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tv   Inside Story 2017 Ep 351  Al Jazeera  December 19, 2017 2:32pm-3:01pm +03

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leadership has condemned the u.s. veto of a u.n. draft resolution on jerusalem it would require president to resend his recognition of jerusalem as israel's capital all of the other fourteen security council members voted in favor of that resolution u.s. vice president mike pence has postponed a trip to the middle east the white house says he needs to stay in washington for a vote on a tax reform bill all sitting at the ready president mahmoud abbas and also one of egypt's top religious leaders they have refused to meet pence following the uproar over the u.s. decision on jerusalem. japan's government has approved the use of the u.s. military aegis missile interceptor system and this is a response to north korean threats and follows pyongyang's launch two missiles over japan this year and november fourth korea test fired at an apartment a ballistic missile that landed in japanese waters the government says this new weapon system will take years to come online. south africa's ruling
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party the a.n.c. house announced its new leader cyril ramaphosa who is currently the deputy president he will be taking over from president jacob zuma he defeated sumus ex-wife in cosas on a zuma and a vote at the party conference. those are the headlines miss continues and officer after story. of virtual coin worth nearly twenty thousand dollars that is still hard to understand but coin is pushing its way into the mainstream with its recent surge in value but what's driving it and can it be sustained and regulated environment this
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is inside story. hello i'm kemal santa maria so we're going to talk about bitcoin today because well a lot of people are talking about it right now the digital currency has moved from the fringes to more of the mainstream particularly in the past few weeks because its value has risen at such an extraordinary right we're talking around the twenty thousand dollars at the moment and just like a surging stock it's left a lot of people wishing that i they got in earlier or wondering how they can jump on board now as ever though there are questions some of which we have to answer in this program questions about how safe it is how to regulate something which by its very nature is decentralized and if it's just another bubble waiting to burst we appreciate the not everyone is up to speed with exactly what this phenomenon is all
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about so here is a quick explainer bit coin is a virtual currency which means it's created by computer code there are no middlemen so there are no transaction fees you don't need to give your real name and there's no government control this is what we mean when we say decentralized. and that makes bitcoin perfect for illicit sales but recently more officially businesses are starting to accept them simply because they are becoming increasingly popular and therefore more valuable when it started back in two thousand and one bitcoin was worth less than one cent as of monday one costs about nineteen thousand dollars according to coin base which is a digital currency exchange based in san francisco now to go back to one of those points cowen appealing to many because of its lack of regulation but governments are starting to take notice for example the french finance minister brown on the matter said on sunday that he is going to propose to the next g. twenty president argentina at the g twenty summit in april we have
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a discussion all together on the question of bitcoin there is evidently a risk of speculation we need to consider and examine this and see how we can regulate big coin so here is the panel for today starting in cambridge with derek holman who is an economic historian at the university of cambridge in the london school of economics on skype from sydney david vaile co convener of the cyberspace law and policy center at the university of new south wales and in berlin your plants are who is among other things the owner of room seventy seven a restaurant and a bar that first accepted bitcoin way back in two thousand and eleven gentlemen welcome nice to have you with us in the interests of transparency i need to start with this we can see you all in vision at the moment hands up if you own bitcoin just in the interest of transparency. so we've got berlin in cambridge with bitcoin and sydney doesn't i just do that and for the record i don't either just in the interests of transparency we think it is important that we do with this for the
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discussion so let's start with you first of all the price i want to deal with the news headlines at the moment this price is what is driving it the fact that as i said over a good number of years it's gone up from almost nothing to nineteen thousand but the fact that november twenty ninth it was about ten thousand and today it's nineteen thousand that seems to me to be quite extraordinary. it is extraordinary but it's not unprecedented in big points case we've seen massive price write ups in two thousand and eleven and also at the end of two thousand and thirteen. you know at the end of two thousand and thirteen that was the first time big question really came on to the mainstream media's radar screen and i think your viewers should be advised that both after the two thousand and eleven two thousand and thirteen run ups price lost nearly ninety percent of its value so what can go up quickly can certainly go down quickly as well yes something i do want to deal with later on i'll just stay with you a moment what is driving i mean we can see what's driving the price but where is
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the interest coming from right now why such a surge in interest right so there's a number of things that have been propelling big price higher most recently is the adoption of introduction of futures markets by wall street firms like c m e e c b o e and nasdaq next year i think this is seen as a major development for big oil and a legitimizing development. in crypto currency as a new at asset class many people think these future markets are going to pave the way for exchange traded funds e.t.s. to come next year as well and we're seeing also survey data indicating that millennial zz a third a millennial here in the u.k. according to a recent survey are looking to invest in crypto currency so there's a number of things but i think wall street's embrace is clearly the biggest factor right now david violence in the us probably the more cautious about three guests come to you to ask you this do you feel that the general public really does
