche Bank.
His colleagues once said Bitcoin
was for law breakers and troublemakers.
He now runs $100 million crypto fund out of Malta.
- Our research shows that the crypto markets
are gonna probably be worth about $8.7 trillion in 2027.
- Which is 50x from today.
- Exactly.
- [Torsten] Most financial analysts
say you better stick to your shares and bonds and dollars.
Bitcoin is dangerous nonsense,
far too risky as investment.
To others, Bitcoin is an escape hatch
that will take them away from risk,
an insurance against financial doomsday,
a way out of the debt crisis,
negative interest rates,
trade wars, and economic downturn.
They say it's an anti-fragile asset
uncorrelated to financial markets.
So who's right here?
Well, every time I turn on the television,
it gets even more confusing.
- Bitcoin is worth about a bit
under $200 billion today.
All the gold in the world is worth eight trillion,
and it could become the next gold.
- In terms of cryptocurrencies, generally,
I can say almost with certainty
that they will come to a bad ending.
- But if Bitcoin is out there, and gold is out there,
it can be a participant in bringing down the dollar.
- I say it's the mother of all bubbles,
and it's also the biggest bubble in human history.
- Do you think this is a currency?
A currency that's really gonna work eventually?
- Well, I think it is working.
And there will be other currencies like it
that may be even better.
- Bitcoin is successful
only because of its potential for circumvention,
lack of oversight.
So it seems to me it ought to be outlawed.
It doesn't serve any social useful function.
- [Torsten] This film isn't investment advice,
but it strikes me that most of these TV shows
just want to stir controversy.
They don't understand what's going on,
but they know that filling airtime
with a controversial topic
will get them higher ratings.
So how about the general public?
In America, the younger generation
already starts to trust this new asset class
and Wences says Bitcoin
may reach a million dollars per coin.
- I would say the biggest financial mistake
you can make right now
is to own an amount of Bitcoin
that you cannot afford to lose
because it's super risky and you may lose it.
The second biggest financial mistake you can make
is not to own any.
Because you put 1% of your net worth in Bitcoin.
Most people can afford to lose 1% of their net worth.
And if I am right,
it's gonna be more than 100% of your net worth,
so with a non-material exposure,
you change your life.
Now what you would spend on a romantic weekend
with your wife,
say sorry, we're not gonna do that this weekend.
I'm gonna just buy Bitcoin.
Consider it spent.
It disappears, and check in seven years.
I either give you bad advice, and cost you a weekend,
or I want a grandkid called Wencito.
(laughs)
- But what you fail to mention is that the currency,
the micro transaction.
- All of that is irrelevant, right?
Meaning all of the cryptocurrencies
are way too volatile
for anyone to take them seriously.
- Hold on, let's go back to where we started.
Bitcoin was created as peer to peer electronic cash.
That was the killer app,
a payment directly from you to me,
from me to the coffee shop.
- I have bought a bag of coffee
for two Bitcoin in 2012,
which today costs me $12,000 in today's money.
That is a deflationary effect.
As long as Bitcoin keeps doing sudden increases in prices,
that's gonna stop retail use in it's tracks.
- With Bitcoin, you can send $1 or $1 million
worth of value anywhere in the world.
You can do it for free.
- [Torsten] But basically, looking at it now,
you lied to us.
Yeah, that's what they all used to tell me,
cheap, easy, fast, global, unstoppable.
I'm not done with you, pal.
But I need to explain what happened here.
Every block contains about one megabyte of data,
much smaller than a photo you post on Instagram.
That means only a limited number of transactions
can fit into each block.
If you want your payment to jump the line,
you can choose to pay a premium fee
or sit and wait.
At one point, the blocks became so full
that the transaction time went to several hundred hours.
That's days!
And it was more expensive than international wire services.
It got so bad that a Bitcoin conference
wouldn't take payment in Bitcoins!
And he's the guy who promised me moving money fast and for free.
What went wrong?
- That's a direct intentional result
of Bitcoin Core's policies
of intentionally making it slow,
expensive and unreliable.
- [Torsten] And Roger blames this guy
for Bitcoin not becoming a mainstream global currency.
- There are no shortage of conspiracy theories.
-
- Blockstream was founded in 2014.
The original co-founders are a lot of core developers.
- [Torsten] Those are the software coders
who continue building Bitcoin after Satoshi vanished.
Roger thinks those guys sabotaged the scaling of the network
so Blockstream could promote its own software solutions.
Sampson says come on,
the blockchain is already 200 Gigabytes large and growing.
- Every transaction made
has to go out to the whole network.
And every block that contains that transaction that is mined
has also to go out to the whole network.
And it has to be stored for eternity.
- [Torsten] The argument,
more independent miners will continue running Bitcoin
and ensure decentralisation
if the blockchain is kept small.
In his view, this decentralisation
is what makes Bitcoin valuable,
a store of value!
- So holding Bitcoin is also a use case.
- And that store money hypothesis,
I cannot get my head around.
It's the most,
like, nutty thing I've ever heard.
- One philosophy could be described as Bitcoin
as digital gold, and the other philosophy
could be described as Bitcoin as digital cash.
- [Torsten] The other team said
you guys have it the wrong way around.
First, Bitcoin needs to be usable as a currency,
a medium of exchange.
Then, maybe, it will become stable
and a store of value.
(soft music)
The solution is easy, just increase the size of the blocks
from one to two, four, eight megabytes
so that more transactions fit into them.
This will lower the fees,
and people will start using Bitcoin as cash again.
- The original title of the Bitcoin white paper
is Bitcoin, an electronic peer to peer
electronic cash system.
- [Torsten] But you know, Satoshi's white paper
isn't the Bible.
It's not a religion.
Stuff changes, we evolve,
we might find out new things.
So why this fixation on that white paper
created 10 years ago.
- There isn't any fixation.
