1 00:00:02,600 --> 00:00:07,800 Bitcoin's made some people very rich indeed - at least on paper. 2 00:00:08,440 --> 00:00:11,520 I've made an extraordinary amount of money. 3 00:00:11,520 --> 00:00:13,440 For some investors here, it's a roller-coaster 4 00:00:13,440 --> 00:00:17,040 ride, as values plunge. 5 00:00:17,040 --> 00:00:20,640 My son says, "Hurry up and become a Bitcoin millionaire, mum!" 6 00:00:21,480 --> 00:00:24,720 We discover the power behind Bitcoin. 7 00:00:24,720 --> 00:00:28,600 Every single one of these is a desktop computer. 8 00:00:28,600 --> 00:00:31,800 There are thousands of them. 9 00:00:31,800 --> 00:00:34,920 But is this all just some media hype? 10 00:00:34,920 --> 00:00:39,000 It's human nature to jump on the bandwagon. 11 00:00:39,000 --> 00:00:41,480 It's what every great bubble is made 12 00:00:41,480 --> 00:00:46,440 of and they are calling this the greatest bubble of all time. 13 00:00:46,480 --> 00:00:50,240 And behind the hype, we uncover a plain old-fashioned scam. 14 00:00:57,640 --> 00:00:58,640 Show me the money! 15 00:00:58,640 --> 00:01:02,400 Tonight on Panorama: Who Wants To Be A Bitcoin Millionaire? 16 00:01:13,640 --> 00:01:17,840 Pounds, euros, dollars - they're all currencies 17 00:01:17,840 --> 00:01:21,200 that we know and we recognise. 18 00:01:21,200 --> 00:01:23,640 We might think we could do with a bit more, 19 00:01:23,640 --> 00:01:26,440 but at least we know what money is and how money works. 20 00:01:26,440 --> 00:01:29,600 We keep it in banks and we spend it. 21 00:01:29,600 --> 00:01:33,200 But now there's a new currency which has got everyone talking, 22 00:01:33,200 --> 00:01:35,520 and it's very different. 23 00:01:35,520 --> 00:01:38,280 It's called Bitcoin. 24 00:01:38,840 --> 00:01:40,880 Have you heard of it? 25 00:01:40,880 --> 00:01:42,160 I don't really understand it. 26 00:01:42,160 --> 00:01:44,760 But yes, I have heard about it. 27 00:01:44,760 --> 00:01:48,400 I do and I wish I had got in on it about a decade ago. 28 00:01:48,400 --> 00:01:49,640 That would have been nice. 29 00:01:49,640 --> 00:01:54,880 I know some people are making a lot of money and some people aren't. 30 00:01:59,200 --> 00:02:02,640 I do also think they are a load of nonsense and it's just a con. 31 00:02:02,640 --> 00:02:04,880 I've been following Bitcoin for the past five years, 32 00:02:04,880 --> 00:02:07,520 and even now, there's still a lot of confusion about it. 33 00:02:07,520 --> 00:02:09,400 For one thing, it might be called Bitcoin, 34 00:02:09,400 --> 00:02:11,080 but there aren't actually any physical coins. 35 00:02:11,080 --> 00:02:14,600 Or notes. You can't hold it in your hand. 36 00:02:14,600 --> 00:02:16,960 Bitcoin is a new type of currency called a cryptocurrency, 37 00:02:16,960 --> 00:02:18,480 and it only exists digitally. 38 00:02:18,480 --> 00:02:20,480 Now, actually, there are quite a few types 39 00:02:20,480 --> 00:02:21,520 of cryptocurrencies, 40 00:02:21,520 --> 00:02:26,760 but they all have one thing in common. 41 00:02:29,840 --> 00:02:31,960 They operate completely separately from the normal banking system. 42 00:02:31,960 --> 00:02:34,720 When you buy something with cryptocurrency, 43 00:02:34,720 --> 00:02:39,200 the banks don't handle or check the payment. 44 00:02:39,200 --> 00:02:41,600 In fact, they don't even know about them at all. 45 00:02:41,600 --> 00:02:43,040 There are shops that accept cryptocurrency, 46 00:02:43,040 --> 00:02:45,440 where instead of using your bank card to take money 47 00:02:45,440 --> 00:02:49,920 from your bank account, you scan your phone instead. 48 00:02:49,920 --> 00:02:55,240 Transaction confirmed. 