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tv   Inside Story 2018 Ep 34  Al Jazeera  February 4, 2018 3:32am-4:01am +03

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and follows two recent knife attacks by syrian teenagers refugees say the incident is being used by far right groups to stoke tension in the area far right supporters have also held a demonstration to protest against what they say is rising crime by migrants at least eleven soldiers have been killed in a suicide bomb attack in northern pakistan the soldiers were playing volleyball in cobol town in the swat valley thirteen others were injured the pakistan taliban have claimed responsibility israeli forces have killed a palestinian man during a raid in the occupied west bank israeli police say they've been searching for a man in jeanine who killed a rabbi in a drive by shooting in january another palestinian man has been shot dead and several others have been injured during raids last month the u.s. president says information in a declassified memo released by congress on friday totally vindicates him in the probe into links between russia and his presidential campaign the memo was written
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by republicans in the house intelligence committee those are the headlines the news continues here on al-jazeera after inside story more than on all these stories of course on the web site al jazeera told called public. it's coil in freefall the cryptocurrency hits a record high towards the end of twenty seventeen but in the last month it's lost almost half its value what's behind that and can virtual coins ever be trusted this is inside story.
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and i'm jane ducked and this is inside story from ahead courses and they've made some people million as others have lost a fortune cryptocurrency zavala tile there's no doubt about that and for those who invest it can be a roller coaster of a ride from all time high to a new low in less than two months come to currencies took the world economy by surprise the first bitcoin launched in two thousand and nine now there are more than thirteen hundred and regulators are taking them more seriously china india and south korea have introduced tougher regulations to combat fraud and tax evasion j.p. morgan and bank of america say they'll hold seing the purchase of currencies on their credit cards and facebook has banned advertising for the virtual coin. a
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sustainable markets or a bubble about to burst we'll talk to our guests in a moment but first let's have a look at the crypto currency market bitcoin the largest of the virtual currencies has fallen dramatically in value from its high of twenty thousand us dollars to below eight thousand on friday if area and ripple also saw drops of about twenty percent the market's been under pressure to sell this past week with more than one hundred billion dollars wiped off in twenty four hours that still leaves the global market value at about four hundred billion according to industry track a coin market cap dot com last week five hundred thirty million dollars was hacked from an exchange in japan renewing concerns about security. let's bring in our panel joining us from new york nissen eappen chief information officer at arcadia crypto ventures and someone who has been
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a bitcoin trader from london martin back access financial analyst and london bureau chief for the street and from sydney david vaile executive director of the cyber law and policy community at the university of new south wales a very warm welcome to all three of you gentlemen listen even as a trader what is it that we saw what is it that we are seeing at the moment this is nothing you see it's just fallen twenty percent this week maybe in the two months it's fallen fifty percent i used to remember times when this was one dollar today morning it goes to ten dollars and it comes back to three dollars so compared to that this is nothing now for all the newbies are there you know my god this is like they're going to get crushed but this is not classical music or jest this is punk rock and you have to be ready for that if you're expecting classical music something that's very very calm well you are in for a surprise so you say this is like comedy in
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a horse my career cryptocurrency if you want to play the game you better get used to this kind of stress yes you better get us because this is a very nice and field even know what percentage of people are in crypto and this is changing the world because it's like you know this is like one thousand nine hundred in the internet you know it's something like you know business comes out and say yes people are going to buy books on the internet nobody believed in by one thousand nine hundred eight most of the analysts out there were saying that around . by not two thousand and two internet is not going to be there there's not going to be any internet and all of this hype is going to be so in-between that prices went up prices go down but the whole space is expanding the same thing is going to happen to the tokenization all the utility talk and market all the security talk in market everything that we see around us are is going to get talk and i'm not going to say it's going to happen to morrow but it's and it's going to happen in the next ten to twenty years and you can be you can decide to be early on it are you can come later it doesn't matter because you can be part of this revolution it can be