It's not the version of Bitcoin that I got involved with,
and it's not the version of Bitcoin
that I want to support.
- [Torsten] So Roger joined forces
with a controversial online gambling billionaire, Bitmain,
a Chinese crypto mining company and this guy.
- I'll do whatever the fuck I want with my money.
- [Torsten] Okay?!
Anyway, they forced a software fork,
which is a split into two separate blockchains.
Every holder of Bitcoin now also owned
the same amount of Bitcoin cash.
- Roger had nothing to do with the creation of Bitcoin cash.
Roger didn't know about it
until a few weeks before it actually happened.
- [Torsten] But still, Bitcoin Jesus
had become Bitcoin Judas.
- Every revolution is followed by the counter-revolution,
which is usually a purge of the original revolutionaries.
- People are very passionate about Bitcoin.
And that's why they show a lot of emotion.
- When you're part of a tribe,
you get very religious about your tribe,
making the other tribe almost your enemy.
- It's very hard to debate Roger
because a lot of what he's saying is just his opinions
and his emotions.
You cannot debate someone's emotions.
- And then they basically diverted entire Bitcoin project
into something that wasn't usable as peer to peer cash.
- When he gave his talk,
I kinda knew that that whole debate slash panel,
I kind of expected it to go off the rails,
but I didn't expect killing babies.
- So that means more babies
are dying in countries around the world
because they have less economic freedom.
More people are starving to death
because they have less economic freedom.
People are literally dying because of this.
I'm not exaggerating.
This is a life and death matter.
- [Torsten] And remember that list of promises
that early Bitcoiners championed?
Cheap, easy, fast, unstoppable.
I forgot one.
- If you don't support free speech,
you don't support Bitcoin.
You're an enemy of Bitcoin.
- [Torsten] Censorship shall not be abided.
- In fact, I myself
have tried posting just a direct quote
from Satoshi Nakamoto,
the creator of Bitcoin.
- I think Roger complains a lot about censorship on Reddit,
but Reddit is just one of many platforms.
- Word for word quote from Satoshi,
without any additional commentary from myself at all,
and I've had that post deleted.
- Even though I may not agree with a lot of things
that Roger Ver is doing now,
I do sympathise with him
and his frustration with being censored.
- They're literally censoring the words
of the creator of Bitcoin.
- Ultimately, it's just a forum
that these guys set up
to talk about Bitcoin,
and they can do whatever they want with it, right?
- [Torsten] When I first started covering this space,
everyone was united in their struggle
against the establishment.
Now the industry has grown so much
that they are competing parties,
propaganda machines, conspiracy theories.
Looks a lot like politics.
- The biggest fight within the Bitcoin ecosystem
is over at the moment
is who has the right to the name Bitcoin?
But at the end of the day,
I think the version of Bitcoin described
in the Bitcoin white paper
has the strongest claim to the name Bitcoin
than anything else.
And that's Bitcoin Cash.
- [Torsten] Roger owns Bitcoin.com
and he has every intention of bringing Bitcoin Cash
to the masses,
even if it means that some people
coming to his website
think that they're buying Bitcoin
but they're getting Bitcoin Cash.
- I think it's fraudulent to say that in causing people
to buy Bitcoin Cash when they actually want to buy Bitcoin.
- [Torsten] So Bitcoin core fans
say Roger is hijacking the brand name,
and Bitcoin Cash supports claim that Blockstream
is hijacking Bitcoin's development.
- I mean yeah, it is a conflict of interest
because they're developing this open source protocol
in a way where their company can benefit from it.
- Everything we're doing is open source,
so it's not like there's some secrecy or anything.
You can see all the code that's committed,
and it does go through this vetting process.
- They have had influence.
I wouldn't say it's not true.
But I don't think they have enough influence
to actually corrupt Bitcoin.
- We no longer have anyone maintaining the project
just because we don't want
that potential conflict of interest.
- But in a way, now they've won the battle anyways.
- [Torsten] So who won Bitcoin's first war?
Well, both parties got their way.
After the split, the market valued Bitcoins much higher.
And Bitcoin Cash transaction fees were much lower.
- The benefit of the scaling debate or civil war was
Bitcoin was battle tested.
Like a lot of companies
and a lot of powerful people
tried very hard to try to change Bitcoin, and they failed.
- This thing that Satoshi Nakamoto launched
is much more resilient than anyone even hoped.
- I know, I know, you want to find out
what any of this has to do
with this new crytopia, a revolutionary internet.
We'll get there, I promise.
But first, we need to go from Bitcoins original blockchain
to hundreds of blockchains.
Back in 2011, when Charlie Lee was a Google engineer,
he wanted a faster and lighter version
of Satoshi's cryptocurrency,
and was one of the first to experiment
with the open source software.
- The actual coding in terms of the code differences
became Bitcoin and Litecoin
was actually pretty trivial.
- And what does that mean in time?
- I would say like four, four or five hours.
- Litecoin was positioned as silver
to Bitcoin's gold.
And it's network value grew to billions of dollars.
Some critics say: Well, you sold at the highest point,
and you kind of hurt the community.
What's your response to that?
- When I sold, no one knew it was at the highest point.
I didn't know it was gonna be the highest point.
Everyone thought it was gonna keep going up.
In hindsight, it was good timing,
selling it at that high.
But I'm still focused full-time on Litecoin adoption,
and working on Litecoin, Litecoin development.
So it's not like I sold it and just quit.
Nobody gets to kind of dictate
how Bitcoin improves or grows.
Whereas with Litecoin, I have a strong influence
on the growth of Litecoin,
which is good and bad.
It's kinda like difference between the benevolent dictator
versus a democracy.
The benevolent dictator is more efficient,
but you have to assume
that the benevolent dictator stays benevolent.
- Let's put a pin in that.
Litecoin was one of the first alternative cryptocurrencies,
or alt-coins.
