emily: bitcoin hits a fork in the road. but will it propel it into the mainstream market? i'm emily chang and this is "bloomberg west." paypal makes its first acquisition since breaking off from ebay. it's a startup named modest. i speak with a cofounder. ik;s, messaging app k cofounder tells us why it is

that we chat of the west. and it's taking the reality tv world by storm. first, to our lead -- bitcoin facing something of an identity crisis. the developers released a softwa upgrade called bitcoin xp over the weekend designed to help bitcoin process more transaction as demand and activity go up. supporters say without this upgrade, bitcoin will hit a bottleneck sometime next year. even though there are plenty of critics, a lot of the bitcoin community has already installed the upgrade. so, what does it mean for the future? our bloomberg reporter has been following this for us. i want to start with you -- what is bitcoin xp and why do developers see such a need for it? guest: the whole conversation centers on how does bitcoin scale?

so, supporters would like to see it grow as big a platform as for instance visa. for that to happen, some of the technical characteristics have to change. camps that some of there are technical changes necessary and this is the result. emily: why are you against this? guest: you have two outlier programmers that don't have a phd -- there hasn't been sufficient peer-review. there's a big consensus that this has been rushed and we see that from the lack of adoption with the minors. at the end of the day, it's a big experiment and we will see what happens, but that's my main reason from a non-core programming standpoint. i'm not a programmer, but i like

to listen to phd's and the experts. that is very important to me. emily: james is something of an expert. james this has been described as , a threat to bitcoin. bitcoin's myspace moment, potentially. what do you think? james think of this as the y2k : of bitcoin. we did not plan ahead to where this would need to grow and scale beyond our our initial aspirations, so bitcoin is going to hit a wall. it's just a question of whether after that wall, whatever solution they come up with can be done quickly enough to inspire enough confidence among the broader community so that when we are past the hurdle, there is still a bitcoin business. instead of -- you referred to myspace. it was one of the first social networks and now it's basically gone because it could not make it past its early growth space. there is a risk if bitcoin does not solve this problem, they will be in a similar situation.

emily: what is the other opportunity for other digital currencies? many say crypto currency is the future, but maybe it is not bitcoin. guest there's the issue that : there are a fixed umber of coins. by increasing the transactions per block, it will lower the price and more transactions will go through. so bitcoin is layer zero. ayers.e seen other l there are multiple layers and it's important we have stability and do things in a very smart, intelligent, best practices way. that is why giving these phd core developers, you have two -- o understand why they are not on board. that is not really clear yet. emily: is this essential to

bitcoin becoming a more mainstream currency? if this does not happen, is bitcoin going to see an end. james: i don't disagree about trying to do it right, but i do feel very concerned that we're not just talking about a technology issue or financial issue. there's a psychological issue that people have decided over the last three or four years that bitcoin is something they're going to trust, they have to maintain that trust. there's a tension between the technology that if it takes too long, the trust disappears and that is a problem. it does open the door for other people to say bitcoin was good and it taught us some things and helped us realize alternate currency is a viable thing, but now we're going to move on and that is the existential risk that bitcoin is up against. emily: the price has fallen to $200. should we be concerned about that?

james: when people have started any kind of fever that catches the market, it goes up and levels out as people get more realistic. i think it's a good point that if we don't solve this problem or if we solve it with a technology that loosens the supply, we know what happens when you loosen monetary supply, it devalues the currency and that's a real risk here. emily: we are going to keep watching. thank you all so much for joining us. well, paypal made its first acquisition since splitting from ebay. that payment giant purchased modest, started by harper reed. i spoke with him about this deal. take a listen. harper what the future : holds as being able to purchase things in the context of which you are seeing them. whether that is on facebook or twitter or things that have not

been invented, being able to purchase that and take advantage of that thing right when you see it is that future and the thing that is hard right now is that it's difficult for the retailer. and so we hope to make it much easier. emily: he referred to the deal as a key code to scale. i asked how it can help those businesses expand. more quickly. harper: i'm sure paypal can achieve great things without us, but the exciting thing is the cheat code i was referring to is that we at modest are focused on this product, these inventions we have created and then when you look at who has the most scale, braintree, which is such a neat company has a great scale and is able to kickstart into appealing to consumers all over the world. and that is were the cheat code comes into play. emily: if you recognize him, he's been on the show before.