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ahead of the curve or you can come in later but this is happening it's happening in front of us martin back at what he said he has happened on is this if any less all who are scary for you i think is significantly more scary i think it makes a good point that the volatility has been around for quite some time but there's a great difference between trading at one and three dollars then there is trading at nine thousand and nineteen thousand dollars which is what we're seeing right now the potential for pain is a lot more significant and the stakes are significantly higher the one point i would make is that i do agree in one thousand nine hundred four we were all questioning the validity of the internet as a commercial vehicle but there was only one internet we've got thirteen hundred crypto currencies right now whether or not you believe that this is going to be the transaction message of the future is really irrelevant is what is going to be the single token that we use or are we going to use multiple tokens if we use it and what is there going to actual vehicle him down there worth shows because the
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jumping in are all good commercial vehicles old no not some that are better than others. this is just it at the present none of them really do anything that we can't already do payment systems are already in place they're much faster they're much more efficient they cost less they take up less energy and in fact they're safer so what the moment nobody has explained to me exactly why these crypto currencies are more valid the payment systems that already exist and i should put it more importantly payment systems which are excepted by the commercial universe and regulators and central bankers i would have a lot more faith in investing in those payment systems than i would in speculating which of these thirteen krypto thirteen hundred cryptocurrency s. are going to ultimately win the race to be digital tokens of the future david vaile what is your take on what we've seen the dramatic rise and now the recent plummet in counties particularly the the the big three big ones what's going on here well
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look i suppose it just emphasizes the same questions that people have been asking. more so very recently which is what ease this thing what what what of these technologies are they currencies are they s. it's are they gambling tokens there's no doubt that the underlying technology the block chain technology has a lot of attention uses whether any of those are currencies do i think. not really proven yet if the currency jumps by ten percent a day then no one can really decide know whether that is what trust they're paying for anything and so there's always been that trouble and there's always been a problem with it as a currency that you can't pay taxes you know which is one of the key features of the currency and as for n s it the other question is what's it backed by and increasingly. it's obvious that it relies on confidence but in terms of anything
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else behind it it's a matter. of consensus and so when the conveyor belt of the rocket is going up the consensus suddenly gives you a ten thousand dollar increase in the value in a very short term but when it disappears then you're left with nothing so i suppose that the real problem is it's about risk it's about understanding what's behind this and it's also about the sophistication of the uses now rather than ninety ninety four i wonder whether the analogy is really two thousand and seven two thousand and eight when the global financial crisis was about to unravel all of the thin and sophisticated financial derivatives that it sort of been building and building and building for sort of ten or twenty years and it turned out when the music stopped then that even apparently quite sophisticated. players like municipal bodies or what they were investing discovered that nobody knew where the
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risk really went nobody knew what happened when the music stopped and so very quickly you had a crisis of confidence. there i suppose two or three days ago you would have said we're on the way off the edge of the cliff i'd say it's jumped by ten percent today so. who knows where it's going but hill knows that a big place i mean let me bring martin in the head that several important points raised by david there what sort of invest is this market attracts and how do we look at it i mean is it a council is it an asset i should imagine that that's very important to the tenant fifty from a legal point of view and how we deal with that going forward no question i think david raises an important point to talk when he talks about the ability to transact if you don't know what the value is going to be in twenty four hours time because the transaction process is quite slow in a big coin universe so i might pay for a car with a bit coin south after noon and i don't know whether i've gotten a good deal when the transaction closes a few hours later or indeed tomorrow when i take delivery of the car that doesn't
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make it an efficient way for us to trade goods and serve. but i think ultimately what we're looking at now is whether or not we are talking about bitcoins and block chain as a platform or whether we're talking about them as an asset i believe in the concept of the platform i'm less excited about block chain it's been around for about ten years it didn't have a great deal of utility three years ago we're talking about it now only because bitcoins traded at twenty thousand dollars apiece the block chain itself isn't revelation very revolutionary i should say and it isn't actually revelator e. either but it is interesting and it does have some validity in the commercial purpose we what we need to descend or dissect the difference between the block chain and the big coins the big coins are speculation they're not a currency they're not even an asset as far as i'm concerned they're a gamble they could be worth billions they could be worth zero the platform itself that's where you've got a story and for me that's incredibly compelling because it's themselves they're entertaining i wouldn't say they've got a whole lot of value in this and what do you say in response to that is it