Some of the early adopters, like Charlie, made fortunes.
Soon, there were hundreds of coins
made by cryptographers, copycats, and con-men.
There's a coin for bloggers,
a currency for online gamers,
one with anonymity, and even one for banks.
But can this invention unleash something even more powerful
than digital currencies?
(dog barks)
Back in 2014, I met the kid who knew how to do it.
- Hi, I'm Vitalik Buterin,
co-founder of Bitcoin Magazine,
founder of Ethereum,
and just general Bitcoin and crypto currency advocate.
- [Torsten] Just 19 years old,
Vitalik was on a mission to make money programmable.
- Vitalik is a very very smart guy.
The thing about Vitalik is he was pushed away of Bitcoin
because he had gone to to Bitcoin Core developers
and tried to build Ethereum on top of Bitcoin.
- [Torsten] And they basically said nope, not interested.
So he built a separate blockchain called Ethereum,
with its own currency called Ether.
- A comparison might be Bitcoin is like a spreadsheet,
and Ethereum is like a spreadsheet with macros.
- [Torsten] Using our analogy, Ethereum allows you
to store cryptocurrency and computer code
in the same secure box.
Here's how a smart contract might work.
Let's say I bet Charlie
that a Litecoin will be worth $200
on January 1st of next year.
We each put an ether into a box
along with a smart contract,
a simple programme that automatically checks
the price of Litecoins
on that future date.
If I'm right, the money goes to me.
If I'm wrong,
it's sent to Charlie.
- A smart contract is neither smart nor a contract.
It's a dumb program.
And once you understand that all it is a dumb program,
that clarifies a lot of stuff.
And the word contract there is in the meaning of finance.
- [Narrator] Most financial arrangements
are pretty simple and clear cut.
A bet with Charlie,
your home loan,
and insurance policy,
just two parties and some form of exchange of value
based on a set of rules called a contract.
The same is true for global financial markets.
Think bonds, futures, derivatives,
credit default swaps.
They're all just contracts,
and the world economy runs on them using middlemen
who all charge high fees.
Proponents say that if we used smart contracts,
we could tell the bankers,
lawyers, escrow agents, and Wall Street finance guys
to take a hike.
- A soda machine is a smart contract machine, right.
You stick in a dollar, you get a soda.
It's very, very simple.
The soda machine does take statistics,
and it has to make sure that you can't scam it
by stealing the soda,
but Ethereum and the people
that are trying to decentralise this
will tell you that that transaction,
that smart contract between you and the soda machine
is so critical that it needs to be globally processed
and saved at 100,000 decentralised computers
because it is so sensitive.
And in reality, 99% of all of these contracts,
they don't need this kind of censorship resistance.
- [Torsten] You know, in two years time
when people will see this film,
or in four years time,
I think will be an interesting historic moment.
- What we're doing is we're saying,
we have this Ethereum network,
inside the Ethereum network there's this asset called Ether,
and we're actually going to be selling Ether.
We're going to be selling Ether
at a rate of 1,000 to 2,000 Ether for one Bitcoin.
And that's how we're gonna raise all the money.
- [Torsten] It worked.
Vitalik figured out a way to fun the Ethereum project.
And it made his investors very rich.
(soft music)
This new model for fundraising soon had a name,
and initial coin offering, or ICO.
- IPOs and ICOs sound similar,
but they have, they're nothing similar.
The only thing similar about them
is they both help you raise money.
IPOs, you don't do until you have a company,
until you have revenue,
until you have users,
until you can actually prove to the public investors
that this is a valuable company
that's worth investing in,
and it's worth buying their stock.
ICOs, it's pre-product.
You have maybe a couple of people on the team.
It's just a white paper.
And so people are just buying into,
trust into faith that this is something that will exist.
- [Torsten] And this is the guy who opened the floodgates.
He crated a standard called ERC-20,
enabling you or me or anyone to create an ICO.
- So on the one hand,
you have these smart contracts,
these little programmes that can talk to each other,
but you have to define how do they talk to each other.
And because everybody now agrees to that same standard.
- [Torsten] Smart contracts can interact
within the entire Ethereum network
and the ERC-20 standard allow the creation of tokens.
- The goal here is like, ultimately,
I'd like to see eight year olds
building their own financial systems.
- [Torsten] Yeah, but what if some of these eight year olds
are also scammers?
- So let's say I'm trying to do a ICO,
and I create a smart contract
where I create a million coins,
and one of the transactions is that if you
send me $100, I will send you that many worth of coins.
- [Torsten] It was a mad gold rush.
- People realised wow, if,
if I can just pull up, pull together a project
and a white paper, I can raise money.
- Like a lot of money.
(soft music)
Some people hawking new coins didn't actually exist.
This handsome chap is the graphic designer
of a Bulgarian ICO.
Actually, they just posted a photo of Ryan Gosling.
Another project raised millions in Ether,
and then vanished,
leaving investors with this website.
Look closer, that's nice.
Most of the scam coins were built
on Vitalik's smart contract platform Ethereum
using Fabian's token standard.
This innovation has enabled a lot of criminals and scammers.
- So I would say the amount of scams
in that system are rather low.
It sometimes looks bigger than it is.
I would assume that the actual scams,
purposeful scams, in that system
maybe were like two or three percent.
I would say actually most ICOs were not scams.
- I would say about two to five percent of the thousands of ICOs
that are happening are actually legit.
- [Torsten] And the rest is?
- Pretty scammy, or just not gonna work.
- Can you define for me what a shitcoin is?
(laughs)
- I think it's just a derogatory term people use
on coins that they don't like
for Bitcoin maximalists,
people who only care about Bitcoin,
everything else is a shitcoin.
In my point of view,
I think a coin that is kind of a scam is a shitcoin.
