Who Wants to Be a Bitcoin Millionaire? Panorama


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Who Wants to Be a Bitcoin Millionaire?

Panorama investigates Bitcoin, going inside a Bitcoin mine in Iceland - where the currency is made - and spending time with Bitcoin millionaires of Silicon Valley.


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Bitcoin's made some people very rich

indeed - at least on paper.

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I've made an extraordinary

amount of money.

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For some investors here,

it's a roller-coaster

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ride, as values plunge.

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My son says, "Hurry up and become

a Bitcoin millionaire, mum!"

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We discover the power

behind Bitcoin.

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Every single one of these

is a desktop computer.

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There are thousands of them.

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But is this all just

some media hype?

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It's human nature to

jump on the bandwagon.

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It's what every

great bubble is made

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of and they are calling this

the greatest bubble of all time.

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And behind the hype, we uncover

a plain old-fashioned scam.

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Show me the money!

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Tonight on Panorama: Who Wants To Be

A Bitcoin Millionaire?

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Pounds, euros, dollars -

they're all currencies

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that we know and we recognise.

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We might think we could

do with a bit more,

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but at least we know what money

is and how money works.

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We keep it in banks and we spend it.

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But now there's a new currency

which has got everyone talking,

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and it's very different.

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It's called Bitcoin.

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Have you heard of it?

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I don't really understand it.

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But yes, I have heard about it.

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I do and I wish I had got

in on it about a decade ago.

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That would have been nice.

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I know some people are making a lot

of money and some people aren't.

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I do also think they are a load

of nonsense and it's just a con.

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I've been following Bitcoin

for the past five years,

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and even now, there's still a lot

of confusion about it.

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For one thing, it might

be called Bitcoin,

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but there aren't actually

any physical coins.

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Or notes.

You can't hold it in your hand.

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Bitcoin is a new type of currency

called a cryptocurrency,

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and it only exists digitally.

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Now, actually, there

are quite a few types

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of cryptocurrencies,

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but they all have

one thing in common.

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They operate completely separately

from the normal banking system.

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When you buy something

with cryptocurrency,

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the banks don't handle

or check the payment.

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In fact, they don't even

know about them at all.

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There are shops that

accept cryptocurrency,

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where instead of using your bank

card to take money

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from your bank account,

you scan your phone instead.

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Transaction confirmed.

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Thank you.

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But the reason you've probably heard

of Bitcoin is because its value has

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gone through the roof.

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Even with its recent crashing price,

if you'd bought £50 worth of Bitcoin

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at the beginning of 2011,

it would now be worth more

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than £1 million.

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I'm going to find out if we've

all missed the boat or whether it's

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still possible to become

a Bitcoin millionaire.

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It started as something for computer

geeks, but it's now moved

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into the mainstream.

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This is Millie.

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She's a Newcastle mum

with three kids and four pugs.

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She's been buying and selling

books on the side for

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almost 15 years.

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But now her new hobby

is investing in cryptocurrency.

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30,000 books I had to hand-sort.

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Yeah, it took me

a whole year to do it.

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Considerably more hard work

than dabbling in bitcoin.

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My son says, "Don't

do the books anymore.

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"Hurry up and become

a Bitcoin millionaire, mum!"

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She heard about it before Christmas

and she's been dabbling

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for the past couple of months,

and has also earned commission

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getting family members to buy, too.

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What I'm doing at the moment

is I'm going to buy

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like £100 worth of bitcoin.

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Oh, my God, it's like

my guilty pleasure.

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I'm sneaking a peek all day long.

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I bought Bitcoin in the hope that it

might improve my life.

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If I lose my four or five

hundred quid, c'est la vie.

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All over the country,

little pockets of people

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are starting to play

around with cryptocurrency.

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Over the last few months,

it's amazing how bitcoin has moved

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into the mainstream.

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Tabloid newspapers are doing special

features about the latest

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cryptocurrencies and which one

you should buy.

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This has gone very quickly

from a tiny, niche little nerdy tech

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that a tiny number of people cared

about to something that the ordinary

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person on the street

is suddenly fascinated by.

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But while Millie is careful not

to invest more than she can afford

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to lose, others aren't.

