When Bitcoin Hit $100: CNBC's 2013 Coverage

Summary

The script discusses the emergence of Bitcoin as a response to currency crises and debt concerns. Created three years prior, Bitcoin is a digital currency that operates without regulation and has seen significant value growth, despite its novelty and association with niche markets like gaming and adult entertainment. While some see it as a revolutionary financial tool, others criticize its lack of tangibility and potential for hacking. The debate highlights the growing unease with traditional fiat money and the quest for an alternative, although the script suggests skepticism about Bitcoin's long-term viability and widespread acceptance.

Takeaways

• 😕 The script discusses the creation of Bitcoin as a response to concerns over government-controlled fiat money and currency crises.
• 💡 Bitcoin was created around three years prior to the script's date and was initially under the radar but started to gain traction.
• 💸 Bitcoin operates as an electronic online digital currency that can be exchanged for dollars or euros on specific networks.
• 📈 The value of Bitcoin has been increasing rapidly, with significant growth over the past year and months mentioned in the script.
• 🌐 There are a limited number of places that accept Bitcoin, including novelty clothing stores, gaming sites, and adult entertainment platforms.
• 🚫 Concerns are raised about the lack of regulation and control over Bitcoin, which could lead to misuse such as by drug dealers.
• 🤔 The speaker expresses skepticism about Bitcoin's value and long-term viability, comparing it unfavorably to gold.
• 💬 A debate is presented in the script about the scarcity and indestructibility of Bitcoin, with differing opinions on its security and value.
• 🛡️ The script suggests that if Bitcoin became widely accepted, it might face regulatory challenges or even be shut down by governments.
• 💼 The speaker argues that Bitcoin fails the test of being a perfect form of money, as it does not meet the criteria of rarity and indestructibility.
• 🔐 The creation of new Bitcoins is described as a difficult process requiring significant computational power, which adds to its perceived security.

Q & A

What is the context in which Bitcoin is mentioned in the transcript?

Bitcoin is discussed as a response to concerns about currency crises and debt crises, as well as a reaction to government actions such as confiscating funds from private bank accounts and printing large amounts of money.

How old was Bitcoin when the conversation took place?

Bitcoin was about three years old at the time of the conversation.

What is the general sentiment towards Bitcoin expressed in the script?

The sentiment is mixed, with some acknowledging Bitcoin's growing traction and others expressing skepticism about its value, security, and future acceptance.

What are some of the places that are beginning to accept Bitcoin as a form of payment?

Bitcoin is being accepted in some novelty clothing stores, gaming sites, and adult entertainment sites, although it's not widely recognized or accepted in mainstream commerce.

What are the four elements that the speaker believes money should have?

According to the speaker, money should be very rare, indestructible, divisible without losing its purchasing power, and not be increased by fiat.

Why does the speaker believe Bitcoin fails as a form of money?

The speaker argues that Bitcoin fails because it is not rare and is destructible, contradicting the four elements they believe money should have.

What is the speaker's opinion on the value and future of Bitcoin?

The speaker is skeptical about Bitcoin's value and future, suggesting that it is a novelty and that if it becomes widely accepted, the US government would likely shut it down.

What is the current size of the Bitcoin market compared to traditional currency trading?

The Bitcoin market is about a billion dollars, which is significantly smaller than the four trillion dollars in currency trading that occurs every day.

How has the value of Bitcoin changed recently according to the transcript?

Bitcoin has quintupled in value over the last year and has seen significant increases in value over the last couple of months, with over a 20 percent increase in just a month.

What concerns does the speaker have about the use of Bitcoin?

The speaker is concerned about the lack of regulation and control, the potential for misuse in illegal activities such as drug dealing, and the possibility of the market being shut down by the government.

What is the speaker's view on the security and counterfeiting of Bitcoin?

While acknowledging that hacking could be a problem, the speaker suggests that the chances of creating a counterfeit Bitcoin that end users would accept are astronomically low due to the design and creation process of Bitcoin.

Outlines

00:00

💰 Rising Concerns Lead to Bitcoin's Popularity

The opening paragraph discusses how confiscation of bank accounts and printing of trillions of dollars have caused people to worry, leading to the rise of Bitcoin. Bitcoin is described as an electronic online digital currency created about three years ago, now gaining traction. People can exchange their traditional currencies for Bitcoin, which has seen a significant increase in value and acceptance, albeit primarily in niche markets like novelty clothing, gaming, and adult sites.

📉 Bitcoin's Drawbacks and the Gold Standard

This paragraph highlights the drawbacks of Bitcoin, such as its lack of rarity and indestructibility, comparing it to gold, which is considered a perfect form of money. Gold's attributes, including rarity, indestructibility, divisibility, and stability against inflation, are contrasted with Bitcoin, which fails to meet these standards. The speaker credits Bitcoin creators for their distrust of fiat money but criticizes Bitcoin as an attempt to reinvent the wheel, resulting in what they see as a 'flat tire.'