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understand this or that i mean hopefully watching a program like this they will learn more but maybe they're just more interested in the fact that the returns are so good at the moment. well the returns are obviously what is driving everybody nuts it's the fear and greed working together the fear of missing out and the idea that maybe you can get on the bandwagon i think everybody should take a deep breath and just step back for a moment but don't listen to me i hadn't thought missed out on that capital gain but the problem is complexity and this shia strangeness and weirdness of the underlying technology and therefore the great difficulty of seeing stories in the economist of people starting to say an exchange traded fund a future is derivative of this sounds very much like a great thing that would call everybody in but how could you possibly value it
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what's what's behind it why is the. i suppose the backing in terms of any assets but also with the protection in case some exchange operator just decides to take your money and go and so from a consumer protection perspective or even an investor protection if we treat this as a speculative assett rather than a currency the question is how can you tell you know what happened you make a rational and well informed sort of estimate of the sort of risk that you're looking at. really i think it's almost impossible for even the experts was gobsmacked by a computer science seminar i went through with the professor of computer languages that you want to study last year and even the experts the cryptographers the math ph d.'s were had them out saying i've been trying to digest the the deep of the underlying technology and so you know i still feel that i only just
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scratching the surface of my own ignorance of all of the different sorts of factors that could come in here so i really have a worry for the taxi driver or the hairdresser who's heard about it last week and suddenly wants to jump in i like the points that you raise and i think your. lane is the perfect person to put them to your david talks about complexity and we had in this. just give me your response to someone who has used for a long time and used it in a commercial sense as well tell me your thoughts. so everything we hear about the complexity and reorganise of bitcoin right now we have heard before about twenty five thirty years ago and then people were talking about this weird thing called the internet bitcoin e's hard to explain it is a very complex technology and it takes about as much time to understand it as it took back then to understand what is an e-mail and how is a web server functioning and things like that but the usability of bitcoin
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increases in it with an incredible speed and we start seeing people using bitcoin even without knowing that they use bitcoin like people today use facebook without actually understanding that they're using the internet so i think we're pretty much on the right path here maybe you should explain to us then in your own experience how it works if you're saying it's actually simpler than it is if i well if i owned bitcoin and i came to your restaurant in berlin and i wanted to pay with it how easy or difficult is that and yeah go ahead explain it. well you're talking about the usability as exact of bitcoin which is very very easy you come to our restaurant you ask for your bill our stuff will present you a q.r. code that you scan with your mobile phone that gives you our payment address and
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the amount to be paid your jacket your click on send and then we have the money irreversibly nobody like with credit cards there cannot be any charge backs or anything like that so the actual use of bitcoin is totally easy but that doesn't explain you how it actually works it's like you can you can use your email client very easy nowadays without understanding how the internet works so i wouldn't think that in the future everybody will know every technical detail of how the bitcoin network works just like today nobody really knows what to t.c.p. ip and all these technologies underlying the internet function very calming chaos is totally easy it's easier than sorry to interrupt your guy just wanted to put some of that garrett hohmann joining us in cambridge basically what you'll seems to be saying is the usability is there and people should use it without fully well that it's not so important to fully understand the technology behind it what do you
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reckon. well i think you know people are a little more trusting of the underlying technology of e-mail because it's just e-mail but when it comes to money and wealth i think people are a bit more conservative in do want to know a little bit more about how something like that quaint works before they put more say resources into it or use it so i don't know that the analogy is a perfect one but i take the point is it doesn't necessarily need to be where everyone understands how block chains work and so on i also think that many people find still difficult to use if you go into a pub here in cambridge like i have and try to pay with their coin and you don't have an internet connection it's very difficult to actually complete that payment. q.r. codes are something that more and more people are getting used to using you know apple pay and other digital payment systems are becoming more popular but still
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paying with your smartphone is is not something that you know majority of people are doing so there is a usability challenge as well people need to learn how to use this new technology before it becomes adopted beyond the tens of millions of people who are using it right now david vaile in sydney how are you going with your complexity and we had this now you understanding a bit more. look i don't want to be the devil's advocate but being typecast as that so i have to sort of respond. i think the comparison with a male is very interesting like i've been trying to help people understand things and trying to simplify and provide usable sorts of technologies for a long time now and you know the great thing about email is that it does have a real world analogy. even the system and the e-mail system a similar enough so that people can you know make their own conclusions like that you've got a message you posit that sort of thing the problem for me with big corn is that
