Bitcoin: The End of Money as We Know It Page #5

new idea is often met

with skepticism,

ridicule, even hostility

from those who stand to

lose most from its success.

Case in point, the automobile.

In the late 19th

century, Karl Benz

and others built the first cars,

contraptions that could

threaten the stagecoach

and railroad industries.

These "self-propelled

vehicles'" or road trains,

would certainly scare

horses, injure people

and damage roads.

Cars, the railroad barons

said, were just too dangerous.

And to protect us,

they used their power

to pass a law in 1865.

It required every

automobile in England

to observe a four mile

per hour speed limit

and to be operated

by a crew of three,

a driver, an engineer

and a flag man.

This heroic flagman

walked in front of the car

to warn fellow citizens

of the coming danger.

The railroad tycoons,

the lawmakers,

the self-appointed

gatekeepers used regulation

to stifle innovation.

But they didn't

invent the flagman.

He's been around

for a long time.

For centuries, very

few could read.

Books were copied by hand.

The people in control, political

and religious leaders,

wanted to keep it that way.

And they greeted Johann

Gutenberg's printing press

with licensing laws,

publishing bans, taxes.

In some parts of the world,

printing was a crime,

punishable by death.

After all, they were

just protecting us

from dangerous ideas.

Before the printing

press, there were

an estimated 30,000

books in all of Europe.

50 years later, there

were 10 million.

As Gutenberg's

invention flourished,

the Dark Ages withered.

Progress couldn't be stopped.

But the flagman

never stops trying.

His masters set

him loose on each

of these innovations

because they threatened

someone's profits,

someone's control.

But remember, this is

a story about money.

What if a technological

innovation allowed anyone

in the world to

be their own bank,

to create a currency free

from taxes and banking fees?

The U.S. Constitution forbids

citizens from printing

or minting their own

currency, competing with

or undercutting reliance

on the U.S. dollar.

In 1998, Bernard

von Nothaus decided

to test the resolve of

the federal government.

- The Liberty Dollar

was available in gold,

silver, platinum, and copper.

It was available in three

forms, both in specie,

in other words, gold and silver,

in paper, as warehouse

receipts and in digital form.

Obviously, the government

didn't like it.

They arrested me

and convicted me

of counterfeiting,

fraud, and conspiracy.

And Im currently

awaiting 22 years sentence

in federal prison.

- [Voiceover] Lesson learned.

- At a hacker's

convention in Netherlands,

there was a young hacker there

who used the alias

of Satoshi Nakamoto,

and he talked to

a friend of mine

and he identified the

Liberty Dollar and me

as inspiring him to

create a new currency.

- [Voiceover] Bernard

von Nothaus's arrest

for creating "private money",

may also have inspired

Bitcoin's inventor

to keep a lower profile,

publishing the

invention under an alias

and vanishing.

- Part of me is interested

to know who Satoshi is.

Maybe that's part of the

mystique of the story,

it's completely irrelevant

to the functioning of Bitcoin

because we have

the code to read.

But it would be

kind of fun to know.

- Who is Archimedes?

Who is Euclid?

We don't know.

We don't know if Euclid was

one person or multiple people?

And you know what?

It doesn't matter.

Euclidian geometry works

whether I know who

Euclid was or not.

Whether Euclid was a

moral and good person.

Or whether he was a corrupt

plutocrat and a bastard.

Science and mathematics

have essential truths

that stands alone

irrespective of its inventors

and irrespective

of their motives.

Well, Bitcoin is a system based

on mathematical truths.

And these mathematical

truths stand alone.

We can read the

source code in Bitcoin

and understand it

and it will be true

whether Satoshi Nakamoto

is a man, a woman,

a collection of individuals,

a government agency

or aliens from the future.

- [Voiceover] Bitcoin

is digital currency

and computer software.

Capital B Bitcoin

is the shared code

that creates a global

payment network,

using computers connected

to the internet.

Bitcoins are virtual currency.

Digital money created, stored

and exchanged on that network.

But unlike virtual dollars

created by a banker,

this new currency

was created with math

by an anonymous inventor.

Bitcoin is an open-source

software protocol,

like much of the code supporting

the internet and email.

Open-source means anyone,

everyone can use the protocol.

No one person or

company can control it.

Every change to the

software is public,

open and transparent.

The code was first

developed by Satoshi.

Then there were

dozens, now hundreds

of programmers

constantly collaborating

to improve Bitcoin's

features and security.

So what makes Bitcoin

a breakthrough?

It tackles an

ancient human dilemma

and solves a computer

science problem.

Any shared information, or data

can be flawed, corrupted.

Anything can be faked.

How do we know that what we're

receiving can be trusted?

- In our traditional mindset,

it's very important

to know who is behind

this currency because

their reputation

is significant in

knowing that our funds

in the true wealth

is actually safe.

- [Voiceover] In

finance, we rely

on trusted third

parties like banks,

credit card companies,

remittance services.

They keep track of

money as it moves

from one account to another.

And they charge us

handsomely for it.

We trust that their

digital ledgers of credits

and debits balance.

A financial system that

cuts out these middlemen

could be faster, cheaper

and more secure.

But Bitcoin is digital.

Music and movies are easily

pirated, copied, stolen.

How can a digital

currency retain value

if anyone can make

a million copies?

The answer is at the core

of Satoshi's invention.

A Bitcoin is not a

file on a computer.

It's an entry in the

publicly- distributed database

called the blockchain.

Just as the Medici kept a

ledger of credits and debits.

Today's banks record

each transaction

as a plus and minus

in their ledgers.

Now we call them databases.

Bank accounts are replaced

by a digital wallet

that you alone control.

Bitcoin's ledger

is the blockchain.

A record of every

bitcoin in existence

and every bitcoin

transaction ever made.

It always balances because

no bitcoin ever leaves it.

When a bitcoin is "sent"

from one digital wallet

to another, what they

are really sending

is control over that

part of the database.

Code that is a unique

key for the new owner.

As the network

processes transactions,

it constantly synchronizes

the one ledger

across the global network.

Each computer, or Bitcoin miner,

has a complete and

identical copy.

And because the

blockchain is public,

it cannot be controlled by

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