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important to separate. from the platforms. is that the way to go forward considering the volatility surrounding the crypts occurrences no is this important is that it. see brocchini see i'm a quarter i'm a technologist i started this from technology this whole block chain people are telling it's a great platform it's just a database why don't you say you like oracle better it's just a database with all the consensus mechanism and the incentive corbett coined this platform or this database is absolutely useless ok if you look into the technology piece of it you can use it as an asset you can use it as a gambling platform you can use it as anything because that's up to you it depends on what you want to do now telling that it is not stable or it's increasing in value can you that it's like saying you know we're in the buggy era and a car has come out and all the bugs you want us are saying or discard is a useless thing it's clunky it falls down is does not have a wiper that's of technology problem somebody will fix it there is an einstein or
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somebody like that will come and fix it but there is going to be a point where if you're still thinking that the buggy is going to be the future in two thousand when you're sitting in one thousand nine hundred twelve that's not gone that could be the case bitcoin is or the block chain and bitcoin are different kinds of coins are going to take over now regarding multiple crypto currency so you can have multiple currencies you have the euro you have the u.s. dollar you have indian rupee you have the chinese yuan and you using all that say made they could end up being thirteen thousand currencies it depends on what you want to use and it is unfortunate preferences as a research is not about valerie bitcoin for example martin. i don't think that you are correct in comparing the multiple currencies to multiple because in the multiple coins that are out there in the marketplace simply because when we talk about the euro the yen the rupee and the dollar they're all backed by the four faith and credit of enormously strong economies they're big they're backed by taxpayers backed by the central bank we understand out underneath allows them to create a particular value i have no idea who backs bitcoin i don't even know the name of
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the guy who created it i don't know if you believe anybody go back to changes in the world i don't know where they're located those are two significant risks and i'm not willing now to say it also is a kind of crazy doesn't it if you don't know who's behind it want to trade value of that coin and it is quite we don't i don't we don't know the people who are sitting on this committee who are verifying the block team were david is that one of the problems we don't really know where the starts where this ends what sort of checks and balances there are in block chains one of the things is that. there's many things that we're talking about that bitcoin is a particular implementation of the block chain technology it's a particular crypto currency but there's thirteen hundred other currencies kind of currencies and there's many other different ways to use a block jane type technology it's also many different sort of political or governance models behind it so because in itself is
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a sensual crypto and it just myth that for avoiding identification through avoiding central banks you're avoiding a lot of the problems that come with identified central banks currency but also a lot of the advantages for consumers like the fact that you can trust many of them and that when something goes wrong there's someone standing behind that at the other end block chain technologies being used as being experimented with by some they're. very mainstream. financial into teas and also. governments and they have no intention of it being you know a crypto anarchist experiment they want to put in all of the know your customer and other sorts of identification functions that work in other areas of business and of the economy and so one of the problems i think is bundling everything together as if one crypto currency is like another and one use of block chain is like another part of the problem for ordinary people for ordinary business people or for the
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consumers ordinary citizens is that the level of knowledge and sophistication and sort of technical understanding and business understanding that you need to work out exactly what you're dealing with is pretty high it's much higher than saying well should i travel with american dollars oh yeah and or whatever because even the nature of an asset a currency or a gambling token it is unclear and the compare ability of the risks in different types of systems the speed that sort of thing it's all very technical and very variable it manes that a lot of people in this market a lot of people in this using this for transit actions really you have to count as unsophisticated and probably at risk of doing things that happened at the stand and me being exposed to risks that they don't understand i guess like many i'm not saying or. i mean it seems that people need to be better educated and surely