🔒 Bitcoin's Security and Scarcity Debate

In this section, the discussion revolves around the security and rarity of Bitcoin. The speaker argues that while gold is physically scarce, Bitcoin's scarcity comes from the computational effort required to create it. The destructibility of Bitcoin is also debated, with the conclusion that it is exceedingly difficult to counterfeit due to the complex and resource-intensive process of generating new Bitcoins. The improbability of successful counterfeit Bitcoin creation is emphasized.

📉 Concerns Over Regulation and Illicit Use

The paragraph discusses concerns regarding Bitcoin's use in illegal activities and its lack of regulation. The speaker mentions stories of drug dealers using Bitcoin and notes that the total Bitcoin market is still relatively small compared to traditional currency markets. There is skepticism about Bitcoin becoming mainstream, as the US government could potentially shut it down if it became widely used. Despite its growing value and visibility, Bitcoin is still seen as a novelty.

📊 Potential Role of Bitcoin in Diversified Portfolios

Here, the potential for Bitcoin to play a role in diversified investment portfolios is considered. Despite its growing acceptance and value, there is concern about the increased risk of hacking as Bitcoin becomes more popular. The speaker argues that the possibility of rapid loss of purchasing power makes Bitcoin a risky investment. There is a debate on whether Bitcoin's vulnerabilities are merely theoretical or likely to occur, with some experts believing in its potential despite the risks.

Keywords

💡Confiscated

Confiscated refers to the act of taking property or money from someone by force or authority, often by a government. In the context of the video, it is mentioned that a few billion dollars were confiscated from private bank accounts, which is a key event that led to people's worry and the subsequent rise of alternative forms of currency like Bitcoin.

💡Trillion dollars

A trillion dollars is an astronomically large sum of money, typically used to describe the scale of national economies or large financial transactions. In the script, the term is used to emphasize the vast amount of money printed, which contributes to inflation and currency crises, driving the need for alternatives like Bitcoin.

💡Bitcoin

Bitcoin is a decentralized digital currency that operates independently of a central bank. It was created as a response to traditional financial systems and concerns about government-issued currency. The video discusses Bitcoin's increasing popularity and value, as well as its role as an alternative to fiat money.

💡Currency crisis

A currency crisis is a situation where a country's currency rapidly loses value, often due to economic instability or poor monetary policy. The script mentions currency crises as one of the reasons why people are turning to Bitcoin, indicating a lack of trust in traditional financial systems.

💡Debt crises

A debt crisis occurs when an individual, company, or country is unable to pay back the money it owes. The video script suggests that debt crises contribute to the insecurity felt by people, leading them to explore alternative financial instruments like Bitcoin.

💡Digital currency

Digital currency, or cryptocurrency, is a type of currency that exists only in digital form and operates independently of a central bank. The script discusses Bitcoin as an example of a digital currency that is gaining traction and acceptance in various sectors.

💡Fiat money

Fiat money is a type of currency that a government has declared to be legal tender, but it is not backed by a physical commodity like gold or silver. The video criticizes fiat money, suggesting that it is not trusted by the creators of Bitcoin, who sought to create a more stable and reliable form of money.

💡Gold

Gold is often considered a safe-haven asset and a traditional form of money due to its rarity, durability, and value. In the script, gold is presented as a 'perfect real form of money' in contrast to Bitcoin, highlighting the debate over what constitutes a reliable store of value.

💡Destructible

Destructible refers to something that can be destroyed or rendered useless. The video script uses this term to discuss the perceived vulnerability of Bitcoin, suggesting that it could be hacked or counterfeited, which contrasts with the durability of physical assets like gold.

💡Regulation

Regulation refers to the rules and oversight provided by a governing body to ensure compliance and stability within a system. The script mentions that Bitcoin operates 'in the shadows' and is not regulated, which raises concerns about its legitimacy and security.

💡Hacking

Hacking refers to the unauthorized access to computer systems or networks, often with the intent to steal or damage data. The video raises the issue of hacking as a potential threat to Bitcoin's security, highlighting the risks associated with digital currencies.

Highlights

Confiscation of billions of dollars from private bank accounts and printing of trillions has led to public worry.

Bitcoin, an electronic online digital currency, was created three years ago and is gaining traction.

Bitcoin operates as an unregulated currency, accepted in some online networks.

The value of Bitcoin has recently increased significantly.

Bitcoin is accepted in novelty clothing, gaming sites, and adult entertainment.

There are concerns about the security and regulation of Bitcoin.

Bitcoin creators are credited for not trusting fiat money controlled by governments.

Bitcoin is criticized for failing to meet the four elements of a perfect form of money.