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it's its fundamental nature is not even clear so it's sometimes called a crypto currency but in many ways it doesn't behave like a currency it doesn't have some of the fundamental things you can't pay taxes with it and you can't. have any aspies redridge it's not like it exists in. anything other than as a chunk of data i suppose it is when we should if you lose that bit of data you've lost the whole thing it's not like there's a bank account and i'm not a fan of banks you know i sued banks of almost driven banks to bankruptcy but you know they're by no means you know ideal but if you lose your your you know your bank account or something like that you can go to them saying you've still got my money and you can get it back on not suddenly at risk so that that risk the physical risk of actually losing access to the single bit of data is something i think it's unusual for people there's another question of the exchange right like
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if the exchange rates relatively stable it's behaving like a currency and it might go up and down one percent sort of every so often that's one thing but if you're in a situation where it might go from ten thousand dollars to twenty thousand dollars in a week and maybe in a jump of a thousand dollars in an hour and if you have gone in to buy a cup of coffee what's the exchange right at the the at. and there's also different exchanges and so which one do you who's actually exchange right do you use i suppose that the the the final thing is that because it's not clear that it is actually a currency many of the features actually behave more like an assett and so that the whole question about speculation about bubbles about sort of sudden disappearance of trust in the market all of those sorts of things i'm likely to affect in a mile or two affect an ordinary sort of currency if you're trying to use that analogy ok you're in berlin i've seen you shaking your head i've seen you nodding
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your head just a quick response for you before we move on. you can there is nothing on the planet that you can hold so security as a bit coin the point here is you need a backup of your private keys. so people will learn to take computer security much more serious than they did so far but bottom line you cannot lose your bitcoin if you have a proper back up and nobody can confiscate your bitcoin nobody can inflate your bitcoin nobody can stop your bitcoin payment with capital controls and so on and so on so bitcoin in fact is the safest s. that the safest digital bear as it that the planet has ever seen i would like to also make a remark about the valuation and the question is it a currency is it a commodity is it maybe a stock it's neither of these bitcoin is
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a network and because people are trying to apply the valuation mechanisms that they apply to stocks or currencies or anything like that they cannot understand this immense this immense growth that we are seeing bitcoin is a network we need to talk about a network valuation not market company tell i say. berke valuation follows metcalf's law which means the value of a network increases exponentially with the amount of people using it if you look at it bitcoin from at coffs point of fuel from a cough log point of view you're not surprised by its growth that's to be expected gentlemen we need to talk about the r word and that is regulation because governments are starting to talk about and really i mean i guess this is what appeals about bitcoin that it is decentralized it's not regulated. garrett and i
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start with you there in cambridge how would you even let's deal with the morals and the idea of regulation in a moment but if it were to be regulated how do you even start with something that is global something that is virtual something that is borderless. well so in big case it's been regulated at least as far back as two thousand and thirteen in the united states when finn sen it should their initial guidance in actually that regulation led to an increase in price as regulation regulatory announcements often have and the reason is again once a regulator comes out and issue some guidance or incorporates. in some way into an existing regulatory framework it further legitimizes it not all regulatory announcements have been positive for the price when china this year announced that it was shutting down exchanges that caused a price drop. but japan you know has already passed laws formally recognized as
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currency and you're seen businesses now more and more business is actually accepting coin in japan and japan is the number one country today for the trade in a big coin so it's a bit of a i think a. myth that because it is not regulated so also a myth that it's a great motive payment for the online dark web there's been a number of successful prosecutions of criminals using that quine online in the country of bulgaria actually which rounded up a criminal network has over three billion u.s. dollars or about six percent of g.d.p. i believe of bitcoin now in its possession so it was able to seize this illicitly used you know because and that's been a huge windfall for bulgaria so it's something that can be regulated and typically it's been regulated at the point where it's converted into national currencies but
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derek you're talking about and this might be my stupid question of the day so do forgive me but you are talking about individual countries there with their individual rules when we have gone a currency that is being traded all over the wool them through the internet so i don't know how the two come together. right well i mean if a country wants to ban big coin for example it might be difficult to completely stamp it out of existence prevent all citizens in a particular country from using it but a country can for example ban the listing of bitcoin wallet apps in the app store and android store it can you know outlaw the existence of regulated exchanges and make sure banks aren't allowed to transfer funds into those exchanges at least banks that are within that country's jurisdiction i mean there are various points of control that regulators can exercise to limit you know the use of mean they may be decentralized but people are still centralized and you know if you know who's running an exchange or developing software you know you can arrest that person if
