tv Inside Story LINKTV August 25, 2021 5:30am-6:01am PDT
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covid-19 infecon. ♪ emily: hello. i have the headlines on "al jazeera."jill biden says the u.s. is on track to complete evacuations from kabul by august 31 deadline, but has asked the defense and state departments to prepare contingency plans in case it needs to be extended. >> we are currently on pace to finish by august 31. the sooner we can finish, the better. each day of operations brings added risk to our troops. but the completion by august 31 depends upon the taliban
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continuing to cooperate, and allow access to the airport for those we are transporting now, and no disruptions to our operations. emily: the taliban said it would not allow western troops to remain beyond august 31. the group said it is also stopping afghans from going to the kabul airport. >> we will not allow an extension the owned august 31. so the u.s. should remove and evacuate all personnel by the set deadline. all their contractors must leave. we are not happy to extend the deadline. and after that, we will have a separate position following the deadline. the islamic emirate is trying to encourage people to go home, but the americans are inviting people to the airport. their adverse policy is continuing. to board people on planes. the airport access dashboard people on planes -- continuing to board people on planes.
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emily: five point $3 billion has been provided to the country since 2002 by an organization that has 27 ongoing projects. last week, the imf locked delivery of payments. since the taliban takeover, the u.s. has frozen 9.5 billion dollars worth of afghan government reserves in american banks. those are the headlines. i'm emily anglin. the news continues here on al jazeera after "inside story," and i will be back at the top of the hour with more news. ♪ ♪ >> what is driving the rise of bitcoin?
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the value of the digital currency as risen again. could they place original -- replace original transactions and what is the use in using them? this is "inside story." ♪ rob: welcome to the program. i am bob matheson. bitcoin hit a record high in its unmatched record of price swings. some call it the currency of the future. others call it bubble that is doomed to first. but the mother of all cryptocurrencies is slowly cementing its place in global markets as the most preferred digital assets. financials to tuitions mastercard, paypal and many others are investing heavily in it, expanding access to customers around the world. so, while coin trends higher,
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the question remains -- will it replace traditional currencies in the future? we ring in our panel in in a moment, but let's recap bitcoin's history. it was created in 2008 by an unknown person or group of people under the name of satoshi nakimoto. it began circulating a year later as an open source software, which means everybody could access the blueprint and make their own coin. it was intended for people to send money online and avoid the global banking system. value fluctuated sharply as people experimented on how to use it now, bitcoin -- to use it. now, bitcoin can be used to buy property, electronics, drugs, without leaving a trace. ♪ let's bring in our guests. in new york, john biggs is a crypto journalist and author of
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"black cats: misfits, criminals and scammers in the. electronic age" we are also joined by the director of a financial res earch firm. we have blaine goodman in london, author and former business correspondent. thank you for joining us. good to have you with us. mr. goodman, let's get context around the recent increasing price in bitcoin. what is behind this? >> what has happened in recent months is that the bitcoin price got ahead of itself. it rose varies fast. it rose very far. we had about $20,000 high-priced set in 2017. then, the price -- high price set in 2017. then, the price manned down,
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which made a lot of people lose interest and a lot of people sold out at the bottom, $3000 a coin. the price started rising and once i got back to the previous i around $20,000, everybody started getting interested again. the price rocketed up, got to $60,000 thereabouts. from there, we have run out of willing buyers come as it were. everybody piled in, and it out ahead of itself. the price fell for a couple months. it has had time to regain its footing slowly as people start giving up on it, and you get a whole slew of negative news stories, which always tends to happen when you have a bear market. but i was expecting a rally like this soon enough, and i bought in as it started to recover. and now, here we are. not just bitcoin.