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regulations will have a place in the sense that they might bring back some source of stability that they might draw more confidence when it comes to this market whatever it is if it's a currency or not because it is that what is needed here that we're here and also want to ask you something else when when this billion was wiped off the us market where did it go. this is to me and one of the it's an excellent question. the money it's a zero sum game in a certain sense because the money is simply going to transfer from one entity to the next and whether or not it exists inside the big point structure or whether it gets pulled out into real cash that's the difference as to where the money goes and actually that raises a really interesting point because the analogy that i like to draw is when you own a share in apple for instance it doesn't matter whether everybody else sells their shares in apple you still have a piece of paper that gives you a small portion of the profits going forward for the sale of i phones and i pads
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and everything else like that everybody could believe you'd still have that piece of paper that would have the value of profits if everybody leaves big coin i don't have anything of let's say if you're buying something that has no value whatsoever that's not true because the value of this point only increases no no no the value of big point only increases when more people participate and when fewer people participate the value decreases that for me is a very uncomfortable legal swaraj the value of the go to a great deal of risk for people who don't know what they're in and then you have to tesla shares let's say let's say you have tesla shares there's no dividend it's trading at trading at three hundred fifty dollars what are you buying that for then or if you're buying gord what it is it is only having value because more people buy gold otherwise why should it be at sixteen hundred dollars i agree with you no metal it's shining it's only use for seventy percent right so it is trading at sixteen and that is called social consensus so let's say you go to sleep tonight i
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agree and your wife tells you you know what i want an ounce of gold and you few have six hundred you tell are ok i'll buy you this piece of gold tomorrow morning you wake up in the morning and if it's by the snap of a finger everybody i don't know is only being hundred dollars you're not going to pay sixteen hundred you really behind it so it is socially going to answer why you don't live where one difference that i have with it i think yourself is going to set it right. you're absolutely right the one caveat i would say though that central banks around the world and some hold tons of gold they don't own any bitcoin so there is a sense there's a floor to the price of gold they cannot because of they talk about senses we don't have that consensus yet and because ok how david i'm going to bring in you how do we get that sort of consensus and clearly regulation is going to become an issue as we go ahead look at what's happened in and south korea the sort of regulation that russia is looking at that if they should be some sort of unified regulation how is it going to be better placed where should it be placed to make
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this is more acceptable you know the fascinating thing about bitcoin is that it's not built on the i suppose the assertion the command of any central government that the attraction first to some of the uses is that it is based on consensus is this or a consensus is that this one that any individual block is valid and that's what all of the crypto mining is about another one is the actual mechanism the technical frame that it's working in and so this is where you see splits so of change and that sort of thing and the third thing that the most interesting one is that it's worth something and the miraculous sort of creation of a big point as a thing that actually worked needed all of those three things that history types of consensus among strangers to just bubble up together and said that was the improbable thing and that was the great achievement that you had. an essential
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agreement among strangers on each of those three quite different levels and that came forward and the problem now is that you're finding that. the technical problems of getting consensus about each block big particularly with the big question model creates huge demand for electricity it becomes slow and there's this in problems the. the technical demands of that consensus about the framework or the protocols as a say in the fragmentation in the creation of thirteen hundred different sort of currencies and so it's very unclear now does that go on forever is next week is there hundred thousand currencies or we know what's the limit there and then what about a government sponsored county will in a sense that the government steps in and says well we don't care about consensus we are going to say it's worth this or we're going to set up a trading mechanism that lets you know ordinary. markets