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they're breaking the laws and that's what we see happening in countries that have chosen to crack down heavily on that point david does that put in of your or lay in if you will feel as a main way guard describes that there is regulation out there and the japanese are even setting the trend was turning into a car. well if i can continue my theme of complexity i've just started a survey where we think we might limit ourselves to the top thirty or forty countries but to try to understand their responses to both bitcoin and also to the. financial transaction use of. technology so for instance you know that the australian share market has just decided to use the underlying technology block shine for the settlement and so one of the first preliminary sort of survey it looks like an extreme variety of responses some countries are ignoring
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it some countries just exploring one use but depriving the others some of embracing it and actually legalizing it and moving towards making it a an. actual currency others outlawed banning it or banning the things around the edges the exchanges and the conversions and so at the moment it's a bit of a miss i'm not sure that that's a bad thing as i suppose a should actually start off by saying there's a huge amount of etiology in the bitcoin and in the block china will there's a whole lot of inbuilt assumptions a lot of it is on one side is very much a libertarian idea that sort of government is bad you know unregulated markets are good and that to me is going into the future but going back to the nineteenth century one of the great inventions of the twentieth century was antitrust law competition law consumer protection law you know banking controls and things that
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actually stopped the crazy and sort of out of control exploitation that you get in some sorts of free markets i'm neither a fan of a total free market nor of a touch of an ivory lighted market what's interesting is some of the conversations i've had in. with bankers and other sorts of people in relation to all sorts of information controls and i often cite look what we want is sensible regulation it actually as we had before in this case improves the value of bitcoin when you get this stepping in it's and that is because the the i suppose the etiological purist position that you know regulation is bad doesn't actually match up with consumer reality where you're completely for instance out classed in terms of knowledge and sophistication but you're also outclassed in negotiating and lobbying power compared to big businesses and also to those who run the bitcoin scheme you might
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actually like to have you know someone on your side or to have some of the prudential regulations or the restraints on straight out rip offs that have actually been developed in the last hundred years rather than going back to the wild west of the nineteenth century with all things are run down the clock so i'll come back to you maybe maybe if i get away from the odd would regulation and use the pay word which david said and that was protections and he mentions before the fact that it's not backed by assets oh ok go ahead you've raised your thinking. i don't know sorry to interrupt you but yeah regulation as a matter of fact the big bitcoin protocol he's not regulated and can by definition by definition not be regulated that is a feature of bitcoin that it is that is its whole purpose and that's what gives it value and that's the way or is they must sorry to interrupt you where is it over to
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you actually related many pure lated where is the protection for the person who owns it. you see the person who believes in bitcoin fuz the absence of regulation as the protection the absence of regulation protects people from negative interest rates from monetary inflation from capital controls from bank bail in. so i belong to all these people who would like to be protected from these things and the tool to protect yourself is bitcoin. if you're talking about consummate protection meaning like i should get my money back if the online shop didn't sent me the parcel or something like that these are things that can easily build on top of the bitcoin network but the bitcoin protocol the bitcoin network itself can never be regulated it would stop being bitcoin if that regulation attempts were successful
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fests and i think discussion gentlemen i thank you very much for your time very common in cambridge david vaile in sydney and your plants in berlin and as ever thank you for joining us you can see this program again any time by visiting our website about jazeera dot com you can head to our facebook page for further discussion as well that is facebook dot com forward slash a.j. inside story on twitter as well i handle is at a.j. inside story i'm at come on a.j. for me come all santa maria and the whole team here thanks for joining us we'll see you again soon. i.
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you are making very pointed remarks where on line the main us response to drug use and the drug trade over the last fifty years has been criminalized or if you join us on sac no evil person just wakes up of in the morning and says i want to color the world in darkness this is a dialogue and that could be what leading to some of the confusion the lie was about people saying they don't actually know what's going on join the colobus conversation at this time on al-jazeera the sams in archaeology graduate from iraq he's also a part time going to billings pergamon museum which includes a reconstruction of the famous ishtar gate in bubble most of the people he's showing around came to germany as refugees this is just one of several billion museums taking part in the project called a meeting point and as well as bringing people together one of its aims is to emphasize the contribution of migrants right up to the present day to western
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culture office in a language he had been because i've been here for some time i can help them with lots of things that mrs ford to me the great thing is it's not just about museums about forming a new life is part of life it's culture. forced to flee from syria to lebanon many refugee mothers risked childbirth in terrible conditions delivery is very difficult here in lebanon it's ghostly i can't go back to syria now because of the war but one lebanese woman is committed to helping them. become friends with everyone i attend and she's important to me. there are a few g.'s midwife at this time on al-jazeera world. i'm jane ducking into other top stories on al-jazeera saudi arabia says it has into .

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