So people create coins just to get rich from it,
print a lot of tokens out of thin air,
trying to pump the price up
and make a lot of money from it.
And it's not really providing a lot of value
to the world.
- [Torsten] No value for the world,
but they did add value for their creators.
If you can print billions of tokens out of thin air
like a central bank, well, that's why this guy
was one of the wealthiest men on earth for a brief moment.
Here's how that happened.
- [Narrator] There will only every be 21 million Bitcoins,
and it's inventor had to earn them
by mining with his computers
just like everyone else.
There are more Litecoins,
and even more Ether in circulation.
Vitalik kept some portion to fund the development team.
And then there's Ripple.
They created 100 billion XRP
but kept 80% for themselves and their clients.
And the other 20%, they gave as a bonus to the founders.
That's how you get to be one of the richest men on earth.
- [Torsten] Okay, maybe I was a bit too harsh on ICOs
democratising start up finance can be a good thing.
There were many legit companies raising capital too.
Over the years, I've met many founders
who have real offices with real people
trying to solve real problems.
But to Bitcoin maximalists,
Bitcoin is the be all end all of cryptocurrency.
Other blockchains, ICOs, smart contracts,
that's all a waste of time.
- There is no such thing as blockchains,
that revolutionise the healthcare industry,
and the automotive production...
- Of course there is.
- Huh?
- Of course there is.
What you're saying is a maximalist point of view.
You are speaking about from a perspective of,
of a cult or a sect.
My problem is that you are hijacking a movement
of a technology that is far greater
and has far more potential
than just these individuals.
- There's all of these different things
that you could use blockchain for, right.
And so people have,
they're almost like different ecosystems.
And then what you see is almost like an evolutionary process
right, where the blockchains fork
and they have the same ancestries,
but they adapt to different environments
and we see this like every increasing level of diversity
in number of blockchains.
So I think the idea that here's like one blockchain,
gonna be one blockchain
and it's gonna be fit for everything,
it's almost like disregarding the nature of evolution.
- Meanwhile, the big corporations
have been studying cryptocurrency.
And they think that Bitcoin's underlying database
is where the magic is.
The motto in the boardrooms,
Blockchain, not Bitcoin!
Back in Germany, my friend Oliver
keeps tabs on the men in suits.
He used to be one of them.
- [Torsten] BMW is looking at using the blockchain
for their future fleet of electric cars
to interact with public transport.
Lufthansa wants to see if the blockchain
can better track parts and maintenance.
And Deutsche Telekom is using smart contracts
to negotiate tariffs
for roaming costs with other telecoms.
(soft music)
if we can store trade certificates and shipping documents
on the blockchain,
you can check to see where those organic avocados
really came from, who grew them,
who packed them,
and who shipped them.
Besides, the Internet of things
needs a ledger of all those things.
Well, that's the idea
behind private centralised blockchains,
maintained and controlled by corporations.
A famous example, the Walmart supply chain trial,
which they're working with IBM.
That's a completely centralised.
They use a blockchain derived product Hyperledger,
but all the nodes reside on the IBM cloud,
and they're all administered by Walmart,
and the supplier is used because Walmart told them to.
It's a centralised database system!
But they marketed it Blockchain.
So that means one,
they wouldn't have got a New York Times headline
if they just said database.
- [Torsten] You might wonder
what's the point of a blockchain
if it's controlled by a company?
Well, I compare it to the open Internet
versus company owned Intranets.
They both exist.
Meanwhile, Facebook announced a cryptocurrency
for their two billion users.
Such a system might be more efficient
than a public blockchain,
but there's a downside.
Some Governments banned it within weeks.
(group chatter)
- Right now, the ways, pieces of paper,
that's being shifted around, that doesn't make any sense.
That infrastructure needs to be replaced.
- [Torsten] Why occupy Wall Street
when we can build a new one on the blockchain instead?
In the future of decentralised finance,
stock certificate, corporate bonds,
insurance policies, property deeds,
mortgages, all can be turned into crypto tokens
and made tradable 24/7.
(electronic music)
(electronic buzzing)
- What's much more exciting than tokenized securities
of traditional businesses where it's just equity
that you pass around
is totally novel digital securities
that you couldn't do before, right.
Novel use cases where you could kick back cash flow
on a continual basis.
I think some examples of this
that we're seeing now are MakerDao,
Binance which has Binance Coin,
that's actually much bigger of an opportunity
because it represents something totally new.
(soft music)
- My name is Dr. Jemma Green,
and I'm a co-founder and the chairman of PowerLedger.
And we use the blockchain
to enable electricity trading,
energy asset financing, and carbon markets.
- [Torsten] This award winning Australian company
wants to take us to a carbon-free economy faster.
Jemma has identified a problem.
- Apartment buildings, often the buildings are tenanted.
An it means that if there is solar panels,
the owner of the apartment isn't really incentivize
to put in solar panels or batteries
because the tenant benefits.
But using our platform,
the tenant will pay their electricity bill
to the body corporate.
- [Torsten] Using PowerLedger,
the tenant pays the owner, not the power company
for their electricity.
And if the tenant isn't at home,
the unused energy will be sold to a neighbour,
lowering their power bill
and making a profit for the owner.
- So it actually crates the mechanism
to justify investing the capital in the first place.
- This system could speed up investment
in sustainable energy projects
by making it easy to own a piece of a solar or wind farm.
(soft music)
Why do I need a blockchain for this?
Can't I invest in a solar farm without this new fancy tech?
- The blockchain acts as a kind of asset register
and income register,
and in tokenizing the asset,
it becomes tradable on an exchange.
You might own two or three solar panels
of a thousand, you know, in a solar farm,
and you would receive the income associated with that
amount of ownership.
(soft music)
- Now bankers don't very much like being cut out
of the cashflow loop,
so they took another look
at Mr. Nakamoto's curious little white paper.