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The staggering rise in the value

of many cryptocurrencies

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has driven some people to take huge

risks, even taking out

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mortgages to cash in

on what they see as a gold rush.

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We have begun to ask

questions and look at it.

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But I don't think anyone in British

politics or the regulation system

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in our country is going at the right

speed, bearing in mind what has

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happened within cryptocurrency over

the last few months.

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Now we seem to have a

real live situation.

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But Bitcoin's value has

gone down as well as up.

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If you'd invested £50

just before Christmas,

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you'd now have £20.

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These recent price crashes have

caused some authorities to act.

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Just last week, banking giant Lloyds

banned its customers

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from buying cryptocurrency

with their credit cards.

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They're worried about

people racking up debt.

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The idea behind cryptocurrency

is that it is a way of storing

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money and making purchases

without involving the banks.

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But remember, the banks don't

just hold our money,

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they also keep a check

on who has paid what.

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They are a trusted central point.

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So how do you do banking

without the banks?

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When you want to buy

something normally

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using your normal bank card,

this is what happens.

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I give my card details to the shop.

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The shop asks the bank

if I'm good for the money.

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The bank checks its records to see

if I have got enough in my account.

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If I do, it lets the shop know,

it updates its records to show

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the movement of money

from my account to the shop's.

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Oh, and it takes a little

cut for its trouble.

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Now, if you wanted to remove

the bank from that system,

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who else would you trust to keep

those records, and not alter them

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or cheat in any way?

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I wouldn't trust you.

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I wouldn't trust you!

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In fact, I wouldn't trust any single

person but I might trust everyone.

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The idea is you don't have a central

record of transactions.

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Instead, you distribute many,

many copies of this

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ledger around the world.

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Each owner of each copy

records every transaction.

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So there's no way that a forged

transaction can make it in.

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If I try to alter a ledger,

it won't match all the other copies

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and it gets rejected.

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So to buy something

using cryptocurrency,

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I give the shop my details.

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The shop asks all the book-keepers

if I'm good for the money.

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The book-keepers all check their

records to see if I have enough.

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If I do, they tell the shop and then

all update their records to show

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the movement of money.

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Oh, and one of them, at random,

will be given a reward of some

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newly-created cryptocurrency.

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This is how cryptocurrencies work.

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And remember, all these

book-keepers, all these

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ledgers are not people.

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They are computers.

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Lots of computers.

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And I mean a lot.

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That random reward for being

a book-keeper is an important point.

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It was the original incentive

for people to use their home

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computers to help keep the books.

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But I feel the scale of these places

is tipping the odds away

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from average investors.

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Every single one of these

is a desktop computer.

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There are thousands of them

all wired together and all doing

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one thing - book-keeping

for cryptocurrency.

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And because every so often they get

that reward of new cryptocurrency,

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they call this operation mining.

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Now this particular mine

contains 20,000 machines,

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a very expensive set-up.

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As well as the cost of the hardware,

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running an outfit of this costs

a lot in electricity.

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That's not just electricity

to power the computers,

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but also to power the cooling

systems to stop this

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lot overheating.

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That's why they've put

this one in Iceland.

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Like a lot of mass

computing operations,

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north is best.

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It means you don't need to run

energy-hungry air chillers.

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You just suck in that

freezing air from outside.

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Oh, and the electricity

here is geothermal and really cheap,

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thanks to the volcanic

activity just underground.

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Despite all of that, though,

this place spends more

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than EUR1 million

a month on electricity.

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So you can imagine how much

money they're making.

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It's absolutely remarkable that

you have these banks of computers,

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warehouses full of them

all over the world.

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All these computers and all

the amazing things they could be

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doing and all the computing power

that could be spent on all sorts

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of tasks is being dedicated solely

to this one peculiar job

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of mining a cryptocurrency.

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It's absolutely ridiculous

in some ways that this

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is what we are using

our computers for.

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The higher the price

of cryptocurrencies,

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the more money the miners stand

to make and the more mines

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spring up.

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Thanks to more and

more press coverage

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and more and more chatter

on social media, rumours

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of a gold rush have spread.

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And in any gold rush,

there will be winners and losers.

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I know many people are

still going to invest,

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I understand that.

