Kind: captions
Language: en
what's up fellow internauts
if you're like me you probably pay for
your coffee with a phone app or buy
groceries online with a credit card
maybe you carry less cash in your wallet
than you used to and you might be
considering other ways to invest your
hard-earned money
one option
cryptocurrency
its popularity has skyrocketed in the
last few years and of course it's all
over the news digital currencies like
bitcoin ethereum and dogecoin have
quickly become household names their big
story coming out of china's central
bank's crackdown on cryptos calling all
crypto related activities illegally
bitcoin's october comeback comes as
other top crypto currencies enjoy
similar gains as investors continue to
pour money into the stocks amid
inflation fares
interest around cryptocurrencies has
grown but the crypto market is notorious
for its volatility and high risk
but what exactly is cryptocurrency what
technology is behind it is it secure
and what can you actually do with it
this is nova now where we mine for
answers behind the cryptic headlines i'm
alok patel
[Music]
watching movies on our computers
listening to podcasts on our phones
connecting to grandma over zoom many
daily activities have migrated online
and money is no exception
i loved coins growing up i was obsessed
with coins and super mario brothers i
collected foreign coins i used to fill
up every single piggy bank and now
thanks to technology coins have an
entirely new meaning for me technology
today is transforming the way we think
about value and transaction
but what have people actually heard
about cryptocurrency
uh a cryptocurrency is a as an online
currency it's electronic money basically
cryptocurrency or like bitcoin
it's the same thing right
crazy yeah yeah people load up on the
big one most people have heard about
bitcoin but bitcoin is just one type of
cryptocurrency in fact the total value
of all existing cryptocurrencies these
days is over two trillion dollars
trillion with a t
that means a lot of movement and
investment in this space
digital technology evolves super fast
and with it an ever growing lingo you
might have heard of digital assets
stable coins and tokens in the crypto
world keeping up with what's what can
result in some confusion
so let's unpack what exactly
cryptocurrency means
and here to help us with that is sheila
warren the deputy global head of the
center for the 4th industrial revolution
at the world economic forum and she also
co-hosts the popular podcast money
reimagined on the coindesk network
let's say you were to kindly buy me a
drink or buy me a cup of coffee and i
wanted to reimburse you for that we'd
probably go to our mobile devices we'd
pull up our payment app of venmo square
whatever it was and i would send you
whatever amount of money i owed you and
then we would kind of walk away very
confident that my bank would send the
money via the payment application to
your bank and we would have a final
transaction okay now imagine if i didn't
have access to a bank account or i
couldn't trust my bank how do you do
that well normally you hand paper cash
or metal coins to another person a
digital way of doing that is using what
we call a cryptocurrency it is a
peer-to-peer transaction i can pay you
directly there is nobody in charge quote
unquote there's no bank involved there's
none of that
think of how we used to send messages
before the internet we would grab a
piece of paper write a letter put it in
an envelope hand it over to the post
office and then trust it would reach its
destination
the technology behind email made the
whole process run faster without the
physical object of a piece of mail and
without the fees or friction you could
even set up your own email server at
home which means no intermediary the
technology behind cryptocurrency allows
for something similar let's start with
stablecoin which has one foot in the
world of old school money and one in
cryptocurrency
that is pegged to
fiat money pegged to the dollar for
example so a stable coin is stable
because its value is pegged to something
outside of itself fiat money are regular
currencies like the dollar or yen
they're called fiat because they're not
backed by any physical commodity say
gold or silver they're issued by
governments
their value comes from the fact that
people generally trust in the stability
of the governments that issue them
they work as long as there is collective
agreement that they have value and then
there's cryptocurrency that has its own
value so a bitcoin is worth what the
market for bitcoin says it's worth
when something like bitcoin is not
backed by something
how does it wind up becoming so valuable
how does it wind up you know hitting 50
000 per coin and why is it so volatile
so it's volatile in part because you
know even though bitcoin itself and i'll
pick on bitcoin for a second remember
bitcoin is just one type of
cryptocurrency but there are many others
you might have heard of ether from
ethereum avax from avalanche litecoin
dogecoin bitcoin's been around for over
a decade now so it seems pretty clear
that it has some staying power bitcoin
is primarily being used for investment