And they've recently been spending
a billion dollars a year in blockchain research.
Isn't it ironic,
Satoshi's anti-bank invention
is now being used by the banks
to move money faster.
And by big business to track supply chains.
(electronic music)
Cryptocurrencies, digital tokens,
public blockchains, private blockchains,
where is the killer app?
Well, adoption of new technology
often follows old trends.
- My name is Marc Ventresca.
I'm here at Oxford, the University of Oxford
on the faculty.
I'm an economics sociologist by training,
interested in how large-scale infrastructure changes.
- So great so see you after nine years.
- [Marc] I know.
- [Torsten] Marc teaches a class
on innovation and system building.
He tells me what must align
for a new technology to become fruitful.
- All technologies start out as interesting ideas.
Some of them begin to develop into innovations
and we know that arc from invention to innovation
takes a lot of time, takes a lot of work.
Some of those innovations
eventually become commercially viable.
- [Torsten] Case in point, the automobile.
In the early days,
cars looked like a pretty lousy idea,
and poorly executed.
- Early on, there were electric cars,
there were battery operated cars.
The combustion engine was a relative late comer.
- [Torsten] It took Henry Ford's mass production
to create the standards,
what a car looked like,
what parts it needed,
how it operated.
That's when complementary assets
and infrastructure emerged.
- So you have a paved roads and petrol stations.
Then you have secondary things like motels and restaurants,
and places to eat while you're on the highway and buy food.
Then you have interesting questions
like what side of the road should we drive on.
- [Torsten] An entire ecosystem had been built,
but it wasn't a smooth transition by any means.
- The imagery here is there are maybe a couple of hundred,
three or four hundred companies
that tried to get into this space.
But they're not car companies.
They're bicycle manufacturers
or steam engine manufacturers.
At some point, in this account,
all that period of ferment settles
around a dominant design,
and then you have what,
again, what innovation economist would call a shakeout.
They would say you go from 300 or 400 producers,
all of them vying to shape this emerging space,
this emerging thing called the automobile.
You may then drop to 20 or 30 manufacturers.
And then you may drop to five or six.
(soft music)
- [Torsten] It took 50 years
for cars to go from curious invention
to finally tuned, mass market product.
50 years to change the world as we knew it.
âª Bitcoin is Gold theme song âª
- [GPS] Your destination is on the left.
- [Torsten] But our story isn't about cars or roads.
I want to learn about dominate designs
of digital technology.
That's why I came to the Computer History Museum
in the heart of Silicon Valley.
- So you're looking at the console for SAGE,
which was probably the first computer network.
- [Torsten] The US military and some American universities
There were 23 centres around North America - [Torsten] The US military and some American universities
There were 23 centres around North America
to warn against Soviet bombers.
And they were waiting for World War III.
asked this guy to create a new kind of network
to connect their separate networks.
- And this young girl
got up and she had a bunch of questions,
but her first one was
how did I manage to convince all the governments
of the world to let us build the Internet.
And I said well, except for the handful of us
that were actually working on the Internet,
nobody else really thought it was a very good idea,
and they didn't think it was gonna lead anywhere.
And you know, we pretty much had free running room.
- [Torsten] Yes, that's the man who co-invented TCP/IP
about 50 years ago.
That's their original academic paper.
You can think of TCP as the backbone of the Internet.
But back then, there were many competing technologies.
- There was a very big battle over the protocols.
TCP/IP didn't just win by default.
It won through attrition by basically being better,
simpler, easier to deploy
than all of the other proposals.
- [Torsten] More scalable.
- And more scalable.
And it had a lot of competition
from phone companies that tried to make the Internet
a closed, metered, controlled system.
They tried to do what people
are trying to do today with blockchains,
which is take the open decentralised network
and turn it into this sterile, closed corporate system
where they can charge by the minute and be in control.
- [Torsten] The Internet's ultimate victory
has a dirty little secret.
The men in charge of promoting it
were employees of the military
with the muscle and the cash to beat the competition.
- And then there's email.
- Email?
I heard that's really neat.
- [Torsten] Email was perhaps
the Internet's first killer app.
Then in the early 90s,
Tim Berners-Lee introduced the World Wide Web
as a 20 page proposal.
Soon, there were browsers that made it more accessible
and user-friendly for the general public.
(electronic music)
- I think that the Internet
is going to be one of the major forces
for reducing the role of Government.
The one thing that's missing,
but that will soon be developed,
is a reliable e-cash.
- [Torsten] Still, few understood the potential
of this new tech.
- From people who thought it would just be
the world's greatest library,
to some of the early cypherpunks,
who are the direct forefathers of crypto,
and certainly blockchain-type ideas,
who thought much as today,
that it would create kind of a Commons
that was outside of the direct control
and normal laws of Governments.
- [Torsten] That's ironic because the US Government
funded it in the first place.
The spiritual forefathers of crypto
who built the early Internet
thought it was a new technology
for global freedom of expression
and a blank canvas upon which they could build their dreams.
Boy, that sounds familiar!
And the media?
They didn't quite know
what to make of this new thing either.
But sure enough, they found juicy stories
about the dark side of it.
- Which was the Internet is full of criminals,
and paedophiles, and pornographers.
And it's too dangerous to use your credit card on it.
It's full of scams.
We're seeing the exact same story now.
- We envision technology as if it were autonomous,
as if it were simply outside of human and social experience.
But we see our technologies
that become shaped by commercial interests,
by political an regulatory infrastructure,
by actors who are acting for many reasons, right?
- Where do you want me?
- [Torsten] Remember Bob?
The big telecoms wanted his thoughts
on a little idea they were kicking around.
- They had a meeting
where they trying to figure out
how they could buy the Internet.
If they couldn't kill it,
well why not own it?
- I got asked that myself
by an executive at a large information company.
It was probably in 1990 if they could buy the Internet.
