How high will Bitcoin go? | Inside Story

how high will bitcoin go the cryptocurrency has just hit another record and demand to own the virtual coins is only rising so could it one day become a real currency something we use in everyday life this is inside story [Music] hello and welcome to the program today with me peter dobby one man's pizza bought with eight bitcoins in 2011 was worth just a few cents way back then now that very small amount of the virtual currency is equal to around 480 000 us dollars that's how much bitcoin has skyrocketed hitting a new all-time high of sixty thousand dollars as of saturday just to be clear that's one coin so called now worth sixty thousand dollars the surge is mainly fueled by a growing number of institutional companies embracing this virtual currency it's also thought to be driven by the approval of president joe biden's 1.9 trillion dollar stimulus package in the us it's feared the pandemic relief bill will push inflation higher in effect devalue the us dollar and the digital currency is seen as a good hedge against all of that but critics warn cryptocurrencies are a bubble on track to burst the money asset has a record of price swings falling sharply several times bitcoin has risen by almost 1 000 over the past 12 months the value of bitcoin in circulation has exceeded 1 trillion for the second time this year new york mellon bank mastercard and other big financial companies have ventured into cryptocurrencies elon musk's tesla car manufacturer bought around 1.5 billion dollars in bitcoin and accepts payments in the virtual currency other smaller digital currencies are also getting a boost prices for ethereum litecoin and stella have also soared this year okay let's get going let's bring in our guests in new york we have john biggs editor of gizmodo a technology website in london we have glenn goodman author of the crypto trader and in liverpool we have gavin brown a senior lecturer in financial technology at the university of liverpool gentlemen welcome to you all glenn in london coming to you first why is there no stopping bitcoin bitcoin has been on a roll now pretty much since it was invented you know the the trajectory has been upward and every few years the price uh in particular has a stumble and a major stumble at that in fact every single time there's a dip it kind of gets to the point where a lot of people even in the industry are starting to question whether whether it's going to last in the long term but that always turns out to be a sort of false crisis and very quickly good news starts happening the price starts rising and everything gathers steam again and every time we get one of these booms which happen every few years there are more and more announcements that come along uh this time from financial institutions mainly and large companies like tesla that kind of reinforce the idea that bitcoin is being integrated into the international financial system the original plan of course was for it to be utterly renegade on the outside and everybody who was into it were kind of tech mavericks libertarians those kind of people but this time around we're seeing uh the big banks the institutions start to embrace bitcoin and try to bring it within the fold gavin brown and liverpool why is it so attractive to tesla and as opposed to only being very attractive to the big institutional investors yeah i think uh certainly with a tesla perspective i mean probably one of the key angles there is the very nature of their their products and their target market quite a forward-looking organization and the idea that they're looking for you know the next generation of currency is potentially you know a currency that they're willing to accept payment for their goods and services for is quite quite a nice step from a from a kind of marketing and pr perspective but i think more than that you know what tesla has represented or what they've seen with that purchase is the idea that if you've got surplus us dollars or a similar fiat currency on your balance sheet you can actually exchange some of that money in return for something let's say like bitcoin and actually use bitcoin as what we call almost like a reserve asset or a treasury reserve asset now based on the purchase that tesla did which was one and a half billion in january of this year depending on the exact timing and depending on how how long they've held that position for if at all you know it's likely that they've made anywhere from between half a billion to a billion dollars on that single trade in between a four and six week period which you know just to put that into context is more than they they made in terms of profitability from selling cars in the entirety of 2020. it's about half their research and development cost so you know certainly a very shrewd move and certainly a move where you know when we look to people like elon musk you know they're very vocal in terms of cryptocurrency in particular and that around bitcoin it's obviously a relatively decent match in terms of the strategic compatibility between the currency and obviously from the perspective of the the organization as well john in new york can i ask you a question the last time that i felt i should have asked the last