The Rise and Rise of Bitcoin Page #2

For years, computer scientists

had been experimenting

with these technologies

to create digital money.

But satoshi discovered

a way to combine them

that had never

been done before.

In doing so,

he invented bitcoin.

There are no records

of nakamoto's existence

prior to the creation

of bitcoin.

On his profile page,

he claimed to be

a 34-year-old man

living in Japan.

Although satoshi nakamoto

is a Japanese name,

he wrote in perfect English

when communicating online

and went through great lengths

to keep his identity unknown.

Nonetheless,

programmers and cryptographers

all across the world recognized the

brilliance of satoshi's design.

And began collaborating with

him to further develop bitcoin.

In October of 2009,

the first exchange rate

was published.

Listing the value

of 1,309 bitcoins at $1.

Bitcoins were cheap,

and through the following year,

they continued to trade

for fractions of a cent.

In the spring of 2010,

a Florida man named laszlo

decided to try using his

bitcoins to purchase something.

He offered 10,000 bitcoins

to anyone who would

buy him pizza.

A man in London accepted

and placed

a long-distance phone call,

ordering him two pizzas

from papa John's.

This is generally acknowledged

as the first bitcoin transaction

for a tangible good.

Bitcoin was

gaining momentum,

but in order

for it to thrive

the coins needed to be

more widely accessible.

A Tokyo-based exchange

named mt. Gox was

the first on the scene

to take hold of the marketplace

and trading volume

started to pick up.

By November 2010,

already 4 million bitcoins

had been mined.

And the exchange price

briefly spiked to 50 per coin.

The market awoke and bitcoin

was starting to look like

it might have real potential

as a currency.

His name is Julian Assange.

Assange and his colleagues

collect confidential information

and then make it public.

The release of 250,000

state department documents

no doubt presents a serious

dilemma for this country.

DANIEL:

Following a massive release

of secret

U.S. diplomatic cables,

donations to wikileaks

were blocked

by bank of America,

visa, mastercard,

PayPal and Western union.

An article in "pc world"

suggested that bitcoin

could be used

as a workaround

to send donations

to wikileaks.

One of satoshi's

last known posts

was in response

to the article and stated...

Shortly after that

satoshi disappeared

from the forums

and was never

heard from again.

Two months later the silk road

anonymous marketplace was launched.

It functioned

as an online black market

for drugs

and other illicit goods

and used bitcoin

exclusively,

because it made

the money trail

nearly impossible

to trace.

The silk road

caught the attention

of New York senator

Charles schumer

who was outraged

and publicly called

for a crackdown

on the site.

Heroin, opium,

cannabis, ecstasy,

- psychedelics, stimulants.

- ( CAMERA CLICKS )

It's unbelievable.

DANIEL:

Throughout all this,

the exchange price

continued to climb.

By February of 2011,

bitcoin reached parity

with the U.S. dollar.

Sparking an influx

of new users and speculators.

By June the price had soared

to a peak of $31

before it came

crashing down.

As the market tanked, the mt.

Gox exchange was hacked,

further shaking

the confidence of investors

and hammering the price

all the way down

to the $2 range

by October.

While bitcoin enthusiasts

kept hope,

skeptics were quick

to share their hindsights

and rants on blogs

and in news articles.

Many thought that

the party was over

and that bitcoin was

on its way out.

I went online and I bought

one bitcoin last night.

Really? It's the future.

I don't know.

It didn't feel real.

No. Real's gonna change.

Just watch.

Today I sent

a total of...

2700 bitcoins

to butterfly labs.

I purchased, basically,

a custom-designed

bitcoin-mining

supercomputer.

If bitcoin fails...

Everything I have

is worthless.

( STAMMERS )

The bitcoins I have,

the computers,

the mining system

was all a waste of money.

But if it succeeds, then...

It will have been worth it,

I think.

( BEEPS ) - The bitcoin economy

was a wild west in cyberspace

that was very attractive

to hackers and scammers.

Over the years,

tens of thousands of coins had been stolen

and 2012 proved no different.

Users had to be careful.

If somebody steals your bitcoins,

there are no consumer protections.

Sorry, they're gone.

You lost your bitcoins? They're gone

and you're not going

to get them back.

But after months of stagnation

on the exchanges,

the bitcoin price was

on the rise again.

The price of bitcoin today

is around $7 u.S.D.,

which just had a nice

little bump this week.

By the end of the year,

the blogging site wordpress

announced it would start

accepting bitcoin payments.

And in early 2013,

the discussion forum reddit

also announced

bitcoin support.

They were the first major sites

to incorporate bitcoin,

and these milestones

signaled the beginning

of mainstream acceptance.

Bitcoin is the most subversive

technology on the planet.

This is a system that is growing

around the entire world.

So if it works,

if this experiment continues to grow,

it doesn't just help a few of us

in this state or in the country,

but it actually helps

everyone around the world.

( PEOPLE CHATTERING )

DANIEL:

As the bitcoin price hovered around

it's previous

all-time high of $31,

I visited a libertarian

conference in New Hampshire.

It lost 20% and then it

gained 20%

in 20 minutes.

It is...

they're silly.

DANIEL:

Libertarians are among

the earliest adopters

of bitcoin.

Its nature as a currency

that isn't controlled

by central banks makes it

attractive to this community.

Once I was able to kind

of grok the basic concept,

it was like, "this is

the perfect money."

DANIEL:

This is what a bitcoin address looks like.

Think of this long string

of characters

as an account number where

your bitcoins are stored.

When you send

or receive bitcoins,

they are sent

to these addresses.

The addresses are

long and hard to remember

so using a phone

to scan a q.R. Code

is a fast and easy way

to read them.

Another good thing to know

is that bitcoins

can be broken down

to eight decimal places.

This means that you can send

fractions of a bitcoin.

So any amount of money

can be represented.

With bitcoin,

every transaction is public.

Everyone can see the amount

that is being sent

without necessarily knowing

the identity of the sender.

These guys even have one

of the first bitcoin a.T.M.S.

You just scan your q.R.

Code on your phone,

put in the dollar bills

and press the button.

Bam. Done.

Perfect.

You now traded your

worthless piece of paper

for real currency.

It's like, "end the fed?"

It's like, seriously, you think

you're gonna end the fed?

You're not gonna end the fed.

You're not gonna change

anything about the fed.

- Transcend the fed.

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