49 00:02:55,360 --> 00:02:56,440 Thank you. 50 00:02:56,440 --> 00:02:59,520 But the reason you've probably heard of Bitcoin is because its value has 51 00:02:59,520 --> 00:03:01,760 gone through the roof. 52 00:03:01,760 --> 00:03:04,880 Even with its recent crashing price, if you'd bought £50 worth of Bitcoin 53 00:03:04,880 --> 00:03:07,480 at the beginning of 2011, it would now be worth more 54 00:03:07,480 --> 00:03:11,240 than £1 million. 55 00:03:11,240 --> 00:03:14,560 I'm going to find out if we've all missed the boat or whether it's 56 00:03:14,560 --> 00:03:17,200 still possible to become a Bitcoin millionaire. 57 00:03:22,120 --> 00:03:24,680 It started as something for computer geeks, but it's now moved 58 00:03:24,680 --> 00:03:27,240 into the mainstream. 59 00:03:27,240 --> 00:03:30,000 This is Millie. 60 00:03:30,000 --> 00:03:35,160 She's a Newcastle mum with three kids and four pugs. 61 00:03:36,080 --> 00:03:38,480 She's been buying and selling books on the side for 62 00:03:38,480 --> 00:03:40,760 almost 15 years. 63 00:03:40,760 --> 00:03:46,000 But now her new hobby is investing in cryptocurrency. 64 00:03:46,960 --> 00:03:48,480 30,000 books I had to hand-sort. 65 00:03:48,480 --> 00:03:53,360 Yeah, it took me a whole year to do it. 66 00:03:53,480 --> 00:03:55,400 Considerably more hard work than dabbling in bitcoin. 67 00:03:55,400 --> 00:03:57,280 My son says, "Don't do the books anymore. 68 00:03:57,280 --> 00:04:00,400 "Hurry up and become a Bitcoin millionaire, mum!" 69 00:04:00,400 --> 00:04:02,960 She heard about it before Christmas and she's been dabbling 70 00:04:02,960 --> 00:04:05,560 for the past couple of months, and has also earned commission 71 00:04:05,560 --> 00:04:10,200 getting family members to buy, too. 72 00:04:10,200 --> 00:04:12,840 What I'm doing at the moment is I'm going to buy 73 00:04:12,840 --> 00:04:18,080 like £100 worth of bitcoin. 74 00:04:18,880 --> 00:04:20,720 Oh, my God, it's like my guilty pleasure. 75 00:04:20,720 --> 00:04:22,400 I'm sneaking a peek all day long. 76 00:04:22,400 --> 00:04:26,440 I bought Bitcoin in the hope that it might improve my life. 77 00:04:26,440 --> 00:04:30,120 If I lose my four or five hundred quid, c'est la vie. 78 00:04:30,120 --> 00:04:32,000 All over the country, little pockets of people 79 00:04:32,000 --> 00:04:37,200 are starting to play around with cryptocurrency. 80 00:04:38,200 --> 00:04:40,760 Over the last few months, it's amazing how bitcoin has moved 81 00:04:40,760 --> 00:04:44,240 into the mainstream. 82 00:04:44,240 --> 00:04:46,360 Tabloid newspapers are doing special features about the latest 83 00:04:46,360 --> 00:04:51,600 cryptocurrencies and which one you should buy. 84 00:04:53,080 --> 00:04:57,120 This has gone very quickly from a tiny, niche little nerdy tech 85 00:04:57,120 --> 00:05:00,160 that a tiny number of people cared about to something that the ordinary 86 00:05:00,160 --> 00:05:04,840 person on the street is suddenly fascinated by. 87 00:05:04,840 --> 00:05:07,960 But while Millie is careful not to invest more than she can afford 88 00:05:07,960 --> 00:05:11,720 to lose, others aren't. 89 00:05:13,400 --> 00:05:17,640 The staggering rise in the value of many cryptocurrencies 90 00:05:17,640 --> 00:05:20,920 has driven some people to take huge risks, even taking out 91 00:05:20,920 --> 00:05:25,160 mortgages to cash in on what they see as a gold rush. 92 00:05:25,160 --> 00:05:29,240 We have begun to ask questions and look at it. 93 00:05:29,240 --> 00:05:34,440 But I don't think anyone in British politics or the regulation system 94 00:05:34,800 --> 00:05:38,960 in our country is going at the right speed, bearing in mind what has 95 00:05:38,960 --> 00:05:44,080 happened within cryptocurrency over the last few months. 96 00:05:45,000 --> 00:05:47,080 Now we seem to have a real live situation. 