Who Wants to Be a Bitcoin Millionaire? Panorama


Who Wants to Be a Bitcoin Millionaire?

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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?

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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

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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

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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.

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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

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economy and so we have

seen a substitute coming

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through in the form of Bitcoin.

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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

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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

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to terrorist organisations.

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But it's the use of cryptocurrencies

to hide money earned

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through crime which is

particularly worrying authorities.

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There are three to four billion

pounds worth of dirty money

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being laundered each year in Europe

through virtual currencies.

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It's still a small proportion

of the overall amount,

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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

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