value people are kind of looking at it
as an asset that you might buy and hold
and you know buy low sell high all that
kind of stuff but there are also cases
where bitcoin has been used as a form of
what we would consider money so people
are buying and selling things using
bitcoin right that is also happening and
the question becomes like is that going
to prove to be the primary use case
where it kind of transitions and this is
again true for other cryptocurrencies as
well or is the value going to remain
more in kind of that investment
portfolio and what people think about
that well it affects the price of the
thing
it's unclear exactly where regulation is
going to land around bitcoin and
cryptocurrency and so a lot of the
volatility is when there's a signal from
the sec or from the fed or maybe from
another government that oh maybe we're
going to do something like a ban bitcoin
or you know maybe we're going to promote
bitcoin you see that reflected in the
price so it is hyper responsive to what
are perceived as external signals around
whether you're even going to be allowed
to hold bitcoin in the future
cryptocurrencies are digital assets that
are monitored tracked transferred and
otherwise utilized
by means of online algorithms amin
gunsire is the ceo of ava labs inc a
team supporting development of the
avalanche public blockchain
he was a professor of computer sciences
at cornell university for about 20 years
until recently when he left academia to
focus on the cryptocurrency industry
their strength comes from the fact that
their behavior is pre-ordained and
constrained heavily by algorithms
the crypto and cryptocurrency comes from
cryptography the science of securing
information by using secret codes like
the german enigma machine in world war
ii or the stuff cold war spies used to
hide their messages
we actually use cryptography when our
computers or phones send messages or
data it works in the background or in
computers by encoding and decoding
information
when we say they're secured by
cryptography we mean that the assets can
only be used transferred usurped etc by
means of a private key the cryptographic
key and uh parties that don't have this
key are not in a position to do anything
to those coins so unlike from your bank
account where the bank has your money
with cryptocurrencies you're the one who
has the money the same way you keep your
cash in a wallet your cryptocurrency can
be made available for you to use in
what's called a digital wallet
that means that you can interact with it
from a computer you can then send or
receive it between wallets it can also
be moved to what is called cold storage
essentially a piece of hardware that's
not connected to any network and can
literally be locked in a safe
cryptocurrency is based on a technology
called blockchain that eliminates the
need to have intermediaries so the
blockchain is the data structure that
track ownership of digital assets online
digital assets are intangible and can be
created stored and traded in a digital
format
so what's happening behind the scenes
when you use a cryptocurrency is there's
this vast network of computers keeping
track of who owns what the naive view
somebody might have is that online we
keep track of digital assets like they
are files but if we were to do that then
i would be able to send the same file to
you and to somebody else at the same
time and both of you would think that i
am paying you so to avoid that problem
what cryptocurrencies do is they
maintain some kind of a ledger you can
think of the blockchain like a
spreadsheet that is copied across all
the computers on the network and are
constantly verifying with each other
that the copies are exact there's some
kind of an order book if you will of who
has how much that ledger or order book
is known as a blockchain it's called a
blockchain for two reasons
first because the entries in a ledger
are grouped into blocks
second because the blocks are chained to
each other they're all copied and linked
across every computer in a particular
blockchain and these computers all talk
to each other to verify they all have
the same blocks
say i have a coin
i can use that coin to buy thomas's
vintage unopened mint condition buzz
lightyear toy or i can buy reagan
slightly used but still ridable with
unicycle but i can't buy both
how do the computers or nodes managing
that transaction make that work
at the core of every cryptocurrency lies
something that we call a
consensus protocol so consensus
protocols are the computer algorithms
that allow the different nodes to remain
in sync while they maintain a nature in
other words once i pay thomas or reagan
the transaction is entered into the
blockchain prohibiting me from pulling a
fast one by paying the other person
the point here is to make sure i'll
never be able to double dip
that would be a safety violation that
would be something that allows to create
coins from out of the thin air and
there would be no integrity to our
accounting if we were to allow that to
happen so the job of the consensus
protocol is to ensure that those
transactions are executed in an orderly
manner that no coins are ever created