(scoffs)
- I remember asking them
well, why don't you buy the world economy,
then you can own everything.
Why don't you buy the weather,
then you can control that too.
- [Torsten] As the Internet's momentum and hype grew,
investors threw money at entrepreneurs
and shady characters.
(soft music)
- The joke in the Dotcom era
was that you put a dotcom behind your company
even if it had nothing to do with the Internet.
And the venture capitalist just throw money at you.
- [Torsten] It took a few decades and hype cycles,
but the wild Internet was eventually domesticated,
co-opted by trillion dollar companies
and then fundamentally transformed how we shop,
work, and communicate.
(soft music)
Speaker's Corner in London's Hyde Park.
For 150 years, this has been a safe place to stand
on a soapbox to sell your ideas,
preach the Gospel,
badmouth the king, or promote communism.
Today, with the World Wide Web,
we can stand on giant, digital soapboxes
using Facebook, Twitter, YouTube.
We can share our ideas,
or start a fight, with anyone on the planet.
- Well, almost anyone.
Of 65 countries studied,
China has the least free Internet,
worse than Iran, Cuba or Syria.
A police force of more than two million cybercops
and the world's most sophisticated
Artificial Intelligence system
keep China's web content clean and users in check.
So sorry to break it to you,
but there's no longer a World Wide Web.
Welcome to the Splinternet.
No, it's not just in China.
- [Narrator] In Russia, Wikipedia is illegal.
Facebook is outlawed in Bangladesh.
There's no WhatsApp in Dubai.
Twitter was banned in Turkey
after news about Government corruption spread.
And Saudi Arabia shut down
the region's largest news services,
Al Jazeera and the BBC.
Meanwhile, in India, the entire web was turned off
100 times last year.
(soft music)
- [Torsten] To be fair,
some of the censorship is to prevent terrorist recruitment,
or to stop violent mobs from hurting people.
But I think Government's control over the Internet
has gone just a little too far...
- Hello, I'm from the Australian Government.
Do you have something to hide?
We've taken the UK's fascist spying law
and made it even more fascist.
To test this shit fuckery,
we chose Australia,
the weakest of the Five Eyes alliance,
thanks to our lack of a Bill of Rights.
So international data requests
will now be funnelled through us,
compromising not just Aussies,
but all of you fuckers too.
You're welcome!
(soft music)
- Hold on,
Satoshi turned money into code,
code is just letters and numbers,
which is speech, right?
So money, now is speech,
which is a pretty powerful idea if you think about it.
But if Bitcoin is this uncontrollable,
uncensorable technology. Can the blockchain
also enable global free speech?
(soft music)
- [Narrator] In some places, it already does.
One Chinese student tried to report a sexual assault,
and was silenced by her college.
But she knew that she can attach a message
into the metadata of an Ethereum transaction.
So she spent 15 cents
and now her letter outlining her story
and the threats she received
is on the public Ethereum blockchain
where it will remain unchangeable forever.
(soft music)
- [Torsten] The early cryptopioneers
wanted to democratised money.
Finance 2.0, if you will.
But now, the believers in the blockchains
have their eyes on a bigger prize:
They want to decentralise everything.
Web 3.0.
Facebook without the propaganda.
Twitter without the terms of service.
Reddit without the censorship.
Online identity without the hacks.
Internet browsing without tracking software.
Websites without the advertising.
- We pay with either attention or privacy.
So we either have advertising thrown at us,
our attention is monetized,
or we pay with micro violations of our privacy.
- [Torsten] And that is why the internet today
is the ultimate surveillance economy.
One privacy tool is the Brave browser.
It doesn't store data
and pays users and content publishers
in their basic attention tokens.
(electronic music)
- What most people in the crypto space
are probably most excited about
is this notion that we can create
these kinds of user-owned decentralised networks.
You can, for instance, offer file storage
in the way that an Amazon does,
or that you could offer search,
you know, the way Google does,
but do it in a peer-to-peer fashion
without this behemoth at the centre extracting rents.
And do it in a way where all the people
that are users of it can benefit.
- Blockstack is the next evolution in computing.
We've seen three main eras of computing before.
We had mainframes that were these large computers
that everyone depended on.
Then we got desktops where users were in control,
and they owned their own computers,
and their data and information.
And then we saw cloud computing
where we're dependent on these large companies
running services for us.
And we're about to embark
on this major shift in computing
called decentralised computing
where users are getting back in control.
(soft music)
- And they really could some day compete with,
if not take down some of the big tech giants,
like the Facebooks and the Googles and the Amazons
that we know.
(electronic music)
- [Torsten] That's a tall, tall order.
- It is, it is, but I mean who would've thought
at the beginning of the Internet
that Wikipedia would beat out Encarta.
- [Torsten] These Web3 promises sound good,
but my professional network is on LinkedIn.
My personal photos are on Instagram.
If I deleted my accounts,
I'd lose everything!
These services aren't just walled gardens,
they are digital prisons.
- Data is locked up in several companies.
And we don't own it.
The companies own it.
But they use the data
to mine it, to advertise to us,
to sell us things,
to manipulate us,
to change our behaviour,
and Ocean Protocol is the answer
to freeing up the data
and giving the power back to individuals.
- [Torsten] So how do you plan to do that?
- It's essentially an operating system
on top of Ethereum
that allows for people to share data,
storage, algorithms,
and computation in a way that preserves privacy.
- [Torsten] It's too early to tell
whether projects like these can succeed.
But I do like the ideal of digital property rights.
Wouldn't it be nice if companies
paid us in cryptocurrency
when they use our data?
And if we control who has access to it
instead of our digital overlords.
And then there is the question
of our most precious information,
our very identity.
- If you take the history of mankind,
a lot of blood has been shed
getting to democracy, right?
The idea that every man has a vote in the world.