time we chatted about bitcoin i think it was about five six weeks ago now we're calling it a currency is that nomenclature wrong i mean it's not a currency it isn't underpinned by anything that's real coinage notes gold silver should we actually be calling it a commodity uh why not i mean look there's lots of other uh pie in the sky stuff that's that's given value uh you could also say that many commodities don't have implicit value gold doesn't have an implicit value outside of us a few elect uses and electronics and then also you can wear it right uh it's a store of value let's say and that value is created by the system that runs it right now um right now the bitcoin is basically priced against the difficulty of obtaining it which is uh which is basically what everything else is right so mining these things is very difficult buying these things is actually fairly difficult and there are people out there who don't want to sell it unless you pay them the ex the equivalent of like a toyota corolla to get one glenn goodman in london goldman sachs is investigating it set up a team of specialists i guess it's investigating how to serve this sector so you have banks institutions in for the sake of this question goldman sachs started by mr goldman and mr sax and i could go and point to and talk to real people partners in a big institution but i can't go and find the partners who set up bitcoin i can't go and find head of finance head of hr head of pr and when the market likes something it gets bigger and simpler but does it necessarily get safer for people who want to invest in it the beauty of bitcoin and the whole point of it really and the the reason why it's uh started gaining popularity all those years ago is because it's uh so-called trustless right you don't need a ceo in charge of it you don't need somebody to make key decisions about who gets the money when and where because it was all written in the code by the the mysterious founder satoshi nakamoto we still don't know who that guy is but he wrote the code so it doesn't matter who he is the code is sacrosanct right and they've only been minor changes to it since bitcoin was invented and that was with the consensus of the bitcoin community the bitcoin network right but the code itself governs everything and the point is you don't need to complain you would never need to phone up the ceo of bitcoin and say my bitcoin has gone wrong because the beauty is bitcoin has never gone wrong bitcoin has never been hacked all the problems that you've heard over the years to do with bitcoin are by ancillary companies uh people and companies who are kind of um who have attached themselves to the side of bitcoin you know trading platforms and that kind of thing um and and scams plenty of scams have grown up around it as well so you know those sort of ancillary services have ceos and stuff and you can complain to them if they rip you off but bitcoin itself has never been hacked it is trustworthy gavin bryan liverpool on that idea of being trustworthy it's got to be trustworthy if it goes more mainstream as we're having this conversation the biggest u.s cryptocurrency exchange is talking to has applied to the nasdaq to be listed on the nasdaq so it will then move away from the point that glenn goodman in london was making it will go away from being a rogue from being a rebel to being kind of half in half out of being mainstream yeah for sure and i think um i think it's important to draw a distinction between the underlying asset or currency or whatever kind of taxonomy we wish to use of bitcoin itself versus the the stakeholders the market actors you know the brokers the exchanges the investment bankers the financial advisors the traders you know retail investors as well as institutional investors all of these institutions are what are looking for uh regulatory approval and regulatory adoption if you like um i guess the difference we have with with bitcoin is that the asset itself isn't um a sentient thing you know as we've said before it doesn't have a board of directors it doesn't have non-exec directors it doesn't have a hq doesn't have a board of governors in this traditional sense of a kind of board structure that you'd normally have with a traditional firm so it's really the actors around bitcoin in terms of its ecosystem and that of the broader kind of cryptocurrency space um who are looking to uh to sort of approach as you say the various um whether it be the nasdaq or other types of institutions to try and look for regulatory approval and this is this is something that people in the crypto space look to quite a lot where they talk about this this need for institutional adoption i mean just just to put it into context you know bitcoin at the moment uh surpassed the trillion dollar mark you know it's now worth more than the russian ruble it's worth more than the thai bart and he's worth just over 20 percent of the value of pound sterling so it ceased to become a kind of periphery asset on the kind of fringes and darker parts of the financial system and he's now moving into these sort of uh institutional norms that we might come to expect expect with a more mainstream asset in particular john biggs in new york these cryptocurrencies all