97 00:05:47,080 --> 00:05:49,520 But Bitcoin's value has gone down as well as up. 98 00:05:49,520 --> 00:05:52,080 If you'd invested £50 just before Christmas, 99 00:05:52,080 --> 00:05:55,680 you'd now have £20. 100 00:05:55,680 --> 00:05:58,200 These recent price crashes have caused some authorities to act. 101 00:05:58,200 --> 00:06:00,880 Just last week, banking giant Lloyds banned its customers 102 00:06:00,880 --> 00:06:04,840 from buying cryptocurrency with their credit cards. 103 00:06:04,840 --> 00:06:08,640 They're worried about people racking up debt. 104 00:06:08,640 --> 00:06:13,800 The idea behind cryptocurrency is that it is a way of storing 105 00:06:13,920 --> 00:06:18,720 money and making purchases without involving the banks. 106 00:06:18,720 --> 00:06:22,000 But remember, the banks don't just hold our money, 107 00:06:22,000 --> 00:06:25,040 they also keep a check on who has paid what. 108 00:06:25,040 --> 00:06:27,800 They are a trusted central point. 109 00:06:27,800 --> 00:06:32,760 So how do you do banking without the banks? 110 00:06:35,120 --> 00:06:37,880 When you want to buy something normally 111 00:06:37,880 --> 00:06:40,400 using your normal bank card, this is what happens. 112 00:06:40,400 --> 00:06:42,360 I give my card details to the shop. 113 00:06:42,360 --> 00:06:46,600 The shop asks the bank if I'm good for the money. 114 00:06:47,560 --> 00:06:52,680 The bank checks its records to see if I have got enough in my account. 115 00:06:53,640 --> 00:06:58,880 If I do, it lets the shop know, it updates its records to show 116 00:06:59,400 --> 00:07:02,640 the movement of money from my account to the shop's. 117 00:07:02,640 --> 00:07:07,240 Oh, and it takes a little cut for its trouble. 118 00:07:07,240 --> 00:07:12,080 Now, if you wanted to remove the bank from that system, 119 00:07:12,080 --> 00:07:15,440 who else would you trust to keep those records, and not alter them 120 00:07:15,440 --> 00:07:18,040 or cheat in any way? 121 00:07:18,040 --> 00:07:21,760 I wouldn't trust you. 122 00:07:21,760 --> 00:07:24,360 I wouldn't trust you! 123 00:07:24,360 --> 00:07:29,520 In fact, I wouldn't trust any single person but I might trust everyone. 124 00:07:32,960 --> 00:07:37,280 The idea is you don't have a central record of transactions. 125 00:07:37,280 --> 00:07:40,040 Instead, you distribute many, many copies of this 126 00:07:40,040 --> 00:07:43,280 ledger around the world. 127 00:07:43,280 --> 00:07:47,960 Each owner of each copy records every transaction. 128 00:07:47,960 --> 00:07:51,760 So there's no way that a forged transaction can make it in. 129 00:07:51,760 --> 00:07:56,880 If I try to alter a ledger, it won't match all the other copies 130 00:07:57,560 --> 00:08:02,560 and it gets rejected. 131 00:08:04,800 --> 00:08:07,400 So to buy something using cryptocurrency, 132 00:08:07,400 --> 00:08:10,320 I give the shop my details. 133 00:08:10,320 --> 00:08:13,960 The shop asks all the book-keepers if I'm good for the money. 134 00:08:13,960 --> 00:08:19,200 The book-keepers all check their records to see if I have enough. 135 00:08:21,160 --> 00:08:25,360 If I do, they tell the shop and then all update their records to show 136 00:08:25,360 --> 00:08:30,600 the movement of money. 137 00:08:34,360 --> 00:08:37,720 Oh, and one of them, at random, will be given a reward of some 138 00:08:37,720 --> 00:08:41,120 newly-created cryptocurrency. 139 00:08:41,120 --> 00:08:43,800 This is how cryptocurrencies work. 140 00:08:43,800 --> 00:08:45,600 And remember, all these book-keepers, all these 141 00:08:45,600 --> 00:08:48,320 ledgers are not people. 142 00:08:49,080 --> 00:08:50,880 They are computers. 143 00:08:50,880 --> 00:08:55,680 Lots of computers. 