And you know, I take it kind of personally
because I was born in South Africa during apartheid,
you know, a child of Indian immigrants.
And we were not allowed to vote.
- [Torsten] Vinny tells me that in the United States alone
there are 14,000 different paper forms of birth certificates
issued by local authorities.
There are mistakes on them
and even identity theft starting from birth.
- All your information is already out there.
You know, there's five hacks a day happening,
so how do you prove that you are who you say you are?
(soft music)
- [Torsten] Our crypto celebrity Andreas
has 10 imposters on Instagram.
Ryan Gosling's alter ego
is committing financial fraud in Bulgaria.
And who knows what's happening
with your compromised information?
(soft music)
Blockchain-based services like Civic's identity.com,
or Microsoft's Ion say they can give us control
of our identity and protect it.
- Currently, we are having our reputation,
our history with different systems
and different companies, like Facebook and Twitter.
With the blockchain, the core of important information
sits on that trusted system
which we control and we can take from wherever
we want to go to something else.
- [Torsten] Meanwhile, Vitalik has inspired thousands
of software developers to build is vision
of decentralised finance,
but early in Ethereum's history,
something went wrong
with one of the first smart contracts
called the DAO.
- The DAO went like this,
they wanted a completely
"the Decentralised Autonomous Organisation".
They wanted a science fiction dream
of an independent computer program
that was immune to human influence.
So what they actually did was build a forthcoming disaster.
- [Torsten] The problem?
Some sloppy code left their safety deposit box wide open,
and somebody just helped themselves.
(soft music)
- It allowed them to pilfer $50 million
from this smart contract.
And that's why when I say it's not even clear
whether or not it was a hack, you know,
this smart contract allowed them to do that.
You know, what happened was the majority of the community
did decide to roll back the blockchain
and to pretend like the DAO never happened.
- [Torsten] Yep, you heard that correctly.
The top decision makers forked Ethereum
into two separate networks,
one where the money was gone,
and a new one where the money
was restored to it's original owners
breaking the first rule of cryptocurrency,
never alter the blockchain.
(soft music)
- Immutability last only as long
as the big boys haven't lost money.
- [Torsten] Just like Bitcoin,
Ethereum also experienced scaling problems.
When a decentralised app called Crypto Kitties,
I'm not kidding, went viral,
and the kitties bred like rabbits in it's blockchain,
the system ground to a halt.
The network is now being upgraded.
But there are many competitors
who claim that their blockchains are faster,
fairer, and more scalable.
The next shakeout will sure be interesting to watch.
- It's never easy to admit that,
that you've been fooled.
Maybe I've been fooled.
Maybe?
- [Torsten] The crypto community
doesn't agree on much of anything,
except when it comes to this guy.
- Hello, my name is Dr. Craig Wright.
I'm the chief scientist of nChain Limited.
- On the balance of the evidence,
Craig Wright almost certainly is not Satoshi Nakamoto.
- The proofs that he gave were not real proofs.
In the end, he either chickened out
or didn't actually have the proof.
- Craig Wright obviously seems to be a scammer.
- I'm happy to say that Craig Wright is a fraud.
- I know he's controversial.
No one really changes the world
without being bold, without disrupting peoples' ideas,
an without drawing a little controversy around the way.
(soft music)
- [Torsten] But the majority of industry
says Craig is crazy or a conman.
- So Craig, kindly join us on stage.
- [Torsten] And that giving him screen time
is irresponsible.
(soft music)
- And I'll say this quite frankly
because I've got more money than your country.
- [Torsten] But I was in the area
and just couldn't resist.
(soft music)
(doorbell rings)
(soft music)
A few quick facts,
Craig is the person
who claimed to be Satoshi Nakamoto on the BBC.
But his cryptographic proof didn't check out,
and since then, many just see him as an imposter.
- I'm the guy with a law degree
that used to work for federal police
and military intelligence.
(electronic music)
- You would actually be the perfect super villain
for us because everybody
kind of doesn't believe you, hates you.
What do you say to your critics?
- Do I start with a muahuahua?
Many people are hated early on
because they're not understood.
If it doesn't have a use,
it shouldn't have a value.
Right now, practically everything is a Ponzi.
I don't particularly like Ethereum.
It's a dead end.
They can say whatever they want about ERC-20
except practically everything they're doing
that they want to solve, I solved years ago.
Decentralisation was never the point of Bitcoin, ever.
I was called a fool then,
and I'll be called a fool again.
And every single time I'll be right.
I picked up "Mastering Bitcoin" the other day,
and I opened page one.
And I went this is wrong.
Silkroad was the worst thing to ever happen to Bitcoin.
- You seem to think that nobody else
has anything interesting to say.
You've already solved the problems many years ago.
That's kind of the vibe that I'm getting here.
- Fairly much, yes.
- [Torsten] Okay.
Turns out, Craig's playbook is patents.
Some say he's a patent troll.
- Well, I've got a bucket list bit
which is to beat Edison, which
as silly as it sounds
came from a Simpsons episode.
To beat Mr. Edison,
I need to get 1,085 (patents).
And right at the moment,
I'm on white paper 1,074.
- [Torsten] For each white paper,
he claims to file about 1.1 patents.
- The first 163 will be very shortly public.
Next year, people are gonna start seeing
that we have hundreds of patents,
and everything changes.
We file PCT and keep them secret as long as we can.
- There's a huge philosophical disagreement
between myself and Craig.
So I think patents
are Government granted monopoly.
- [Torsten] The big brains and big egos
who broke away from Bitcoin
couldn't hash out their differences.
So there was another split.
Craig's new coin also claims to be the 'real' Bitcoin.
And he wants to enable blocks a million times larger,
updating and storing this giant blockchain
will be impossible for normal computers.
I just can't figure this guy out.
Is he a genius, a madman, a fraud?
Maybe all three?