make a virtue of doing the thing they do which is they operate in parallel to but outside of government or central bank control is that a good thing or a bad thing and if they move mainstream they've got to stop doing it haven't they of course i mean they're going to be regulated and and remember these the cryptocurrencies actually don't do much better than the normal banking system does i can swipe my card in switzerland and it'll pop up on my phone instantaneously even though everything is based in the u.s you can't do that with crypto so a lot of the features of the current banking system that took hundreds and thousands of man hours to build out over the past 50 to 100 years aren't available with crypto it's a it's very very nascent it's very very simple my view is that all this stuff goes underground it disappears behind the scenes in the it uh and the it labs of the major banks and they basically strip it for parts and start using it for themselves uh all this talk about creating mainstream usage and and implementing it so i don't know i go to across the street to the bodega and i buy a sandwich with bitcoin it's not gonna happen uh there are methods that you could use uh associated with that but all those methods have to be regulated you're gonna be in a situation where a vast majority of this stuff requires know your customer information i have to send my picture i have to send i don't know dna samples and also the crazy stuff to these exchanges just to do business with them and it's only going to get worse unless it basically gets subsumed in the entire banking system and all these images that you're showing right now the bitcoin atms and also the stuff goes away uh because as it stands the current system and as they said the players are the the worst uh the worst actors in this space bitcoin hasn't been hacked but plenty of people have been hacked and scammed and uh and ruined uh by playing in this space gavin brown and liverpool just to go back to that point you were making earlier gavin about the the percentage footprint that bitcoin has with all the major currencies around the world there has to come a point as they're not because of that when quotes the feds finance ministers central banks etc do want to get involved because if anyone anywhere in the world particularly now because we all have to pay for covid somehow probably very probably via taxation at some point if somebody someplace ends up with a big pot of money that's getting exponentially bigger and bigger and bigger every finance minister around the world is going to say oh hang on i'd like some of that to pay for coronavirus or to pay for a war or to build arms and sell them to somebody else something has got to give i think you know you mentioned their taxation i mean just to put it into context the the global financial crisis um one of the key responses of our central banks is that of quantitative easing that often people describe as printing money it's not quite that but it's certainly expanding the money supply and back in 2007 2009 the total expansion of the money supply was about two trillion dollars now just to put that into context you've probably seen recently with uh the original u.s response that was just short two trillion dollars in the cares act just over a year ago and another 1.9 trillion coming through today from the biden administration so what we've seen is it over the last decade plus and then accentuated by covert again is this reliance on quantitative easing on a re uh as the main monetary mechanism in terms of actually responding to a crisis and trying to manage the border economy and i think something that was mentioned before was the idea that you know that is that's the type of argument which plays quite nicely into into the the kind of uh justification for potentially considering something like bitcoin which is which is finite by by design you know bitcoin has been pre-designed pre-coded it's not designed uh in terms of its monetary policy it doesn't have one in the sense that it's managed by a central bank or a currency board or a monetary policy committee or anything similar like that there are no people involved in that sense it's basically pre-coded and was designed back in 2008 before its launch in 2009 and i certainly think that that is a key argument for for those individuals who are looking to potentially speculate on the value of a bitcoin asset i guess the the broader thing is though is that obviously if we see more adoption going and i don't necessarily think we will i agree with with the previous uh speaker from new york um i i see genuinely a more of a response from the nation state we're already seeing the movement of the digital dollar movement in the us we're seeing that there's similar things happening in china who are very far ahead in launching their own central bank digital currency so these are currencies which use all the great advantages of something like bitcoin but um to sort of enable their economy and give empowerment to individuals but at the same time they're not willing to necessarily afford the the anonymity that that's something like a bitcoin or similar cryptocurrencies grant the individual let's go back to our guest in new york john biggs john