he was a cpl for president obama 's campaign. i asked if he's going to get involved in 2016. harper: i guess if barack obama runs for president again, but thankfully that is prohibited by the constitution. emily: still to come, airbnb is looking for a ceo in china with the help of two chinese the sea vs firms. plus kik joins the unicorn club. why he thinks he can play with facebook and snapchat in the big leagues. ♪

emily: now to a story we are watching -- the president of

soft tank is making a big wager . they will purchase $483 million worth of company shares what he calls a personal but. when the transaction is complete, he will be the second against shareholder after the founder. now to airbnb. the startup is joining a list of us-based companies expanding china. including uber and linked in. in a statement, they said in just the last year, how down travel from chinese guests has grown 700%, making it our fastest-growing outbound market. airbnb partnered up with two chinese venture capital firms. china broadband capital and another the first order of one. business is to hire a ceo for airbnb and china. ,oining me now to discuss working with airbnb on the strategy. what makes you think airbnb can succeed where so many u.s. tech

companies have failed? guest: in china, you are seeing with the success of the iphone, a growing block of chinese consumers want to have a more westernized lifestyle. emily: is the government going to allow this? guest: the government is pretty savvy of choosing who it can -- you can succeed in china. they want to improve relations with companies and relations outside of china. emily: with facebook and twitter being blocked and companies saying we're not going to try china at all what makes airbnb , different? guest: media is a lot more regulated and there's a lot more oversight, whereas cross-border commerce is being promoted by the chinese government. emily: i recently sat down with the cto of airbnb.

to talk about the china strategy at the technology conference. take a look at what he had to say about airbnb's expansion in china. >> china as a country is growing faster than any other country in the entire world as a source for travelers. incredible growth. and you know it's an amazing , thing. there's a growing middle class and the first thing they want to do is experience the world. many of them have not left the country ever before. china is number one in terms of international tourism expenditure. it was $100 billion in 2013 and they estimated it would double again over five years. put that in comparison with the next two highest, the u.s. and germany are tied at 80 billion. the future of international travel is the chinese tourist. emily: what is interesting is they are looking for a ceo in china and they are looking at these venture capital firms.

china broadband and sequoia. we don't know the other guys. who else have they help to get into china? guests: china broadband has been a pioneering entrepreneur. it is linked with sequoia here in the u.s. emily: do they have government connection that airbnb needs? guest: the process of making bets in china -- we love to help them meet with the right folks in china to help put forth more communication and avoid misunderstanding. emily: i lived in china and every time you check into a

hotel, they have to scan your passport and they hold on to that information. how does airbnb handle that side of things? guest: the chinese government prefers people have records of people staying. especially foreigners. that obviously applies to anyone operating a business in china, so it is up to the host to deal with such matters. emily: so the hosts are doing that? guest: it is up to the host. the government is encouraging it to be open about more ways to collaborate and we will see what happens as the scale grows. emily: it is interesting they are looking for a ceo of airbnb china. could uber benefit from something like that? they have run into many issues and their offices were just raided. guest: transportation is a lot more regulated as a sector so over has challenges to deal with that. emily: what other companies could benefit from having a ceo

in china? companies looking to expand -- is that the way to get into china? guest: the way to get into china is to find the right local partner. it's important to figure out what is the right middle ground that both sides can accept. to make the production reductive. then you have a china ceo who has some kind of decision-making power to make adjustments. you have to make adjustments for the chinese local situation. emily: what has been your advice to airbnb? throughout the process. there is a chinese version doing something quite similar and it's even more built out. they have cleaning services you can use. guest: my partner is on the board. we think the two businesses are not directly competing with each other and have different focuses. i don't think they have any

desire to expand beyond china today. there could be a way to work together. all along, i always thought the alibaba or yahoo! model is something companies should think about. if uber was an investor earlier, they would not have the contingency situation. that they have today. emily: you think uber should have -- guest: we are very supportive of that model. longer run, it is more a humbling relationship. emily: where is airbnb going to expand next? they have talked about iran. guest: they have a million stays in one night and that's a record. one reason that we are investing, it is an amazing