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as well, the other cryptocurrencies are following to some degree. rob: i want to get back to what motivates the fluctuating price of bitcoin, but when i started reading about bitcoin, and i know nothing about bitcoin and i started reading about the technical side, the software side, frankly, my brain started to hurt within a paragraph. i don't what to get into the technical side of this. tell me, what is the motivation behind a cryptocurrency like bitcoin? >> the original idea behind bitcoin was a more seamless way of making payments, either down the street or across the globe. if you look at payment mechanisms when bitcoin was brought to market or invented, there weren't a lot of choices. you had to send money through swift. you have to rely on traditional they meant networks which extract quite a bit different anybody using them. the original idea was a peer to peer payment system to transfer value from one person to
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another. that has evolved. the price and value has increased, not so much for the utility, more for the stored value or investment aspect of the cryptocurrency. rob: have we moved from a model which was essentially a method of making payments easier, to a speculation model? we are talking about something that, forgive a dreadful analogy probably, something that started as paypal but now is like investing in gold? >> yet, the narrative around bitcoin has changed. at the beginning, it was around payments. bitcoin is not suited for day-to-day payments, like at a 7-eleven or convenience store, but it does serve a purpose as a store of value for people who invested or as you mentioned to speculate on it. the narrative is changed. the other thing that changed is the ecosystem of cryptocurrencies around it. there are many cryptocurrencies now that are very focused on payments as an example, so they are much more efficient than
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traditional methods, very cost-effective and fast. solving some of the challenges we had before. bitcoin was the first iteration, first mainstream reptile currency, but there have been tens -- first mainstream cryptocurrency, but there are tens of thousands of cryptocurrencies, some that have stored value, some have functionality and some are just there to be there. we have a lot of cryptocurrencies that have no actual usage but have increased in value along with the rest. rob: john biggs, elon musk was quoted as saying owning bitcoin was only a little better than holding conventional cash, but that slight difference made it a better asset to hold. what is the slight difference and why is it better? >> bitcoin and cryptocurrencies route around damage. the internet was designed to route around damage. we talk about the history of
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blockade and blocking is rooted in anti-censorship and anti-control. the vast majority of money historically always had a hathor -- always had an authority figure or god or someone on it to show there is implicit rest associated, that it is associated with [indiscernible] bitcoin was the exact opposite of that. that is what we are seeing now. if you look at onlyfans, it started out as a site that wanted to be tiktok with people in t-shirts at then people took off their shirts that they don't want to support that anymore. the payment process was very specific, they don't want to support that anymore, which is a moral question. and the question of morality is exactly what bitcoin is designed to do, it is designed to route around those kind of things. so, if i am in iran and facing
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sanctions and can't use a credit card for some reason, i can use bitcoin. if i am an adult performer, i can use bitcoin. if i tried to sell something 70 doesn't want me to sell in a certain place, like a book or ecstasy, i can use bitcoin. for better or worse, that is exactly what it is. elon musk has a bug, he likes to talk about bitcoin and then blow it down again. i wouldn't trust anything he has to say but he is right, it is cash we can send back and forth on the internet that is anonymous to the degree that cash cannot be anonymous. rob: as this moved from the stage where an individual is able to use this for regular transactions? or as it moved to another level where we are talking about all of a sudden the price of bitcoin being really excessive. is moving away from the original business model?
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and does it have relevance in terms of the level of payments? >> yeah, it has moved away to a tremendous degree. the new narrative grew up around the time covid came along. my theory is, perhaps bitcoin's price would never have recovered at all had it not been for covid . it might've its popularity to covid because when covid came along, central banks in the western world suddenly changed monetary policy. they started easing monetary policy, they started printing large amounts of money. central banks were panicking, governments were panicking so there were willing to do anything they could to keep their economies on their feet during the lockdown. so, interest rates which were already incredibly low went to rock-bottom, money printed everywhere, and this scared a lot of people who believe in sound money and hard money,
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which is most people who know about economics. they worry about these things because they don't want to see the currencies in which they deal everyday being devalued, currencies with which they are there living. so bitcoin got this reputation is digital gold, an idea that it has a more long-term store of value aspect because it can't be printed in infinite quantities. the number of bitcoins's total 21 million bitcoin. there are currently 18 million or so. the other few million will be mined and created in the next 100 years or so, so a very small supply of that coin, which made it very different to the fiat currencies, in particular the dollar. people started pouring money into bitcoin because they thought it was sound money like gold, alternative to gold, even though it doesn't exist in the