that all ownership is tracked and that
all of the participants that are part of
the blockchain network see the same
transactions in the same order there are
many different ways for computers to
achieve that consensus proof of work is
one kind of consensus algorithm it was
invented by satoshi nakamoto to be clear
satoshi nakamoto is an alias for the
anonymous person or group that wrote the
original white paper describing
cryptocurrencies and then created and
released bitcoin in 2009
but back to proof of work it's
absolutely brilliant in how it works it
allows
disparate parties to come together and
maintain a ledger in some orderly
fashion
those parties have to have what we call
mining rigs so if you ever heard of
bitcoin mining
what's going on behind the scenes is
that people are coming into this this
ledger they're participating by
purchasing these rigs which are special
purpose computers and um those computers
then are trying to solve all these
crypto puzzles essentially doing the
kind of work that they need to do in
order to append blocks to the blockchain
and they're compensated for the work
that they do so virtual miners around
the world are trying to solve these math
puzzles with their machines it's like a
race and the winner is the only one that
updates the last verified transactions
to the blockchain
in exchange they earn some
cryptocurrency so this is a very
competitive game and by now it's become
a very exclusive game you need enormous
amounts of machinery to have a
meaningful part in it and
that machinery ends up consuming a huge
percentage of the world's electricity
supply but again this is proof of work
the consensus protocol used by bitcoin
some new generations of blockchain and
cryptocurrencies work with greener
protocols that use far less energy and
as the popularity of these digital
currencies grows new startups are trying
to improve the ecological impact that
proof of work created by using
alternative sources of energy so a lot
of things about cryptocurrencies make
them so compelling for various uses in
the digital world they're very easy to
transfer across borders
they span the globe they are
instantaneous the system itself does its
own monitoring now again there are lots
of different types of cryptocurrencies
circulating that have different
functions arguably the most well-known
and the most valued are bitcoin and
ether sheila warren again
so each of those sits on top of a
blockchain there is the bitcoin
blockchain and there's the ethereum
blockchain and those are different
systems uh they have different code
underlying them
it's like different languages they are
fundamentally underlying different
technologies even though in the broad
sweep they're all a blockchain
[Music]
so cryptocurrencies differ and have many
functions a cryptocurrency stores value
it serves as a means of exchange
you can be a participant in the
maintenance of the ledger and you can
get paid for the the duty you you
provide the service you provide in
maintaining that decentralized ledger
and in recent past uh those payments or
those service fees to the participants
in these systems have actually been uh
quite amazing compared to the yields
that people get from the traditional
financial system and then the final
thing you can do if your cryptocurrency
allows it is to use these coins to run
smart contracts
the major innovation in ethereum was
actually introducing the smart contract
concept which has spawned a whole
generation of financial services uh and
other kinds of opportunities so a smart
contract is not really a contract is a
piece of code in a nutshell the terms of
agreement can be written as lines of
code and the smart contract executes
itself once those conditions are met
as an example take what happens when
weather grounds your flight you know
flight insurance is the thing that some
people engage in
and so if i'm waiting at the airport and
oh no there's a hurricane my plane can't
take off you know everyone gets on the
phone or gets on their app and tries to
rebook their flight or rushes the
counter and like use those poor people
and try to like get on the new plane
what would happen with a smart contract
is you'd have an external signal let's
say it's the weather channel local
weather reports it says oh hurricane is
coming
you would automatically basically get
rebooked right the code would execute
once you got a signal from that external
source this thing is happening meaning
your flight can't take off everything
else would follow automatically there'd
be no need for human intervention
after the break we'll talk to someone
who's harnessing the power of the
blockchain to make a difference in the
real world stick around
[Music]
in the world of cryptocurrency there is
a distinction between native coins and
other coins that are known as tokens an
example of the first one would be
bitcoin ethereum avalanche these are
native coins uh they're used to maintain
the balances within the ledgers and then
tokens are things generated on top there
are thousands and thousands of tokens
these tokens operate on top of the
underlying coins and they have a lot of
uses
some tokens correspond to real estate to