can i ask you a slightly kind of left field question because there was nothing on the telly here in doha last night i was watching one of my favorite movies terminator 2 and it occurred to me thinking about bitcoin this morning is bitcoin the sky net of the world's financial markets maybe in five or ten years time because to pick up on that point that gavin was making it's pre-coded and it's wrapped up with this idea that you know bitcoin is going to do its own thing it's going to be outside the mainstream because it's smashing the privileged monopoly of the financial system of the banking system but that's not perhaps such a great thing to say it we might be talking about this in the past tense in five or ten years time there's a lot to unpack there i mean the idea that this is the sky net is kind of laughable it's just not strong enough it's not where the this the bitcoin is never gonna start creating uh creating uh terminator robots to send back in time and and that's i'm not being facetious it's just not the the code just isn't smart enough to do any of the things that we expected to do which is crush the uh crush the economic uh hegemony of nation states right so let's assume that at some point we we use the tools that bitcoin has given us and this is and we're using we're using that word bitcoin interchangeable with cryptocurrencies but you could also say ethereum which is a programmable currency to a degree um and and a few other currencies that are privacy based etc uh but just at a on a broad level if i'm a nation state right now if i'm a government what i want to do is i want to use these tools to digitize my currency to change the way it's bought and sold to change the way the volatility is managed etc and i want to move away from paper and i want to move away from uh from non-digital means of of money transfer being having having a having a cryptocurrency based uh current uh nation-state currency is vitally important for a lot of these folks because it gives you instantaneous access to everybody's wallet you can see exactly what joe smith down the street has spent on i don't know a power boat and you can exact you can see exactly what a organization has spent on feeding the poor for example so you're in a very very interesting position when you start using this stuff if you strip away all the things that the the cypherpunks love about crypto which is essentially this false sense of anonymity and uh and the ability to move this money without too many bells going off at the irs or any other taxation office then you've got something fairly interesting and it's also kind of dangerous to the average person but again the average person isn't going to be taking part in the current crypto market uh the vast majority of people in the world don't actually understand or even care what's going on in the crypto markets it's great for folks who bought a thousand of them i don't know and 20 2010 uh but it's not so great for somebody who is still using a non-smartphone to to get i don't know crop prices somewhere in uh in central africa so help them okay and the only people are going to think to help them are probably going to be the governments okay glenn goodman coming back to you in london there we're now living in a time of kind of printing press economics around the world because as uh gavin brown and liverpool has correctly said we've got to pay for covid somehow that's going to be a multi-trillion dollar pound euro whatever your currency is it's going to be in the trillions for years and years to come you're clearly quite a fan of crypto currencies or this particular cryptocurrency fans like you all say the same thing they say it's a safe place to go it is akin to gold but it's not akin to gold because if there's problems with the us dollar that's why you have fort knox if there's problems with pound sterling that's why you have the bank of england because some place there are big lumps of gold underpinning a real currency and that's the thing i just don't understand about this how can it be safe for ordinary investors not big institutional guys who've got billions sucked away but people like the four of us who maybe want to put 10 15 20 000 something or other into an investment and let it sit there for a decade um those currencies aren't underpinned by gold anymore they used to be underpinned by gold but richard nixon uh broke the link between the dollar and the gold and gold in the early 70s and ever since then fiat currencies have been exactly that they're just pieces of paper that the government guarantees gold is really nothing to do with them and yeah we keep some gold but not very much in the uk in the us they keep more gold but you know still not a great deal um the the key point and i'm another misconception is that i'm a huge bitcoin fan i have a certain amount of skepticism like you do about the idea that it will ever take over from the us dollar and from fiat currencies but i think um i disagree with john because he said um it won't defeat the dollar and fiat currencies it won't be the skynet that beats them but the the current narrative uh amongst the bitcoin aficionados and obviously there's a huge number of them now is not about it beating the dollar it's about