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real world in the same way gold does. but to address john's point, in terms of name and processing, he is right. it allows you to do things some payment processors might otherwise and, as we have seen with onlyfans. but one significant problem aspect is that, if governments decide they don't like it broke payment process anymore, they feel it is getting too powerful, the u.s. government has a lot of power and regulators have a lot of power to not kill off bitcoin , but certainly cause it major problems by banning the fiat connection, the fiat crypto connection between the dollar and by encrypt currencies like bitcoin. it would make it very, very difficult if not impossible for people to transfer their money from one to the other. rob: john, you had a point you wanted to make? >> as i said, technology routes
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around damage. if we are worried someone is going to shut down our fiat gateway to the dollar or anything else, there is always going to be somebody floating around who's going to do the deal with you, whether legal or illegal. and i suspected vast majority of banks are going to push back against this because they know where their money is going to be made in the future. the money's not going to be made in human advising, it is going to be robo advising, people into meme stocks, that is where the money is going to come from. if enough money is thrown at this problem, the u.s. government or any government will have no control, which is what we start recently when the you -- when the eu went to basically ban general-purpose wallets, which wasn't true, but it's given of people to make the price of bitcoin move up a little bit. rob: do think cryptocurrency, given fluctuations we have seen
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in the market at what we have been talking about so far, do you think cryptocurrency eventually is going to need some sort of centralized authority to stick the price? because i can understand the attraction of some people, the currency being untraceable. but being unstable is a very significant thing again. >> for the majority of people in cryptocurrencies right now, they either do this before, figured it earlier this year when bitcoin price halved, that there are very few other assets in the world that have the volatility cryptocurrencies have, and even just bitcoin itself. people in that coin, hopefully most of them understand that there are risks. the other thing to keep on the radar is the fact cryptocurrencies are essentially serving as a base for central bank currencies around the world. here in asia, we have china moving forward with the e
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reminib. it is block chain based. this is the way the world is going and digital currencies when we look 20 years out, will be the main way people are saving money, making payments, and spending money on a daily basis. physical cash will be a small part of what we use in the future. so cryptocurrencies in some ways are the regulated part of the future, and certainly that has appeal to people, as stated by my fellow panelists that if you are in a place like afghanistan right now, the value of the currency, inflation is tremendous right now because people can't access it, so costs are going up rapidly. you don't want that if that is your primary savings. so, for many people, bitcoin and cryptocurrencies are a way to hedge traditional payment methods around the world. rob: what we have been talking about in some ways as a very
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positive and understandable aspect. for example, the researcher was able to do, i was surprised at the level of impact mining for bitcoins would have. it has had a significant impact on the consumption of fossil fuels and climate change and of course there are the illegal elements to this as well. if it is not transparent, it is easier to hide payments, particularly on the dark web where you are buying weapons and drugs and so on. talk me through the downsides of this, particularly in relation to the climate, because i don't quite understand that. >> in terms of climate change, you need a lot of electricity to mind bitcoin, the way it works. mining is, if you imagine block chain technology, it was a network around the world -- it is a network around the world run by individuals. , atm's around the world running by individuals.
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how do you pay for this network? the mining process is how you pay for it. it used to be proof of work, which meant your computer was running and doing work and processing transaction. soon, if i own enough cryptocurrency, i will have some say in the network at control over the network. that is the way things are changing. except for rare cases where people are literally connecting to a coal plant in the middle of china or west virginia somewhere, the actual electrical impact is negligible. it is a can to half a city -- it is akin to half a city for a month or so. a lot, but not nearly as bad as, think of a banking network. it has got to be on par with that at the very least, but it is improving. in terms of the dark web, in the
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united states, you can go by and shoot up a school completely legally. you don't even need bitcoin. so that his neck were to change anything. bet -- so that is not going to change anything. bad people are going to do bad things and people who don't have the same sense of morality as you are going to buy some pot on the internet. there's no way to stop it. the idea we could centralize this and regulate this as something that is controllable is pretty much impossible. it will be fun to watch everybody try. ultimately, we are going to have government-based coins, the yuan, the dollar, etc., that are going to have some sort of connection to the algorithms, which will be cryptocurrencies. rob: the fact that these downsides exist will give governments and other financial bodies, international financial
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bodies, the impetus to move into this and say, for this reason, we have to institute control, we have to have some oversight of this. how do you think that is going to play out? john is skeptical this is going to work? do you think there will be a conserted effort -- concerted effort to clamp down on this? >> we are already seeing this. janet yellen, treasury zack greinke -- treasury secretary, not a fan of cryptocurrencies. gary gensler of the sec in america, the most important regulate knows a lot about cryptocurrencies and used to even lecture about them. people were optimistic he would be a big fan, but he got his new job and it is clear he wants to regulate, and in ways people might not like who work in the industry.