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It's not because you're stupid.

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It's humas nature.

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There is this incredible thing

called a fear of missing out, right?

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And it's just such a powerful thing.

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And wherever there's the promise

of gold, there's also those

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who want to exploit the prospectors.

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This might look like a rock concert,

but it is in fact a recruitment

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drive for a cryptocurrency called

OneCoin.

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Based on the success of Bitcoin, but

better, smarter and more innovative.

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OneCoin, we're told, will make us

rich beyond our wildest dreams.

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Layla got interested

in cryptocurrency after a trusted

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friend, and OneCoin salesman,

asked her along to

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one of the meetings.

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It took me 20 years

to save up this money.

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I made lots of sacrifices with two

jobs while studying,

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and the aim was ideally to get

on the property ladder,

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use it for my marriage,

and also to help my mother

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and my brother.

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Layla attended a seminar similar

to this one 18 months ago in London.

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It encouraged people to sign up

to a scheme to help spread the word

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about the OneCoin cryptocurrency.

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So Panorama decided to go undercover

to see the hard sell for ourselves.

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We wanted to investigate how

unsuspecting investors

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are lured by OneCoin to part

with their hard-earned cash.

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Layla felt pressured

by the salesman.

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Handing over £32,500

of her savings in just one day.

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He then went on to telling me

there was a guaranteed return

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of more than £400,000

and I was making the best

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decision of my life.

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I then told my mum, my sister

and that totalled up

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to £56,000.

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Listening to the sales pitch,

you can see why the family

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thought they'd struck gold.

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What do you earn a year?

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Six figures is good, right?

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We make 35,000 a week.

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We should have listened

to you a long time ago

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and if you did you'd be

a multi millionaire.

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You can make millions

of pounds and very quickly.

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Not so for Layla though.

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Shortly afterwards she discovered

she'd lost access to all her money.

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And that's when I realised that

I had just made the poorest

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decision in my life.

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Last month, the Bulgarian

authorities raided

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OneCoin's headquarters

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and shut down their servers.

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It is one of many investigations

from around the globe.

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Several of OneCoin's representatives

were arrested in Britain.

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In a statement to Panorama,

OneCoin told us they have

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offered full cooperation

and are collaborating

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with all authorities to finalize

the case as soon as possible.

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However, they claim that Layla had

gathered enough information to take

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an informed decision.

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And that she had received,

activated and used her accounts.

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Therefore we consider

that there is no legal reason

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for claiming a refund

from the company.

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Today, Layla is shattered.

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She's lost her life savings

in what is essentially

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an old fashioned pyramid scam,

using cyrptocurrency hype.

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And she's not the only victim.

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The authorities say they need more

help from legislators to bring

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this area under control.

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We need the help of regulators,

we need the help of legislators,

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particularly to crack down on these

high valued investment scams

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and you know this trend of fools'

gold effectively that is offered

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to people as they seek to cash

in on the Bitcoin frenzy

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and are just scams -

perfect scams and because it's not

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regulated there is no means

by which the investor can make

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an informed decision as to if it's

safe to invest my money in this.

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I think that to date cryptocurrency

has not been on Parliament's

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agenda or on the agenda

in Whitehall that much.

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I think probably hand on heart

we have all been too slow,

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but the opportunity is not lost,

and we should get

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on with the job now.

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As the authorities struggle

with regulation, the most powerful

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online platform has decided to act.

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Facebook has banned adverts that

promote cryptocurrency and these

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recruitment events -

these so-called

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Initial Coin Offerings.

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But away from some out-and-out cons,

there are other ways that

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cryptocurrencies can be used

to subvert the system.

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Remember how cryptocurrencies

bypass the banks?

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Well, that means that your

transactions are very,

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very hard for the authorities

to regulate or trace.

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So if you happen to have a few

million that's difficult

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to move around the world,

Bitcoin could be the

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perfect system for you.

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So, here we have a beautiful

property, it's 4,800 square feet.

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The asking prices is 17.5 million

pounds and this property

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is available to be acquired

in Bitcoin, in fact that's

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the prefered method for payment.

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Eleesa Dadiani is a London art

gallery owner who brokers deals

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between ultra-rich sellers

and ultra-rich buyers.