stocks equities some correspond to nfts
representing digital art ownership
online
we'll get to nfts in a bit
but before that in new york city we
found an example of how this can work in
the real world if you take a drive
through east new york or through north
miami or south los angeles or west
philadelphia you see derelict properties
vernon j is an entrepreneur who's been
in the real estate industry for 16 years
specifically in multi-family properties
and it drives me insane because there's
so much value to be had within those
properties and within these communities
and there's so much need the only reason
that they're not being renovated and
rejuvenated is because the banks are not
uh providing that liquidity in that
capital it's not a priority for them
earlier this year vernon j released
equity coin the first digital token on
the blockchain backed by affordable
housing you know i'm able to do that
because i own assets already so i'm able
to use my assets as the first test case
uh in this process in this tokenization
of real estate vernon j says that in the
us it's hard to finance large affordable
housing properties i go to the bank i
try to get financing for this thing so
that i can house 100
families who are suffering from or or on
the brink of homelessness and the bank
is like okay that's cool that sounds
good you know they don't really care
about that they care about the bottom
line
they would require
exponentially more down payment than
they would if it were located in a more
ritzier area so the blockchain can act
and acts right now as an alternative to
financing using a bank
the blockchain harnesses funds provided
by a community of investors who buy
digital tokens representing a share of
the property
that's the other side of equity coin
providing the opportunity to own
property to those who previously
couldn't afford it east new york is kind
of like the last vestige of properties
that you can purchase that are under a
million dollars in brooklyn new york
people in east new york generally
they don't have access to investments
so i think what the blockchain is doing
it's opening those opportunities that
have been generally closed to the public
and allowing them to take part with
equity coin people can invest as little
as a thousand dollars so it's opening it
up to those i guess you know ordinary
folks who who are trying to better
themselves we're trying to create
generational wealth even if you're able
to own a fraction of real estate assets
you're still able to increase your net
worth it may be incremental but it is
happening vernon j says there's power in
owning assets within your community you
now have a bigger sense of pride
your mentality kind of changes i
actually own a piece of that property i
own a piece of this community
right so i'm going to stick up for my
community now being able to tap into the
blockchain right what you're actually
doing is you're creating more housing
that otherwise would not be there
the housing created by equity coin is
intended for those facing homelessness
with the help of government incentives
for landlords new york city's family
homelessness and eviction prevention
supplement for example helps these
tenants pay their rent for up to five
years i understand now this whole
spectrum i've got a community that needs
housing that needs awareness that needs
funding a landlord who wants that secure
five-year
income and then a company like yours
that are like hey we can fractionalize
this property without a bank in the form
of a digital token get investors to put
in as little as a thousand dollars then
now we have a runway for the landlord to
maintain this property we've got fixed
up units for people to to move into and
basically it's win-win-win no matter
what corporation you have you have the
ability to tokenize your assets in the
next 10 years every company is going to
use the blockchain in some form or
fashion because it just creates more
efficiency
specifically in accounting one of the
promises of the crypto ecosystem leading
aside cryptocurrencies is a more
democratized access to financial
services sheila warren again for example
you know it's not easy if your credit
score is really bad to do things like
get a loan or if you want a very small
loan there aren't a lot of banks or
other maybe some credit unions that will
service that it can be hard people to
get insurance so as we move forward
certainly my hope is that we will see a
much more democratized access to
financial services that many of us take
for granted and so if you do it all on
chain or online you don't need to know
who the person is to deem whether or not
they get this loan because the system
itself is holding them accountable for
doing so so it's a very different way of
i think removing some bias from systems
again this all depends on the priorities
of those who are building these systems
in the realm of tokens there's a
particular kind that's gotten a lot of
buzz lately
now what the hell's an nft apparently
cryptocurrency everyone's making so much
money can you please explain what's in
nft that's pete davidson on a saturday
night live sketch about nfts to answer