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decide the price of this but within sort of controls and we don't need consensus about technical framework we don't need consensus that it's worth anything we just work on. within very close downs within sort of highly governed infrastructure highly governed sort of social and business sort of frameworks echoes of the things that government provides and it's not about consensus modern is doing it well at the moment what do you make of so south korea's moves and look what's happening in zimbabwe in venezuela at the moment how well kept i can see is all being used they can it'll be melded together to provide the perfect platform. this is i think it's fascinating because i do think it has some incredible utility for people who are participating in economies that don't really have significant backing of their currency or indeed central banks that are trusted and i can understand in places like zimbabwe and venezuela why you would want to go
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into a market place that you could at least have some confidence that the value that you have created is going to be stored now this incredible amount of volatility in bitcoin but there's even more in the venezuelan currencies and indeed in zimbabwe as well so you can understand why there would be attraction there but i guess i would say that in many respects all of us are using digital currencies as we speak it's not like we're walking around with enormous bags of cash in our pockets when we go out and buy our coffee i take my card i touch the thing i get my starbucks and i'm on my way that's a digital currency in many respects and what the banks and the central banks do is they trade digital currencies amongst themselves the amount of actual notes dollar notes that are in the marketplace and out in the real world are infant tested inference compared to the value of goods and services are changed each day so we're already in a world in some respects of digital currency so that platform that concept does exist that's why i have been skeptical of the idea of bitcoin coming in at
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a forty five degree angle and this and people assuming that it's a brand new futuristic technology we've been doing this in fractional reserve banking for decades now and that this isn't new this could actually relatively all this in a few good i mean clearly i should imagine you can say that he said nothing of any sort of bubble so i'm just wondering way too from now for crypto currencies and let me. and respond to ok two or three things i want to bring him to provide one you cannot regulate bitcoin because nobody owns it you cannot take the server down there's no one server to take down there's no one company to take down ok so if we're using it so it's like this so let's say the government comes with a rule tomorrow saying that you know what you cannot trade coffee but only starbucks can trade coffee ok you can go to a starbucks and you can buy coffee and let's see the got starbucks has put out censorship or not than that's me saying that you are not allowed to buy coffee from starbucks let's say for hypothetical cases and let's say david is drinking
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a coffee out that he's took a stake in a coffee i go to him and say david i'm going to give you my i form do you give me my can you give me your coffee there's no way he's going to refuse that offer even if there is a rule so that's one thing and the second pieces nobody's been banks so let's say i go to my bank and i do a wire transfer to david in australia so the wire goes from my bank to the federal reserve and from that it goes to the nostra account for their bank in australia it goes to david's account but realistically that clearing and settlement happens over a week when i send david or anybody in london a big calling or a light coin or a theory i'm the assa goes to them within one minute or ten minutes the slower bitcoin it doesn't ten minutes maybe the confirmation times declaw i get it i'm going to be going to have cleared it and we're going to have to move in there a minute gentlemen sorry to cut you off thank you for all your different opinions when it comes to this certainly a fascinating subject and one we all have to get our heads wrapped around the thin
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eappen martin bacharach's and david bell and thank you two for watching and see the program again any time by visiting a website al-jazeera dot com for further discussion at our facebook page that's facebook dot com for slash a.j. inside story can also join the conversation on twitter a handle is at a.j. inside story from egypt and the whole team by. on counting the car some of the biggest names in tech out with record earnings but
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they're also under scrutiny by regulators in what's being called at the sec clash a look at business relations between the u.k. and china plus another scandal in the german auto industry counting the cost at this time of. the palestine national locust was first founded in the one nine hundred thirty s. but has had to be revived in two thousand and ten all was very important for me to sing in palestine now musicians from all over the world come together to perform in the occupied territories it's a good philistine it's like every palestinian living in the aspirant felt it was the first time they performed using their identity al-jazeera world hears music as a force for unity the diaspora orchestra at this time.
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al-jazeera. where ever your. i'm rob matheson in doha with the top stories on al-jazeera a russian jets being shot down by rebels over syria's northwestern adlib province russia's defense ministry says the pilot managed to eject but was later killed near the town of sort of head moscow has retaliated its.


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