the dollar dying first and then bitcoin filling the filling the void the the narrative goes the the fed is printing huge amounts of money and so are other central banks and that this will cause a huge economic boom um later this year probably and then uh with the economic boom we get huge amounts of inflation and then they have to raise interest rates and then that crashes the economy and but the inflation is still there and then it crashes the dollar and the dollar has been overprinted and the dollar goes to zero and uh and so do other fiat currencies and what fills the void gold and silver perhaps but also bitcoin for exactly the same reason but silver at the moment is according to some people being held artificially low isn't it silver at the moment is according to some analysts being held at an artificially low price because people have gone to gold and there literally isn't enough gold to subsidize the number of people that want to go there as a safe haven i want to move on to my last couple of points let's just go back to gavin brown and liverpool gavin what's the difference between bitcoin and dot-com because everyone said in the 90s and the naughties oh dot com get in make loads of money get out i'm not from a fiscal point of view sure that i see much of a big difference here well i mean we say that but um i mean just to put it into perspective reuters did an article um just at the end of last year which showed that um the entire market value of all american tech companies most of whom were originated in the dot com or just earlier to the pre.com era their total valuation was more than the entire european stock markets so that all listed companies across the whole of europe so i don't think it's necessarily true to make a comparison or to think about.com as get in and get out because what we've seen is is a sort of 20 to 30 year appreciation in market value from a lot of those kind of uh unicorn companies that went on to to get a valuation in excess of a trillion dollars i think the thing with bitcoin is similar to what both speakers have said already you know the first thing i would say is i don't believe in bitcoin maximalism bitcoin maximalism is the idea that one day we will um bitcoin will crowd out all fiat currency um and it's only when you actually agree with that type of argument that you can see you know even exponential gains from the current uh all-time price high that we're in at the moment but equally i don't necessarily see bitcoin disappearing you know i think there will always be an appeal um for an asset or currency type equivalent that that banks the unbanked that allows people to move money uh without the need for financial intermediaries and their own banks um i think the key thing though at the moment is that if you look at say something like bitcoin its capacity is very limited a lot of people use that argument against it um for instance bitcoin typically processes about seven transactions per second compare that to the visa payment network which is around about 20 to 30 000 transactions per second so bitcoin certainly isn't the money replacement that some people would badge it to be today however you know if i was to take you back 100 years and we we went to have a look at the wright brothers trialing flight for the first time and someone criticized it and said well you know that's never going to change the future because it's not safe they don't go very far they can't carry very many humans all of that would have been true at the time but i think what we're seeing here is the principles you know bitcoin is still very nascent it's only sort of 12 and a half years old and yet it's already being talked about in mainstream media and is already 13th by market capitalization on the entire list of over 100 fiat currencies globally i mean as i said it's already surpassed the russian ruble and the thai baht and is closing in on the swiss franc so it's it's no longer that nascent asset which is kind of esoteric on the fringes and it's certainly something to be considered seriously albeit that the future is still has yet to be written and uh and i can see arguments both ways i guess i would say i'm very objective on that i think gentlemen we have to leave it there thank you so much for talking to us from new york london and liverpool they were our guests they were john biggs glenn goodman and gavin brown and thank you to you too for watching the show you can catch the program again anytime via the website aljazeera.com and for further discussion go to our facebook page facebook.com forward slash aj inside story you can also talk to us on twitter i'll handle as ever at aj inside story from me peter dobby and the team here in doha thanks for watching we will do it all again at the usual time tomorrow until then bye-bye [Music]

Channel: Al Jazeera English

Views: 312,119

Keywords: us latest news, al jazeera, tesla, bitcoin value, elon musk, aljazeera, aljazeera english, al jazeera english, virtual currency, cryptocurrency, washington dc, united states of america, aljazeera news, digital currency, aljazeera live, business & economy, bitcoin shares, bitcoin, tesla invests in bitcoin

Id: W97uEncDlvM

Length: 25min 25sec (1525 seconds)

Published: Sun Mar 14 2021