144 00:08:57,800 --> 00:09:02,880 And I mean a lot. 145 00:09:04,400 --> 00:09:07,800 That random reward for being a book-keeper is an important point. 146 00:09:07,800 --> 00:09:10,400 It was the original incentive for people to use their home 147 00:09:10,400 --> 00:09:13,680 computers to help keep the books. 148 00:09:13,680 --> 00:09:16,920 But I feel the scale of these places is tipping the odds away 149 00:09:16,920 --> 00:09:19,960 from average investors. 150 00:09:21,680 --> 00:09:26,960 Every single one of these is a desktop computer. 151 00:09:28,000 --> 00:09:30,840 There are thousands of them all wired together and all doing 152 00:09:30,840 --> 00:09:36,000 one thing - book-keeping for cryptocurrency. 153 00:09:37,920 --> 00:09:41,880 And because every so often they get that reward of new cryptocurrency, 154 00:09:41,880 --> 00:09:47,120 they call this operation mining. 155 00:09:47,600 --> 00:09:50,400 Now this particular mine contains 20,000 machines, 156 00:09:50,400 --> 00:09:55,200 a very expensive set-up. 157 00:09:55,200 --> 00:10:00,440 As well as the cost of the hardware, 158 00:10:03,440 --> 00:10:05,880 running an outfit of this costs a lot in electricity. 159 00:10:05,880 --> 00:10:07,840 That's not just electricity to power the computers, 160 00:10:07,840 --> 00:10:10,120 but also to power the cooling systems to stop this 161 00:10:10,120 --> 00:10:11,280 lot overheating. 162 00:10:11,280 --> 00:10:15,280 That's why they've put this one in Iceland. 163 00:10:15,280 --> 00:10:17,360 Like a lot of mass computing operations, 164 00:10:17,360 --> 00:10:19,920 north is best. 165 00:10:19,920 --> 00:10:22,800 It means you don't need to run energy-hungry air chillers. 166 00:10:22,800 --> 00:10:27,200 You just suck in that freezing air from outside. 167 00:10:27,200 --> 00:10:30,480 Oh, and the electricity here is geothermal and really cheap, 168 00:10:30,480 --> 00:10:34,720 thanks to the volcanic activity just underground. 169 00:10:34,720 --> 00:10:37,560 Despite all of that, though, this place spends more 170 00:10:37,560 --> 00:10:41,960 than EUR1 million a month on electricity. 171 00:10:41,960 --> 00:10:47,120 So you can imagine how much money they're making. 172 00:10:48,760 --> 00:10:51,680 It's absolutely remarkable that you have these banks of computers, 173 00:10:51,680 --> 00:10:56,480 warehouses full of them all over the world. 174 00:10:56,480 --> 00:10:59,120 All these computers and all the amazing things they could be 175 00:10:59,120 --> 00:11:02,240 doing and all the computing power that could be spent on all sorts 176 00:11:02,240 --> 00:11:07,400 of tasks is being dedicated solely to this one peculiar job 177 00:11:08,240 --> 00:11:12,240 of mining a cryptocurrency. 178 00:11:12,240 --> 00:11:17,360 It's absolutely ridiculous in some ways that this 179 00:11:18,800 --> 00:11:20,720 is what we are using our computers for. 180 00:11:20,720 --> 00:11:22,160 The higher the price of cryptocurrencies, 181 00:11:22,160 --> 00:11:25,080 the more money the miners stand to make and the more mines 182 00:11:25,080 --> 00:11:26,920 spring up. 183 00:11:30,200 --> 00:11:33,440 Thanks to more and more press coverage 184 00:11:33,440 --> 00:11:34,960 and more and more chatter on social media, rumours 185 00:11:34,960 --> 00:11:37,920 of a gold rush have spread. 186 00:11:37,920 --> 00:11:43,160 And in any gold rush, there will be winners and losers. 187 00:11:44,360 --> 00:11:48,840 I know many people are still going to invest, 188 00:11:48,840 --> 00:11:50,480 I understand that. 189 00:11:50,480 --> 00:11:55,720 It's not because you're stupid. 190 00:11:55,960 --> 00:11:57,000 It's humas nature. 191 00:11:57,000 --> 00:11:59,840 There is this incredible thing called a fear of missing out, right? 192 00:11:59,840 --> 00:12:01,600 And it's just such a powerful thing. 