Mar 10, 2014|
Garland talks bitcoins with economist Ben Brunson.
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Automatically Generated Transcript (may not be 100% accurate)
Finger about something good so we -- a lot about it over the last couple years big corn. It's -- virtual currency dude digital money. That's that's existed for quite awhile now -- in -- to congress on that. Well you know -- I think this may even overcome -- over. Incumbency prologue the -- queues round the world. More more people will be using it to approved repair its software engineers were actually. Made. -- corn who cringed food actually have something in and we've had other song that it's who involving ATM machines and accepted bid cordons. And in the middle of this it's. -- -- the most important institutions I think forbid Cohen at times ago website call Mel docs G or acts. Announce it lawless stood that was 750004. And almost. Half a billion dollars worth of revenues. Just disappeared. And we sit and to do an -- to -- where. And help those who have that we have been Bruton and history expert economist author testers leading in the polls step in that bill and welcome to show appreciated. What what's the latest where -- orbit coincidences. Well that -- are alive and well in and trading. That are around 600 dollars and that common these days. So there. They're very real and continue on despite the numerous issues some which Egypt side. Independent what what was the the top number was at 900 dollars a -- corn. Well bid calling it and trading day about 11100 dollars. That it was I believe -- hi hi all I'm listed trade. And that was late last year. And -- -- virtually Brockton have value wise. Why why do you think it's going to survive. Well it is it's saying is and that's to go back to let bitcoin it is and and it pointed an attempt. By. One or more people on color not. Exactly sure who it is only Newsweek just out and so on but he denies that. But it's software code that written to create a and virtual currency that is outside in the nation's state outside of the control of many nations stayed -- that did exist. Early on line. Purely within. Machines within computing devices. It's completely arbitrary there's nothing packing up -- points. Their noble on deposit or no money on deposit anywhere that accepts the value declines in it. Surely has value based on people treating it and and hoping and expecting the price to be higher in the future. -- -- -- That it is a unit of measure. That clinic to things so it's an attempt to trade currency. And it's a unit of measure to do. I think him personally that it's it's fail or fall short of being currency I would view it more as a commodity over -- could think of it as a very speculative. -- That trade respectively. But it's also a containment exchange mechanism and as a payment mechanism it's actually works. Fairly successfully although it is subject to to being hacked. Which is exactly what happened -- mountain -- which which you pointed out early. But I would not view bitcoin currency because it's not. The ubiquitous when he accepted and in any value. Some good points. Quoted and -- hours but you wouldn't quote dollars and declines. If you understand what I'm saying the AD. Dead. It's just speculative construct from that perspective on the board bitcoin is very successful as being -- Completely anonymous way for people. To exchange value between each other over the Internet. And in that regard decline is it is success that does achieve that and that -- in my opinion is the the biggest. Asset bitcoin and -- feature -- -- that people find most appealing. How does. In the in -- to you to do a guarantee anonymity word we're down. Show what can sure after shows sixty minutes -- report last night. On the data mining. Legitimate. Organizations around the world and hacking. Of illegals all over the world news good corps and guarantee and and him. Well the way -- point where x.s. -- is the bitcoin. Is associated. To an IP device to machine to the computers can be it Smartphone can be a laptop. It could be -- server somewhere. But the big clue in itself. It is there's a public record at the -- -- that point but it's not. In the name of a person it's it's it's assigned to an IP device so if you possessed that IP. Device that he's possessed that Smartphone if you have -- thousand bitcoin. That are located on on your Smartphone. Bet that this payment zoning -- you know works exactly the payment cash intentions anonymous in the and I can. Easily -- take a hundred dollars and give it to you or anyone else and then that person is now the owner of that 400 hours. I can and. Steal -- hundred dollars and essentially on the honor that hundred dollars and let someone can somehow prove that I've stolen. Bitcoin works the same way so once the big point is associated to an IP device. If it on myself -- I can -- around values that in my in my pocket. If I had him one point four million -- on myself around. I would be holding a billion dollars essentially cash in my pocket and I can go. And I give that -- someone else whoever possesses that cellphones. Possesses. Something worth a billion dollars right now we're bitcoin -- And so that is the and it and it anonymity that is obviously very attractive for a lot of illicit purposes. Ours continues. And so when we come back. Anybody interested in commenting asking questions we go at the bit cool and expert about. What is it will continue. Do you use is there a reason for -- use Gibbs called Q Sid 01. Celebrity. Total for everywhere in the country -- six fixated on it steroids WWW. A book a backward thinking about big big -- of virtual currency. They got pretty popular of their pearl wild do it if it looks like it's like because it when in value -- corn. From over a thousand dollars -- from around 600 today. And the question this is again rebuild is gonna keep corn will be taken note form will with the spear. Where -- -- and blues his three -- Expert on all of this. And bill and -- of this when it comes to big corn there is a fine night amount is or not. I guess that's correct right now there about twelve and a half million -- in existence. And then there are created derivatives. When he five new bit culinary ten minutes. And and it will be there's a Max number of bitcoin that can be created that when he won millions. And it's expected mathematically it will -- that number as a rate of creation slows down over time we'll hit that number in the the year 2040. And I know nobody really knows who via region resisted so. Somebody by the new moves and sure of what's his last. Not -- she's not Komodo NC. Presume -- it and ultimately used by the the trader creators early on. And Newsweek. Last week. Sound a person by name -- so -- not Comodo and living in the LA area land. Ran a long interview claiming that that dollars and the that coaching now Comodo and he has cents. Denied it but. It's in its hard in oh Berkshire. It's if he's the real not about it's widely. Agreed. The real creator bitcoin owns. Currently -- declines that are were probably 400 to 600 million dollars so the person that Newsweek out and it certainly does not level lifestyle that matches when it is. And let's let this mother and a modest home land middle class neighborhood of LA and you know. He would be the axiom wall them -- now. Did did the originated or Oregon ridge in the twin wars every explained why and there's a finite amount to -- -- -- Yes. The reason -- -- in the reasoning behind the them article creation of bitcoin man then the the that the creation that's -- night in and it can be it known and everyone knows and its public. And everyone knows what to expect it is and in there in the words of the crater traders -- -- and -- -- the concept of inflation. An excess money creation. That Central Bank can do that they're well. So that -- an attempt had managed that. Of course. Again it's it's a completely arbitrary construct. Big points for their years and -- traded. Decline was first released as a software onto the Internet and 2009. And for years. They traded between 25 cents and a couple dollars a bitcoin. And just that. Couple years ago they started to run -- and values and they traded for a while on the 100 to 200 range in the last year. Late last year they had the big run up to eleven under and eight cents fallen back to 60620. Dollar range. But that's still very high valuation. Compared to what bitcoin bullets that just a few years ago. So it where it goes from here it's completely speculative it's not something that would recommend. For. Four the average person to be involved then. I can think of several reasons like that point would go to zero tomorrow. The most obvious and the one that's been talked about -- these susceptibility to hacking. The fact that bill or investors who are using mount Cox has an exchange. And trading bitcoin. And trading in non speculative basis to. Found out that a lot of their decline or on deposit at mount attacks you were traded away and and what the problem the bitcoin has once they trade. Is registered in the public record. It's irreversible there there's nothing you can do about it so. If somebody if you have -- point on that computer and someone hacks into your computer and get access to your bitcoin. And then without your knowledge. Conducts a trade to a device that they control. It once that trade -- registered on the public record which happens almost immediately. It's done it -- It's the can't change it you can't argue about it it's it's done me in new IP devices the owner of that bitcoin. And year -- a lot so. It's it's very speculative from that perspective -- and we know for a fact the world at least ostensibly -- -- You mentioned at the start of the show. Mound back claim that they had bitcoin network. About a half a billion dollars stolen from them over a period of months if not years. And they didn't know about it so. It -- there was also another exchange last week that failed because they had a much smaller man that points hacked from them I think they claim that nine to ten million -- -- of that -- attack from them. And that exchange failed so it very. And -- dangerous from that perspective the other respective Banca. It is. -- a nation state decided at that point as a bad thing. You have to typed or risk there you have regulatory risk so you have some countries that said Ian make that point the legal China has talked about doing that. And affect China it is. And now said the big point can only be traded and arraignment the but local Chinese currency. But a nation state to decide that there have been destroyed -- by unleashing their cyber warriors on that so it. It's a Putin decided that the bitcoin is bad for his -- has oligarchs in Russia. And they'd released their their cyber games on bitcoin. I'm fairly sure they could. Wipe out their credibility in the software pretty quickly -- Also all of the big -- -- for talks to each other that's how you can trade public record so every device that has declined. Software on a -- you can go. Take your computer. And go to download bitcoin software on your computer and I you've become part of the bitcoin network. But every device is talking to every other device across the worldwide Internet and that -- One win a trade happens that's how others and agreed upon public register of that trade occurring. Now from one IP device to another most of -- authorized but. -- -- note some Omar opera itself. If anyone who want to -- so virus and so that network would. Find that it spread through that network. And a matter of minutes frankly so. There's a lot of risk around that in my opinion. Two very speculative saying it's it's just not dump them I would. It's not something common all of them from any monetary perspective even on short. -- -- efforts are reading about did in abuse and it people taunted and wrote about. I'm reminding of that coins and even when Brett about it or to listen to an -- -- really understand what to talking about. A government YouTube and looked in the video and it looked like to me there a couple of fairly large machines and promote -- says. Costing -- report thousand books end. You're head of the pretty burst. In and computers. And everything else to go get the points. How does somebody get a court and they have to. Go buy these expensive machines and learn bottom line that or can you. Get on the web sites have guts and cash a move by X amount of course. -- -- Actually the bitcoin mining which is the creation of new bitcoin. At the current rate of about 25 new bitcoin every ten minutes. And all this is controlled by the at that point suffered self. It is actually. Everyone on the network has participating in the mine now. And and year -- year computer is working tests. -- it's widely described as math problem I would college's -- exercise. And roughly every one who is involved and mining has. Essentially equal probability. Winning the next block. 