your question pete nfts are a type of
token
nft first of all stands for non-fungible
token it means that it's unique and it
can't be replaced with something else
and so i think to take this back a
bitcoin is fungible okay a dollar is
fungible i don't really care if i have
this dollar bill or that dollar bill i
could do the same things with them nfts
aren't interchangeable they're
collectibles and like any collectible
you want to own the ones with the
greatest value baseball cards are often
used here you know or garbage pail kids
to date myself a bit there are some that
are just kind of more exciting they're
rarer they're worth more you know than
others okay but if i own a rare baseball
card that means that there literally
aren't many of them
but digital files can be copied over and
over again so how can a digital file be
worth anything how do you make it unique
an nft is data that is accounted for in
a digital ledger so in a blockchain
this data represents something specific
for example the picture of a cat a piece
of art a song all in digital form
you can think of nfts as certificates of
authenticity for digital artifacts
so you are buying the ownership of that
unique artifact which can then be moved
over to your digital wallet
it's a pretty ingenious solution to the
problem of making digital assets
valuable that's why lots of big brands
are making nfts
the new james bond film no time to die
was the first in the series to have nfts
dolce gabbana recently announced it sold
in auction a collection of nfts for the
equivalent of 5.7 million dollars i mean
this total also included some actual
couture
and the nfl and nfl players association
announced they'll create unique digital
video nfts of the top plays in a season
and in league history
in the nft world there's all kinds of
stuff that you can literally buy and be
the sole owner of there's even a kobe
bryant nft coming out i'm a big fan the
idea is there's something unique about
that brand and it's attributes
maybe it's a player maybe it's a style
maybe it's a line maybe it's a font you
know whatever it is there's something
about it that's unique and so by owning
that this is a recognition that we spend
more and more of our lives especially in
this pandemic time online
and as we intermediate our identity with
our online persona
a lot of the images that we show online
are really powerful and so an nft what
people do with them you don't print it
out and put it on your wall the way you
would with art um maybe it's a clip you
watch in your you know in your leisure
but the eldership is something that you
might make it your avatar online you
might make it something that is your
background on one of your social media
profiles you know whatever it is right
um and these have a lot of value and
they have value the same way that where
art has value
but of course not all of them have value
and some of them are really novelty
cards like anything else i love nfts
they are very hype driven i mean good
sir it's not a good investment vehicle
that i would encourage other people to
jump into but if you love the art it's a
great way to make a statement um
in the very near future we're going to
see games use nfts and you'll be able to
take your avatar your weapons etc your
in-game things from one game to the
other and that's a different business
model and business structure for the
gaming world these approaches are
examples of something the industry calls
decentralized finance or defy
and some are saying that d phi will be
the killer app that makes crypto as
commonplace as the internet
defy is a system by which financial
products become available on a public
blockchain okay so rather than going to
a brokerage or a bank for the lending
purposes you can do all of that on
the blockchain and so that is huge in
terms of democratizing access to things
like credit uh or to things like you
know insurance provision or whatever it
might be important to note that defy is
still in its infancy but i do think that
once we kind of land that there is a
desire to open up these opportunities to
others at really small almost micro loan
micro credit amounts so that the average
person who maybe never had access to
that kind of service could actually do
that i think about my parents back in
like 80s and 90s using western union to
send money to family in india and
reality for a lot of people like would
this transform remittances and how some
people would be able to send money back
home if they were a foreigner yeah you
know so it's about having trust in these
systems so it's one thing for me to be
able to send a bitcoin you know to
family and wherever but then they have
to be able to receive the bitcoin and
then transfer the bitcoin into fiat or
whatever else or have merchants that
will take it or whatever it is there's
like infrastructure that has to be built
to make that valuable that involves a
lot of education and somewhat of a level
of sophistication on the part of
everybody in that ecosystem now there's
also a dark side to all this
apps that poses crypto websites but are
actually fake
users that move funds there see them
literally disappear
no one can tell you that this new