193 00:12:01,600 --> 00:12:03,920 And wherever there's the promise of gold, there's also those 194 00:12:03,920 --> 00:12:06,880 who want to exploit the prospectors. 195 00:12:08,360 --> 00:12:12,200 This might look like a rock concert, but it is in fact a recruitment 196 00:12:12,200 --> 00:12:17,320 drive for a cryptocurrency called OneCoin. 197 00:12:20,840 --> 00:12:21,120 Based 198 00:12:21,120 --> 00:12:21,320 Based on 199 00:12:21,320 --> 00:12:23,200 Based on the 200 00:12:23,200 --> 00:12:23,400 Based on the success 201 00:12:23,400 --> 00:12:23,600 Based on the success of 202 00:12:23,600 --> 00:12:23,760 Based on the success of Bitcoin, 203 00:12:23,760 --> 00:12:23,960 Based on the success of Bitcoin, but 204 00:12:23,960 --> 00:12:24,200 better, 205 00:12:24,200 --> 00:12:24,360 better, smarter 206 00:12:24,360 --> 00:12:24,560 better, smarter and 207 00:12:24,560 --> 00:12:24,800 better, smarter and more 208 00:12:24,800 --> 00:12:27,280 better, smarter and more innovative. 209 00:12:27,280 --> 00:12:31,000 OneCoin, we're told, will make us rich beyond our wildest dreams. 210 00:12:32,960 --> 00:12:37,200 Layla got interested in cryptocurrency after a trusted 211 00:12:37,200 --> 00:12:39,640 friend, and OneCoin salesman, asked her along to 212 00:12:39,640 --> 00:12:42,880 one of the meetings. 213 00:12:42,880 --> 00:12:45,400 It took me 20 years to save up this money. 214 00:12:45,400 --> 00:12:49,160 I made lots of sacrifices with two jobs while studying, 215 00:12:49,160 --> 00:12:53,600 and the aim was ideally to get on the property ladder, 216 00:12:53,600 --> 00:12:55,440 use it for my marriage, and also to help my mother 217 00:12:55,440 --> 00:12:58,160 and my brother. 218 00:12:58,160 --> 00:13:02,200 Layla attended a seminar similar to this one 18 months ago in London. 219 00:13:02,200 --> 00:13:05,600 It encouraged people to sign up to a scheme to help spread the word 220 00:13:05,600 --> 00:13:08,920 about the OneCoin cryptocurrency. 221 00:13:08,920 --> 00:13:14,160 So Panorama decided to go undercover to see the hard sell for ourselves. 222 00:13:14,240 --> 00:13:16,000 We wanted to investigate how unsuspecting investors 223 00:13:16,000 --> 00:13:20,760 are lured by OneCoin to part with their hard-earned cash. 224 00:13:26,560 --> 00:13:29,440 Layla felt pressured by the salesman. 225 00:13:29,440 --> 00:13:34,680 Handing over £32,500 of her savings in just one day. 226 00:13:36,480 --> 00:13:40,000 He then went on to telling me there was a guaranteed return 227 00:13:40,000 --> 00:13:42,360 of more than £400,000 and I was making the best 228 00:13:42,360 --> 00:13:45,240 decision of my life. 229 00:13:51,760 --> 00:13:55,200 I then told my mum, my sister and that totalled up 230 00:13:55,200 --> 00:13:59,040 to £56,000. 231 00:13:59,360 --> 00:14:02,000 Listening to the sales pitch, you can see why the family 232 00:14:02,000 --> 00:14:04,360 thought they'd struck gold. 233 00:14:12,440 --> 00:14:13,800 What do you earn a year? 234 00:14:13,800 --> 00:14:15,000 Six figures is good, right? 235 00:14:15,000 --> 00:14:16,200 We make 35,000 a week. 236 00:14:16,200 --> 00:14:18,560 We should have listened to you a long time ago 237 00:14:18,560 --> 00:14:20,800 and if you did you'd be a multi millionaire. 238 00:14:20,800 --> 00:14:23,600 You can make millions of pounds and very quickly. 239 00:14:25,920 --> 00:14:27,160 Not so for Layla though. 240 00:14:27,160 --> 00:14:32,000 Shortly afterwards she discovered she'd lost access to all her money. 241 00:14:32,000 --> 00:14:34,800 And that's when I realised that I had just made the poorest 242 00:14:34,800 --> 00:14:38,280 decision in my life. 243 00:14:38,280 --> 00:14:39,680 Last month, the Bulgarian authorities raided 244 00:14:39,680 --> 00:14:40,720 OneCoin's headquarters 245 00:14:40,720 --> 00:14:42,000 and shut down their servers. 