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Fine art, F1 cars, precious stones,

bullion, fine wine, bloodstock,

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thoroughbred horses...

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all the normal categories.

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So we have a new breed of high

net-worth individual who've made

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a lot of money with cryptocurrency.

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So now we have a problem.

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How do we cash in these holdings?

0:17:510:17:54

So there's another

way of doing things.

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Move from crypto

into tangible assets.

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I mean it's a great problem to have.

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And this is where the unregulated

nature of cryptocurrency

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really comes into its own.

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One of the reasons to not use

conventional currency

0:18:120:18:15

is because you can't.

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A lot of clients are

from China, Russia...

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And these are people who are willing

to put a lot of money

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into the UK market for example.

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How do you move this money

from a sanctioned nation

0:18:350:18:37

like Russia, for example?

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How do you move this money here?

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If you are under the sanctioned

domain, you will have probably

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had your money frozen at some point,

you have banks controlling

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what and how you spend your money,

transactions being flagged up

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even though there's nothing

wrong with them but just

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because they don't look

like your normal transactions.

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You're probably going to acquire

cryptos, and then very easily

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transcend that handicap.

0:18:540:18:56

Eleesa stresses she does stringent

checks on clients to make

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sure their money is clean before

she deals with them.

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Others are not as scrupulous.

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One of the things around crypto

currencies is that they have come

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along at a time when anti-money

laundering and know your client

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regulations has reduced the supply

of legitimate money to the illegal

0:19:160:19:20

economy and so we have

seen a substitute coming

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through in the form of Bitcoin.

0:19:220:19:27

This ability to make payments,

which avoid going through the banks,

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is what really kick-started Bitcoin.

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By making it the digital currency

of choice for criminals.

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Since its earliest days,

websites on the darknet have allowed

0:19:380:19:41

the trade of illegal goods

like drugs and weapons,

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with Bitcoin considered a safe way

to make payments and even pass funds

0:19:440:19:47

to terrorist organisations.

0:19:470:19:52

But it's the use of cryptocurrencies

to hide money earned

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through crime which is

particularly worrying authorities.

0:19:550:20:01

There are three to four billion

pounds worth of dirty money

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being laundered each year in Europe

through virtual currencies.

0:20:040:20:09

It's still a small proportion

of the overall amount,

0:20:090:20:11

but it's quickly growing.

0:20:110:20:14

And of course because this

is an unregulated area,

0:20:140:20:17

highly anonymised, it's very

difficult for the police

0:20:170:20:19

in most cases to identify

who is actually cashing this out.

0:20:190:20:25

But we're also seeing

a trend where drug money

0:20:250:20:28

is being converted into Bitcoins -

cash buying Bitcoins and then

0:20:280:20:31

the criminals distributing that

money through multiple accounts used

0:20:310:20:34

by individuals that are not

seemingly connected

0:20:340:20:36

with a criminal organisation.

0:20:360:20:40

There are then darker sides

to Bitcoin and virtual currencies,

0:20:400:20:44

but there is also a lot of money

to be made - if you get

0:20:440:20:48

your timing right.

0:20:480:20:54

I'm travelling to the heart of this

new movement - San Francisco.

0:20:540:21:00

In the 60's, this city brought

the world hippy culture

0:21:000:21:02

and free thinking ideas.

0:21:020:21:08

Today, it's an anti-bank revolution

the people here want.

0:21:080:21:11

And these early adopters are far

more interested in cold hard

0:21:110:21:13

cash than free love.

0:21:130:21:19

I've come to the Cryptocastle -

a New Age commune of

0:21:190:21:21

which Jeremy Gardner is the king.

0:21:210:21:26

So tell them to look

at the volatility.

0:21:260:21:28

It's something you google.

0:21:280:21:31

Look at Bitcoin.

0:21:310:21:33

Now "The Castle" is actually

a three storey house

0:21:330:21:35

which this 25-year-old sublets

to other cryptocurrency enthusiasts.

0:21:350:21:39

I am surprised there are so many

bunk beds in a house that

0:21:390:21:42

accommodates so many millionaires?

0:21:420:21:44

The millionaires, once

they make their millions, move out.