nascent economy is is actually 100
secure it isn't
of course there is risks so the smart
contracts who facilitate these kinds of
operations can have bugs in them
mistakes you make are also you know they
can also be fatal for you in the sense
that you can lose your funds if you send
your funds to the wrong address there
might not be a counterparty at that
address to uh to help you recover your
funds if you send them to the wrong
location so there are all sorts of risks
in this universe and
that's partly why the rewards are also
high as well
i think there's two things to value when
it comes to security people are
sometimes talking about uh volatility so
how quote secure is it sometimes it's
about like how much can i assume that if
i have something in my wallet it's gonna
actually have value that i can then use
a later date it's tough to know right so
i would say generally speaking
the trends are all online all of these
things are definitely trending positive
over time i mean if you look at where
this has come in the past decade it's
unbelievable like just how much it's the
value skyrocketed and then there's the
question about like fraud and hacks and
things like that right which is more of
a cyber security question so there
there's interesting questions around um
your data i'll distinguish from you know
your actual value the value you're
holding initial wallet so here's where
you know the hot hot topic of encryption
enthusiasts there are those who hold
everything they have in what's called a
cold wallet it's offline you know you
can think of it as like a flash drive
that you're keeping like in a safe that
you're locking up it's like fireproof
right kind of thing right some people
that's the only way they are willing to
hold anything it's kind of like you're
having your your big savings account
that you really never access and then
some checking account that you kind of
keep a small amount in that you kind of
use you know for everything so if your
debit card gets stolen that only goes to
your checking account there's not that
much money there you're not worried
about it because the other money is a
different account there's a way of
thinking about it that way where what
you have online available anytime is an
amount you intend to trade with you
intend to use it to buy and sell things
and anything else that you're holding is
an investment you're keeping offline
you're holding it somewhere else and
you're kind of letting it sit so that's
a common division of things sheila
warren says that hacks and diversions
are actually pretty rare do i think that
you need to be careful i do with crypto
put in what you can afford to lose
because it's there it is a volatile
investment but it's not something i
honestly uh tell my friends and family
to worry about too much these days
especially if you're dealing with some
of the more established protocols
there's this perception that um
criminals prefer to use bitcoin
criminals love cash okay cash is
untraceable if i hand you a million
dollars like there's no record of that
transaction kept by anyone
bitcoin is extremely traceable it is an
open ledger anytime money changes from
one person's hands to another there is a
record that that happened and more and
more people will be signing up either
because they want to or because they'll
have to
i do think that anyone in there let's
say 20s 30s maybe even 40s now is going
to have to get these lines familiar with
a digital wallet but let's be clear if
you can use venmo or paypal or
squarecast or zell or whatever you can
use a digital wallet it's really not
that different it's super clear to me
that in about a decade or so we're going
to see a massive move a massive flux
from old school of traditional finance
services to this new infrastructure
that's much more elegant where the
compliance rules are built in in some
inescapable fashion into the fabric of
the finance system and and you get a
result as far more trustworthy because
there is really no trusted party that is
in a in a position of of god-like power
that could do all sorts of malfeasance
instead the system itself provides very
strong guarantees to the participants
the new way in which money is issued
transacted etc transferred around the
world is going to be digital and that's
going to be on blockchains of different
kinds
[Music]
nova now is a production of gbh and prx
it's produced by terence bernardo r.a
daniel jocelyn gonzalez isabel hibbard
sander lopez monsalve and rosalind
tordesillas
julia court and chris schmidt are the
co-executive producers of nova suki
bennett is senior digital editor
christina manan is associate researcher
robin kasmer is science editor robert
boyd is digital associate producer and
devin robbins is managing producer of
podcasts at gbh
there's nothing cryptic about how
amazing our theme music is it's by dj
kid koala
i'm alok patel we'll be back in two
weeks which is plenty of time for you to
read up on bitcoin and ether but also on
all the other coins out there like
cardano and tether and xrp and solana
and polkadot and dogecoin and unisof and
tara and litecoin and avalanche and
chain link and shiba inu and
there's so many
gbh