Bitcoin's scarcity is based on the scarcity of CPU time, unlike physical scarcity of gold.

The creation of a Bitcoin requires vast amounts of CPU power, making it difficult to counterfeit.

Concerns about the potential misuse of Bitcoin for illegal activities.

The Bitcoin market is currently valued at about a billion dollars, a small fraction of daily currency trading.

Bitcoin's value has quintupled in the last year, with significant increases in recent months.

There are dozens of online places where Bitcoin is accepted, though not widely recognized.

Debate over the potential role of Bitcoin in diversified portfolios and its security.

The possibility of increased hacking attempts as Bitcoin becomes more widely known.

Opinions vary on the long-term viability and acceptance of Bitcoin.

Transcripts

you know you confiscated a few billion

dollars out of private bank accounts and

you print a couple trillion dollars and

all of a sudden you know what happens

people start to worry so out of this

worry we have something called the

Bitcoin

bitcoin is an electronic online digital

currency was created about three years

ago kind of flew under the radar now

it's starting to actually gain some

traction you exchanged your dollars to

exchange your euros whatever you go on

to these networks and they it's an

accepted currency and it's zooming and

value lately just unbelievable at how

much this has taken off and and there

are places that are beginning to

actually accept this sort of universal

digital currency kind of operates in the

shadows not regulated but it's an it's a

total outgrowth of people getting start

starting to get worried about these

currency crisis debt crises where are

these things accepted still not a lot of

places I checked out online not a lot of

websites that you would recognize but

the places are kind of novelty clothing

gaming sites yeah wait for it porn some

of those places but you know there are a

lot of drawbacks are a lot of fears that

I'm sure that our guests are going to

talk about but this tells you how really

insecure people are in this age of debt

and currency crises and all the other

things that we have going on in the

world first I have to give Bitcoin

creators credit at least they they know

enough not to trust fiat money that's

controlled by our government but we

they're trying to reinvent the wheel and

they've come up with a flat tire we

already have a perfect real form of

money and it's called gold money has to

have four elements it has to be very

rare indestructible divisible without

losing its purchasing power and cannot

be increased by Fiat and and bitcoins

fail on the first two they are not rare

and they are very much destructible had

paypal invented Bitcoin we don't be

heralding it as the most important

financial revolution since the internet

isn't the credit card perhaps and I

guess I would say as for those first two

points as to it being destructible and

rare I guess I don't know if I agree

with that I mean gold is only rare

because it's physically scarce but

Bitcoin is rare because it counts on the

scarcity of CPU time and so I think it

like why is that so destructibility I

think that's also sort of in question

what are the chances of someone coming

up with a counterfeit Bitcoin and they

present that to an end user and they're

accepting this this phony Bitcoin

I guess the chances would be

astronomically low and that's the whole

design I mean the way that you the way

that you create a Bitcoin is that you

basically have to find a larger rare

number bigger than any of the other

Bitcoin out there and so every Bitcoin

the next Bitcoin is even harder to

create and so I'd say right now it

requires vast amounts of CPU is

generally through Amazon Cloud and

things like this to create the next

Bitcoin so be exceedingly impossible or

exceedingly difficult to create so hack

so hacking Bitcoin could be a problem

but what about someone coming up with a

counterfeit that end users don't

recognize as being counterfeit and then

of loading the purchasing power of all

just yeah you guys I guess one of my

concerns here is - is that you know

there's a lot of stories about drug

dealers using these kind of things and I

think it's just a matter of it's not

regulated it's not controlled the whole

the whole Bitcoin market is about a

billion dollars it's a novelty for the

Geek Squad I can assure you if these

became well promulgated then the US

government would shut it down and just

just to give alright just to give our

viewers some perspective there's about

four trillion dollars in currency

trading every day and as Michael said

it's about a billion dollars worth of

bitcoins it has quintupled in value over

the last year just just since the the

Cyprus thing came up it's up over 20

percent or over the last month or about

a couple months it's up over 40 percent

so it's actually getting some visibility

out there again you can go online and go

to places where bitcoins are accepted

and there are dozens of places no

websites that you would actually do that

you know if I said them oh yeah I know

that but it's just gonna be very

interesting to see just how much this

catches on it just sounds so silly but

maybe it's not David how much of your

wealth will you place in bitcoins what

percentage would you believe that a for

any sort of a highly diversified

portfolio something like Bitcoin is

going to play an increasing role if it

is widely promulgated and the

exponential increase of someone trying

to hack it because it'd be many more

people trying to hack it goes up well I

guess you're assuming that merely that

because you can theorize the possibility

that's going to happen I would say your

purchasing power can be wiped out in a

nanosecond and that's why it would never

be widely accepted in this I hear you

say that but that doesn't make it true

and I think that there are people who

spend a lot of time on this that might

know this topic maybe a bit more

and who believe