0:21:440:21:46

Right.

0:21:460:21:48

In 2013, he put all his savings

into cryptocurrency,

0:21:480:21:51

and after four years of growth...

0:21:510:21:56

I've made an extraordinary

amount of money relative

0:21:560:21:58

to what I ever conceived.

0:21:580:22:03

To me, crypto assets are like social

security for millennials.

0:22:030:22:09

In theory, young people who invest

today have the potential to see

0:22:090:22:12

a lot of their wealth

being generated just

0:22:120:22:14

by holding these crypto assets

as they appreciate in value over

0:22:140:22:16

the next years and decades.

0:22:160:22:22

It's an investment

opportunity of a lifetime.

0:22:220:22:24

I've lived through crashes

in the value of these assets before

0:22:240:22:30

and if my net worth dropped 95%

tomorrow, it would have no

0:22:300:22:33

effect on my happiness.

0:22:330:22:36

It strikes me that even if it

drops 95% you are still

0:22:360:22:39

going to be very wealthy.

0:22:390:22:40

I'd still be fine.

0:22:400:22:42

You know I don't want to come

across as too obnoxious.

0:22:420:22:49

Hang around with these guys for just

a little while and you do get

0:22:490:22:52

the sense that something really

is happening here.

0:22:520:22:54

They talk a good game.

0:22:540:22:55

But Jeremy is only

a Bitcoin millionaire.

0:22:550:23:01

Next stop, a billionaire -

recently named by Forbes as one

0:23:010:23:04

of the richest cryptocurrency

investors on earth and one who truly

0:23:040:23:08

believes it will change everything.

0:23:080:23:14

This is the future.

0:23:140:23:16

You're not going to use pounds

and dollars and euros

0:23:160:23:19

and whatever anymore.

0:23:190:23:21

In five years, you're going to walk

into a Starbucks and you're

0:23:210:23:26

going to try and pay the pounds

or dollars or euros

0:23:260:23:28

and he or she will laugh at you.

0:23:280:23:30

He or she will laugh

at you and they'll say,

0:23:300:23:33

wait a minute, don't you have any

Bitcoin?

0:23:330:23:36

Tim Draper owns hundreds

of millions of dollars worth

0:23:360:23:39

of cryptocurrency himself -

so maybe it is in his interest

0:23:390:23:41

to talk up its value.

0:23:410:23:44

Mind you, back in 2014,

he did predict, almost to the month,

0:23:440:23:48

that the value of one Bitcoin

would hit $10,000.

0:23:480:23:52

But now he accepts that that value

may be out of control.

0:23:520:24:00

Bang the gong.

0:24:000:24:02

It could easily go to one million

or 2000 per Bitcoin in any given

0:24:020:24:08

period of time because depending

on people's perception and how

0:24:080:24:13

excited they are and how the press

portrays it and how governments

0:24:130:24:16

push it around.

0:24:160:24:22

This is the greatest thing that's

happened to the world

0:24:220:24:25

economy in centuries.

0:24:250:24:29

Depending on who you talk to,

you get two very different

0:24:290:24:32

visions of cryptocurrency.

0:24:320:24:38

It's either the future of money,

and you should grab it

0:24:380:24:41

and get in early...

0:24:410:24:42

Or...

0:24:420:24:43

This is something to me

which is a classic bubble.

0:24:430:24:45

It's an irrational movement

in prices and ultimately I think

0:24:450:24:47

investors who put money into this

risk losing a lot.

0:24:470:24:55

The process of building a bubble

means that individual investors have

0:24:580:25:01

to have almost a religious faith

in the future value

0:25:010:25:03

of the crypto currency.

0:25:030:25:10

And because they believe

this is going to unlock

0:25:100:25:17

riches in the future,

they are prepared to pay more

0:25:170:25:20

and more money for that today.

0:25:200:25:21

And the bubble keeps on inflating.

0:25:210:25:23

At some point either the price

becomes too absurd or circumstances

0:25:230:25:27

change or it's revealed

that there is not going to be

0:25:270:25:30

any fantastic value

in the future and the bubble

0:25:300:25:32

will come crashing down.

0:25:320:25:40

The hype and excitement surrounding

the promise of riches is all too

0:25:400:25:43

familiar to this guy.