25 bitcoin. And so yard had millions of devices that are trying to do this. And and its failure and actually winning matter. -- about on par with winning a lot. And if you don't have one of them devices. Doing the minding. Do you have any chance at all. No debate but if you had a big point sob story your involvement process but the fact is that higher end. CPU terror faster computing devices -- today blitzes. And Larry had central processing unit says the actual. They chipped that -- doing processing on your computer or on your mark found. So if you have a faster. CPU years have -- better probability. -- winning then next. The next block that awarded then again once boarded roughly every ten minutes. So there are people who invested and then. Higher end CPUs. To attempt to solve these -- problems faster than. It's here the first of all the math problem and an announcement to the network you UN of the pocket when he flat coins and 25 -- right now. Today as work. Roughly what were 141000 but thirteen thousand something like that's them. Let me let me take a break right now can hold a bit longer. Apple. Wants to learning about big points of questions we got the expert comments to succeed -- One eights company told free anywhere in the country exit succeeded on its role except. Once -- -- victim but -- -- virtual currency did you money. The became very very very popular when all the real through over thousand dollars. Boy and somewhere around 600 now. And the main reason for the drop by eight that was website that built in accordance. And they got active and broke with big nobody knows what really have -- money. 424. Million dollars. Who disappeared. 750000. -- Wherever an expert on that Colin it's bin -- and withers author of -- slaying of faults that happen admin. Bill and wind. Look at all of this one girl. Or or they're going to be all there currencies. Like this or do you think. Big -- stays the course and grows again. I think and it. Big -- will be it will go -- -- history is an early attempt at what will continually evolve. Aspect of that coin that I think is the most appealing to a lot of people. For both legal and illegal reasons. Is the anonymity. The ability to. To. Travel. With a bunch of money in your pocket that's not being. You have followed by any government agency. So it worked like cache memory card I think that's on the most appealing aspect of it. And that -- something that's outside of the general banking system which. Landlords now can never operate on anonymous basis anymore and and what I could see it kept happening next is something that -- is essentially this payment that point and declined to do this mathematically. Where you have an actual currencies those incentives bitcoin you could have dollars and you can -- -- dollars or euros or whatever on deposits somewhere or you could have someone creating eagle bank that says. You know each each unit represents. Attempt at an ounce of gold or under to announce that -- of goal. And days he had somebody technical bank. That you could trade debt -- namely trade bitcoin and do it anonymously. And I think they'll be at illusions that come along like that. We wanted to couldn't somebody steal that'll -- Somebody in the way bitcoin works now. And if there's any future. System that works similarly it'll always be susceptible to acting upon that computing device and that and that devices. Plugged into the Internet. Then there's always that risk that someone can get two year divide them and the fact is if you think -- major corporations that have -- -- And how much money they spent trying to prevent that from happening. You know use an individual don't have a great chance of hitting it if it here at tempting enough target. Q to the people in the world who wanted to steal. And I are gonna meet in person in this when I read about it than -- -- remembered quickly that their name. Oh we called -- twins. These are the -- the two guys and told me if I'm remembering incorrectly. Base who do Zuckerberg Facebook's thing. It was really they arrived do when they were -- he stole it from. And in our bread that they had and best signaling what could trillion dollars and -- points have you seen anything ready thing about. What this loss of have million dollars is done to their enthusiasm over the courts. No I don't know about there a year you're exactly right the winkle -- plans or Harvard and and the city's soccer -- FaceBook and settled for 65 million dollars. And then they took that those proceeds and started their own. Venture capital fund for lack of better phrase but part of what they invested in early on and -- -- early investors and -- So assuming. That they still hold their -- calling. And I had no idea what their current position than they may have sold along panic they may have been. One of the victims of one of these attacks I can't tell you but to date. On its face Hewitt and they've they've done well by being an early investor -- colon -- They were in early enough that way they -- -- -- when it was. You know well under well below the current price. All right bitter by can hold you know the ten minute for a comeback can talk about little controversy. -- heroic corrected it -- -- about some difficult so road to some serious and showed on the decisions and set a -- sex and drugs and paid for very often -- a bit corns. And something called the assassination. Market. We're literally it was crowd funding for murder with a big points. Come right back over a video -- celebrity