246 00:14:42,000 --> 00:14:45,760 It is one of many investigations from around the globe. 247 00:14:45,760 --> 00:14:50,360 Several of OneCoin's representatives were arrested in Britain. 248 00:14:50,360 --> 00:14:52,720 In a statement to Panorama, OneCoin told us they have 249 00:14:52,720 --> 00:14:54,720 offered full cooperation and are collaborating 250 00:14:54,720 --> 00:14:57,600 with all authorities to finalize the case as soon as possible. 251 00:14:57,600 --> 00:15:00,240 However, they claim that Layla had gathered enough information to take 252 00:15:00,240 --> 00:15:03,840 an informed decision. 253 00:15:03,840 --> 00:15:07,960 And that she had received, activated and used her accounts. 254 00:15:07,960 --> 00:15:10,120 Therefore we consider that there is no legal reason 255 00:15:10,120 --> 00:15:14,200 for claiming a refund from the company. 256 00:15:15,800 --> 00:15:16,920 Today, Layla is shattered. 257 00:15:16,920 --> 00:15:19,320 She's lost her life savings in what is essentially 258 00:15:19,320 --> 00:15:23,280 an old fashioned pyramid scam, using cyrptocurrency hype. 259 00:15:23,280 --> 00:15:26,200 And she's not the only victim. 260 00:15:26,200 --> 00:15:28,840 The authorities say they need more help from legislators to bring 261 00:15:28,840 --> 00:15:33,680 this area under control. 262 00:15:33,680 --> 00:15:36,560 We need the help of regulators, we need the help of legislators, 263 00:15:36,560 --> 00:15:39,440 particularly to crack down on these high valued investment scams 264 00:15:39,440 --> 00:15:44,680 and you know this trend of fools' gold effectively that is offered 265 00:15:44,760 --> 00:15:48,720 to people as they seek to cash in on the Bitcoin frenzy 266 00:15:48,720 --> 00:15:52,240 and are just scams - perfect scams and because it's not 267 00:15:52,240 --> 00:15:54,880 regulated there is no means by which the investor can make 268 00:15:54,880 --> 00:15:59,520 an informed decision as to if it's safe to invest my money in this. 269 00:15:59,520 --> 00:16:02,200 I think that to date cryptocurrency has not been on Parliament's 270 00:16:02,200 --> 00:16:04,400 agenda or on the agenda in Whitehall that much. 271 00:16:04,400 --> 00:16:07,880 I think probably hand on heart we have all been too slow, 272 00:16:07,880 --> 00:16:10,280 but the opportunity is not lost, and we should get 273 00:16:10,280 --> 00:16:12,200 on with the job now. 274 00:16:12,200 --> 00:16:14,360 As the authorities struggle with regulation, the most powerful 275 00:16:14,360 --> 00:16:18,640 online platform has decided to act. 276 00:16:18,640 --> 00:16:22,440 Facebook has banned adverts that promote cryptocurrency and these 277 00:16:22,440 --> 00:16:23,600 recruitment events - these so-called 278 00:16:23,600 --> 00:16:28,160 Initial Coin Offerings. 279 00:16:28,160 --> 00:16:30,800 But away from some out-and-out cons, there are other ways that 280 00:16:30,800 --> 00:16:35,280 cryptocurrencies can be used to subvert the system. 281 00:16:35,280 --> 00:16:39,280 Remember how cryptocurrencies bypass the banks? 282 00:16:39,280 --> 00:16:41,160 Well, that means that your transactions are very, 283 00:16:41,160 --> 00:16:46,400 very hard for the authorities to regulate or trace. 284 00:16:46,800 --> 00:16:49,400 So if you happen to have a few million that's difficult 285 00:16:49,400 --> 00:16:51,520 to move around the world, Bitcoin could be the 286 00:16:51,520 --> 00:16:54,120 perfect system for you. 287 00:17:03,520 --> 00:17:08,800 So, here we have a beautiful property, it's 4,800 square feet. 288 00:17:11,400 --> 00:17:14,120 The asking prices is 17.5 million pounds and this property 289 00:17:14,120 --> 00:17:16,120 is available to be acquired in Bitcoin, in fact that's 290 00:17:16,120 --> 00:17:17,320 the prefered method for payment. 