0:25:430:25:49

The key to making money

is to position yourself

0:25:490:25:52

before the settlement.

0:25:520:25:54

Played by Leonardo DiCaprio

in the film The Wolf of Wall Street,

0:25:540:25:57

Jordan Belfort made a fortune

from persuading ordinary people

0:25:570:26:00

to invest in shares he promised

would inflate in value,

0:26:000:26:03

before the scheme collapsed

and he pleaded guilty

0:26:030:26:05

to fraud charges in 1999.

0:26:050:26:11

If anyone knows about cons

and bubbles, it's Belfort,

0:26:110:26:13

and he doesn't see Bitcoin -

or any cryptocurrency - ending well.

0:26:130:26:19

So what would the Wolf

have made of Bitcoin?

0:26:190:26:24

God, if I had Bitcoin back

when that was, thank god I didn't.

0:26:240:26:27

Right, I would have made $50 billion

seriously, this is so,

0:26:270:26:29

it's almost a mirror image

of what was happening at my company.

0:26:290:26:33

Belfort says he recognises all

the signs of market manipulation.

0:26:330:26:39

They're out there putting out these

sort of false narratives and these

0:26:390:26:42

half truths that if you read them

or hear them and don't fully

0:26:420:26:45

understand the big picture,

it is very easy to think

0:26:450:26:49

that they are right, that this thing

is going to the stars,

0:26:490:26:51

it's going to be the next big thing

and that you throw your money in...

0:26:510:26:59

People are mortgaging their homes,

people are taking loans out

0:27:010:27:03

on their credit cards,

they're putting their last

0:27:030:27:05

dollars into Bitcoin.

0:27:050:27:06

You know the ones at the end

of the day that typically get

0:27:060:27:09

slaughtered the most are the average

mums and dads.

0:27:090:27:11

So far, Millie has lost a small

amount of money on her trades

0:27:110:27:15

but she is still hoping

for good returns.

0:27:150:27:17

I'd like to buy a house,

I'd like to leave my

0:27:170:27:20

children lots of money.

0:27:200:27:22

I think I want all the things

that other people want,

0:27:220:27:26

just the normal stuff,

enough money to open

0:27:260:27:27

a pug sanctuary!

0:27:270:27:29

But maybe the idea of becoming

a Bitcoin millionaire

0:27:290:27:33

is a perversion of the real,

original intention of Bitcoin -

0:27:330:27:36

to reinvent money -

to move power away from the few,

0:27:360:27:38

and give it to the many.

0:27:380:27:46

These currencies are here to stay.

0:27:460:27:47

They might fall in value,

they might rise in value

0:27:470:27:50

but the underlying tech is not

going anywhere and more

0:27:500:27:52

and more people are going

to start using them.

0:27:520:27:58

And I don't think governments

are ready for that yet.

0:27:580:28:00

The people behind cryptocurrencies

designed an almost perfect way

0:28:000:28:03

to wrest control from the financial

system - and governments.

0:28:030:28:09

But I wonder if they

expected their model to be

0:28:090:28:11

jumped on by investors,

scammers, and criminals.

0:28:110:28:18

And I wonder if they thought

they could escape the grip

0:28:180:28:20

of the financial authorities

that they so railed against.

0:28:200:28:23

As those authorities start to awake,

the battle to impose

0:28:230:28:25

control on cryptocurrencies

is only just beginning.

0:28:250:28:33

Bitcoin is the world's leading virtual currency, but unlike real money, it is not backed by a government or properly regulated. Bitcoin is exchanged and held digitally by users - which is attractive to criminals selling drugs, pornography and arms. But now Bitcoin is moving into the mainstream and being openly marketed as an investment opportunity.

Panorama investigates what Bitcoin is and what it means, going inside a Bitcoin mine in Iceland - where currency is made - and spending time with the Bitcoin millionaires of Silicon Valley. The programme also hears from others who have been scammed out of their life savings and investors who think the cryptocurrency is an enormous scam and that the writing is on the wall.

In Britain, and around the world, authorities are sounding the alarm that Bitcoin is too risky - is it too late, or too crazy, to try to become a Bitcoin millionaire?