you know moral five to -- at. You know and that -- currency called bid -- is what we're discussing. It's made -- big splash and lot of headlines lately. One website that dealt exclusively with the -- -- 700 to 2000 points. Almost half billion dollars in -- and you know about it says. And that the same time we've got. Some central banks bank president so People's Bank. Or make a strong case against the -- banning financial institution from conducting business than those -- Are requiring Internet site register -- corn transaction. With the appropriate government agency. And also trended -- public at the risk of investing in good corn. As our guest showed earlier of China's. Internet leader. Suspended. Abuse subdued -- on its site and so forth and so on. We're above big Brooks and with it's an expert in this so subject. -- and some gold so Perot went. I think he -- was you anonymous site were people paid for sex and drugs and weapons in the paid for a primarily with the cool and the region -- was reportedly arrested is that still in plays and or bid cool orange. Really as he. Monetary value that can hide illegally attempt. Well the pilot last question first as -- get pointers this payment can. So they're just city diesel is catches but you can transfer them freely over the Internet. And that's. Like -- said -- that one as their primary. Attractions to a lot of users and it points so outside of trading at point it's impossible in the -- how much. Bitcoin when used for currency and transactions. How much of it has been legal or illicit. But it would not surprise me if the majority improbably in vast majority -- years. Outside of trading. Has then. For a legal transactions. This silk road atlas a site that specialized and all things illegal if you will that you mentioned drugs -- what was best known for bud. Be a child pornography and and gun running and -- Hiring hit people and everything else. But as what it was known for excellence. Essentially a forum for. For matching people up and most people who went to. Silk road did through did so -- war the onion network. The onion routing network switches. Which was thought to be -- to to travel the Internet anonymously. So at that point matched up pretty well that. -- -- That the FBI infiltrate -- silk road again and actually get control cell growth servers for an extended period of time and and they -- her. We're pretty effective in shutting down on the activities of so -- but there's there -- other so -- out there and Anders. Brought part of the Internet two. People it's called the deep Internet. Did. Most people aren't really familiar -- don't interact -- on a typical day. And oldest part of the Internet there's still silk roads out there so they're still people. Trading drew and and trading in all sorts of things. That governments which they wouldn't trade on line. And and one of these when we -- talking about -- the Internet. On this hardly read it and Forbes doesn't mean it's true and revenue for. It's called the assassination. Market web -- and it's a crowd funding source form -- What they do the collect monies to killed certain people President Obama is on the Ben Bernanke is on in the number of other. Worldwide notables. Isn't this kind of thing the book caused governments worldwide to shut down in the in and currency now and in the future. Well. You know work something like that -- to. Produced a -- -- So if someone were to act in and try to claim the at that point or whatever it was used to pay them off. And where that to make ten -- yes that the type of thing that can certainly result in legislation as we will now often takes. The spectacular. End to. To prompt congress and and regular regulatory bodies and action. There are some you know big point. I think there's large academic following on a big wing Ben Bernanke for instance. Talked about bitcoin has talked about decline. And it actually talked to. I would not say he's endorsed picked on by any means but -- actually talked favorably about the concepts behind -- point. And I you know from my perspective as an economist I would say. Yeah a lot of what is happening decline is inevitable. It's gonna happen it -- a basic commander desired to to act outside the confines of -- regulatory environment. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- You are real quick and -- of them did it that they looked at this point -- those things into actual case that you Google like growth we have. That kind of thing and also the final one we're -- to need in -- -- at this point and obviously of the year okay the ago. You could do on the expiration of the -- -- Let the good question is does the basic way too. Convert to cash and at that point bitcoin indicated -- is to act through an exchange. That's the most straightforward way that's the type of service that mound -- For pocketed until. Went under or UConn is Google. Bitcoin exchange. That's right and there are a number exchanges. A -- do a little bit of homework you can find exchanges in -- they have a bit of a track record and have established themselves as reputable. However if -- -- It -- two US states exchange. I you know you can't do it anonymously you know towards the exchange has been -- knows that you. John yes land and exchanged. A thousand dollars for a bit Klein or whatever you wanted to do or vice Versa. And now and ultimately gonna -- record around that that what happens with its client on the illicit market is that of course people. We'll trade bitcoin. Illicitly. And then -- back Alley transaction if you'll -- are literally exchanging. Briefcase full of cash. -- device that has X amount of that going on and and then the decline it can be. Easily transported. From the United States to Colombia for instance for Mexico the payoff for drug cartel. That doesn't it two days but as a -- -- almost certainly gonna do little exchange. Feel like reading future shock all over again that was good education bill and I appreciated that time during which could talk Garland might play area in and run to. Rub that would come right back we called the think -- for the caller is big corn be I'd TCU war why then come right back.