service and an amazing community and we don't see anyone else doing something similar around the world. we would like to see more chinese travelers travel on airbnb. emily: we will be watching. hans, thank you for joining us. always great to have you here on the show. turning now to a chinese company investing in a north american company. investing $50 million into the messaging app kik . i spoke to the cofounder of the comparison and the race to build a chat platform. guest: we're talking about building a chat platform. it has to do is being able to message her friends and family, which is the most important use of most people's smartphone. but to become a chat that form is having more interaction -- games, businesses and we chat is

a shining example with what they have done in china where you can order a taxi, buying stuff, to refinancing your mortgage. we think the next race is for the chat platform. emily: up next, the newest reality tv star could be sponsored by intel. details into the chipmaker's foray onto the small screen, next. and hackers are having quite an affair with ashley madison today. as we head to the break check , out the launch of this unmanned japanese rocket filled with supplies for the international space station. ♪

emily: it is time now for the daily byte, one number that tells a lot -- 32 million. that's the number of ashley madison users exposed by hackers today. if you remember the data was , stolen over a month ago and the hackers who called themselves the impact team said they would release the data if the cheating website remained active. today, they made good on that promise and names, streets, e-mail addresses and phone numbers were all posted to the dark web. out of the 32 million names, 15,000 are said to have.gov .gov e-mail addresses. intel is getting into the reality tv business. the ceo and creator of "survivor" announced a deal yesterday. the upcoming show will be a $1 million prize contest to create the best wearable device. but with a chipmaking declining

and a stock price down 20% this year, is it a smart way to jazz up intel's image? joining us to discuss that is lucas shaw and james from forrester research. james is this a smart branding , move? is this grasping for straws? james: it smacks a little bit of desperation. don't get me wrong. it is a great idea. i'm surprised no one thought about it before but for intel to put its brand behind it is risky, given his brand is not in the strongest of positions anyway. i will be surprised whether they can meet the expectations of reality tv viewers who are watching shark tank and the apprentice while making it still their brand. emily: mark burnett is no slouch. lucas what is your take? , lucas: there are two things that work -- one is technology occupies a far larger of culture than it once did between social media and different consumer facing tech companies.

and hollywood tends to reflect whatever is happening in society, so you have one of the biggest shows on hbo is set in silicon valley, so it was bound to happen that you would have reality shows that in that same world. hollywood hopes of you have a tech show that you will appeal to a younger demo. you see with the tv networks, the average viewer tends to be going up, so whether it's partnering with intel or putting a youtube star in the middle of a show, they are trying to reach people between the age of 20 and 40. emily: ge is sponsoring its own show with ron howard. is this a continuing trend? lucas: there was a story in one of the entertainment trades this morning that either nbc were cbs was working on a comedy loosely inspired by the people you may know feature on facebook. you are definitely seeing more and more shows whether it is

nonfiction reality or reality based in the world of tech. emily: even though you think it is bizarre, could intel and incorporate some of these ideas into it is this or is this purely a branding opportunity? james purely a branding : opportunity. if there's someone out there with the next big idea, they've already taken it to kick starter and they are not going to wait and say a million dollars from wait for theave to next few years, which is not necessarily a bad thing. you don't have to wait for the big guys to hand you the money anymore. that's the change in the digital economy. i think those ideas are already out there. emily: if not a reality show, what does intel need to do? james: it comes to putting amazing products out on the market. they have the microsoft problem -- you are known for one thing and it's the shareholders -- it's the thing that makes your shareholders happiest and that thing is not as important to the world anymore.

you have to innovate. microsoft has been a good job. microsoft has come up with new services but we are not seeing that innovation that of intel and moving your brand forward is not going to be sufficient. emily: the show is coming out next year. i am a little curious. i will be watching. james of forrester research thank you for joining us. lucas, thank you both. that is it for this edition of "bloomberg west." tomorrow, more details and the latest from salesforce. we will see you then. ♪

>> from our studios in new york city, this is "charlie rose." charlie: we begin with a look at the 2016 presidential election, donald trump's campaign for the republican nomination continues to surge, 24% in a recent poll of gop voters followed by jeb bush and ben carson. hillary clinton remains under abuse for use of a personal e-mail server. matt dowd recently spent time talking with voters at the iowa state fair, where they all work. he is an analyst for abc news and he joins me now from one of ou