- And a lot of the things he says are very,
are just wrong technically.
- However, I did calculate
that nChain spent tens of millions of dollars
to develop and file these patents.
And some have been granted.
What's the point of having a war chest full of IP
if they aren't going to enforce it?
So basically what I'm looking at
is stuff that nobody's ever really seen in the community.
- [Craig] That's correct.
Yes.
- As soon as the price of Bitcoin
and the cryptocurrencies went higher,
what did most people do?
All they did was start adopting
all the worst behaviours of bankers,
scamming the market,
centralising wealth in a few hands.
- [Torsten] Hmm, I think that's called human nature.
- So everyone wants to change the world
simply because they're not in the position of power.
As soon as they get into that position,
they do exactly the same thing.
- [Torsten] So guys like you will build a better future
and we can trust you guys better than the bankers?
- You don't have to trust us.
That's the beauty.
We're building a trustless,
decentralised system that gives power to people.
(soft music)
- Trustless sounds like there's no trust.
But actually it means we don't need to trust you.
I think the better word should be trust-free..
About one third, or maybe half of all the cost
of all the transactions are paid to establish trust
between trading parties.
Like we're paying for lawyers.
We're paying auditors.
We're paying even police, even regulators,
Government to build trust,
to ensure everything will be enforced.
So trust is quite expensive.
Blockchain is the first time
that we saw some technology
that can eliminate the cost
or reduce the cost of trust dramatically.
Magical things will happen.
- [Torsten] Trust may be expensive,
but it's also in short supply.
All around the globe,
people have been losing faith in the media,
institutions, and Governments.
So what if this new technology
could fix one of society's biggest issues?
But the question remains:
What if you are cheated?
What if your password is stolen,
and the money,
the contracts,
your identity is gone?
If code is law,
who administers justice?
(soft music)
Aren't you worried that the promise of decentralizing power
is kind of in jeopardy with you and Charlie
and Vitalik and Craig
as such central figureheads?
- Yeah, I really wish
there weren't public figures or leaders.
I want everyone to lead themselves,
but sadly that's not the world we live in.
If you're gonna look to a leader,
you know, choose your leader wisely.
(soft music)
- But just how different are they
from our current political, financial,
and business leaders?
Are their systems really resistant to corruption,
immune to manipulation,
and worthy of our trust?
(soft music)
Maybe that's why the best bet is on the only project
without a figurehead:
Bitcoin doesn't care about human drama,
bad press, or what anyone thinks.
Yeah, sure, it hasn't succeeded as a global currency yet,
but in the past decade,
it has been the world's best performing financial asset.
So we're back to where we started:
The genius who vanished.
(electronic music)
- With Satoshi being gone from Bitcoin,
Bitcoin is really a very decentralised network and currency.
- He was intelligent enough to know that
a system without a father
was gonna be much more robust
than a system with a father.
(electronic music)
- No father maybe,
but without leaving a will,
the kids are now fighting over the meaning of his invention,
and the inheritance,
projecting their fears and fantasies onto his legacy.
(soft music)
For some, it's money for the Internet
that can replace middlemen
and bank the unbanked.
And maybe a tool for illicit trade,
or is it digital gold?
A totally new asset class.
A bet against the bankers.
And insurance against inflation.
Protection from corrupt politicians.
And a weapon against the state.
Maybe the end of money as we know it.
For some entrepreneurs, it represents a shortcut
to fund their dreams.
A platform for fairer finance.
Which is why incumbents fight it.
Some say public blockchains
are just slow and useless databases.
While big business is busy building private blockchains
to boost efficiency.
Or maybe this decentralised technology
is a new protocol layer for the Internet
upon which we can build a better web
to dethrone the tech giants,
reclaim free speech,
protect online identities,
and facilitate free trade in a borderless, digital economy.
Oh, and a tool to rebuild trust in our societies,
and yes, maybe even save the planet.
That's a never ending list of cryptopian ideas.
(soft music)
Isn't this a bit too much to ask
of a nine page document?
(soft music)
Yeah sure, the Internet and the Web
started out as white papers too.
But it took decades before it's infrastructure was built,
became user friendly,
and ready to scale globally.
- We kind of domesticate the wild potential
of technologies into what's familiar.
And we dramatically underestimate,
or under imagine
what that technology may eventually do.
- [Torsten] It'll be the users,
maybe billions of them,
who will adopt this technology without even knowing
what a blockchain is or how it works.
Because here's the thing:
The average users don't care about the wires
that move their money quicker,
don't know about the software
that moves this movie or that picture,
what will move them
are services that'll make their days a little brighter,
their chores a little lighter,
and their lives a little richer.
âª Dude's got suits âª
âª Dude's got a tie and a big smile âª
âª And he's pitching me some blockchain âª
âª Supply chains are broken âª
âª Do we need his token âª
âª There's a pain in my brain âª
âª and I'm going insane âª
âª I don't want no blockchain âª
âª That one plays chess at his desk âª
âª poses for the press âª
âª The price of his coin just tripled âª
âª I just stare into the Ether, take a breather âª
âª 'cause I don't wanna cause a Ripple âª
âª Don't wanna cause a Ripple âª
âª I won't trust him with my money âª
âª Will never trust him with my life âª
âª Well I have been told âª
âª That my life is controlled âª
âª But Bitcoin ain't Gold âª
(rock music)
âª Talks Bretton Woods âª
âª That guy speaks code âª
âª Runs a full node âª
âª This is new money production âª
âª of illicit goods âª
âª This is a weapon of math destruction âª
âª That lady's quick on her feet âª
âª Lit in her a tweets âª
âª Says she takes on the haters âª
âª and nothing can break her âª
âª The Web could be much safer âª
âª And our Freedom quite greater âª
âª And it's all in this white paper âª
âª All in this white paper âª
âª I don't trust them âª
âª With my money âª