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all it takes is one excuse to clamp down, a good excuse. th -- they used to use terrorism funding and that it facilitates crime and all of that, but those arguments were easily refuted by saying nearly all crime is financed by dollar notes, suitcases full of money. now, they have got the better excuse, the environmental one. bitcoin does use a lot of electricity. i take john's point about how the banking system also uses a locked up electricity, but the problem at the moment is that bitcoin doesn't actually do much that is useful like the world banking system does. it facilitates all these incredibly useful transactions, the banking system, that keep the world economy going. bitcoin doesn't do that. nearly all transactions are still speculative and investment based, they are not about making regular payments.
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so we have got a bit of a problem. the environmental aspect is not going away. there are newer cryptocurrencies that will use proof of steak and other technologies that don't involve huge amounts of electricity for mining. that is where the future is. as you can tell from my tone, i'm a big fan of cryptocurrencies in general. bitcoin, i can see real fundamental flaws, not least the environmental factor, which could possibly sink it, not altogether but bring it to a much lower level and make it superseded by other cryptocurrencies. rob: we were talking before about the market opening up, bigger organizations opening themselves up to using cryptocurrencies generally. how much do you think people are doing that with a lack of understanding of what they are getting into? and if that is the case, how much of a risk are bigger
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companies and government economies opening themselves up to by getting into something that is so fragile as cryptocurrencies as they exist? ? >> part of the problem with the drive up in price is institutional investors getting involved. we have seen more crypto focused funds, and traditional players are getting into this in terms of investing. a lot of family offices are now taking a slice of bitcoin with people -- a slice with people investing in bitcoin and e ththerium and others. others have a sophisticated view of what is happening and understand the risks. it is when your taxidriver or pharmacist starts talking to you about cryptocurrencies that you have to worry.
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as an example, a cousin got involved. luckily, she got involved in the right time and has made three times her money. the downside is, she is putting more of her wealth into it and that is not money that she has toulouse. -- she has to lose. although it is impossible bitcoin could go to physical zero, it could drop significantly and if you had all your retirement savings in it, and with my investment strategy of buying high and selling low, you would have lost 50% of your growth in the past six months, which is challenging. within the industry, education is an important part of this because you have people off the street who are not familiar with the cryptocurrency industry that are getting involved. it still is a very small percentage of the entire investors or holders of cryptocurrency, but when you look at government regulation outside the tax question, that they want to tax what is there,
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it is a certain amount about protecting consumers as well. if you look at u.s. aqua -- u.s. asset classes like private equity or investment capital, you have to have a certain wealth or salary and you are aware of the risks and can afford to invest money you could potentially lose, and cryptocurrencies are one of the few asset classes -- so when people see 1000% return, they want to get involved in that thou sometimes understanding the risks. rob: looking forward, are we looking at cryptocurrency as it is at the moment as essentially an experiment? or are we seeing it as a genuine alternative currency, as it stands at the moment? >> technologically, we are looking at an experiment, probably a massive experiment. probably one of the most
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interesting ways to unlock capital in our recent history. we haven't had anything like this in the past 50 years in terms of the taxidriver being able to put in $5,000 and take $1000 back out, which in many cases is a scam, sometimes it is not. again, it is experimental. the technology is not even made, let alone half-baked. people are throwing things together in a willy-nilly way to see what will stick, just like in 1999, 2000, the y2k.com years . rob: we appreciate you joining us. we are up against time. our guests in new york singapore and in london, glen goodman. and thank you for watching. you can see the program again any time by visiting aljaz
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sonoko sakai: well, i grew up in a very small town called kamakura, whichs about an hour outside of tokyo. and so i was immersed in the old world, old japan, very artisinal, without even knowing what that word is. they have this craftsmanship. that was the way people lived. you had to know how to work with your hands. and it was an awakening for me as a young child looking at the craftsman's work.
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