291 00:17:17,320 --> 00:17:20,560 Eleesa Dadiani is a London art gallery owner who brokers deals 292 00:17:20,560 --> 00:17:25,840 between ultra-rich sellers and ultra-rich buyers. 293 00:17:27,080 --> 00:17:29,480 Fine art, F1 cars, precious stones, bullion, fine wine, bloodstock, 294 00:17:29,480 --> 00:17:33,280 thoroughbred horses... 295 00:17:33,280 --> 00:17:35,400 all the normal categories. 296 00:17:35,400 --> 00:17:38,240 So we have a new breed of high net-worth individual who've made 297 00:17:38,240 --> 00:17:43,080 a lot of money with cryptocurrency. 298 00:17:43,080 --> 00:17:46,160 So now we have a problem. 299 00:17:46,160 --> 00:17:49,240 How do we cash in these holdings? 300 00:17:49,240 --> 00:17:52,040 So there's another way of doing things. 301 00:17:52,040 --> 00:17:56,680 Move from crypto into tangible assets. 302 00:17:56,680 --> 00:17:59,480 I mean it's a great problem to have. 303 00:17:59,480 --> 00:18:01,600 And this is where the unregulated nature of cryptocurrency 304 00:18:01,600 --> 00:18:06,840 really comes into its own. 305 00:18:07,840 --> 00:18:09,880 One of the reasons to not use conventional currency 306 00:18:09,880 --> 00:18:11,000 is because you can't. 307 00:18:11,000 --> 00:18:16,200 A lot of clients are from China, Russia... 308 00:18:25,400 --> 00:18:28,600 And these are people who are willing to put a lot of money 309 00:18:28,600 --> 00:18:30,040 into the UK market for example. 310 00:18:30,040 --> 00:18:32,400 How do you move this money from a sanctioned nation 311 00:18:32,400 --> 00:18:33,440 like Russia, for example? 312 00:18:33,440 --> 00:18:35,120 How do you move this money here? 313 00:18:35,120 --> 00:18:37,760 If you are under the sanctioned domain, you will have probably 314 00:18:37,760 --> 00:18:40,400 had your money frozen at some point, you have banks controlling 315 00:18:40,400 --> 00:18:43,080 what and how you spend your money, transactions being flagged up 316 00:18:43,080 --> 00:18:45,240 even though there's nothing wrong with them but just 317 00:18:45,240 --> 00:18:47,120 because they don't look like your normal transactions. 318 00:18:47,120 --> 00:18:49,520 You're probably going to acquire cryptos, and then very easily 319 00:18:49,520 --> 00:18:51,560 transcend that handicap. 320 00:18:51,560 --> 00:18:54,240 Eleesa stresses she does stringent checks on clients to make 321 00:18:54,240 --> 00:18:57,880 sure their money is clean before she deals with them. 322 00:18:57,880 --> 00:19:02,280 Others are not as scrupulous. 323 00:19:02,280 --> 00:19:07,440 One of the things around crypto currencies is that they have come 324 00:19:08,600 --> 00:19:11,200 along at a time when anti-money laundering and know your client 325 00:19:11,200 --> 00:19:14,920 regulations has reduced the supply of legitimate money to the illegal 326 00:19:14,920 --> 00:19:17,160 economy and so we have seen a substitute coming 327 00:19:17,160 --> 00:19:22,240 through in the form of Bitcoin. 328 00:19:22,280 --> 00:19:24,880 This ability to make payments, which avoid going through the banks, 329 00:19:24,880 --> 00:19:29,160 is what really kick-started Bitcoin. 330 00:19:29,160 --> 00:19:33,840 By making it the digital currency of choice for criminals. 331 00:19:33,840 --> 00:19:36,920 Since its earliest days, websites on the darknet have allowed 332 00:19:36,920 --> 00:19:39,080 the trade of illegal goods like drugs and weapons, 333 00:19:39,080 --> 00:19:42,160 with Bitcoin considered a safe way to make payments and even pass funds 334 00:19:42,160 --> 00:19:47,400 to terrorist organisations. 335 00:19:47,920 --> 00:19:50,280 But it's the use of cryptocurrencies to hide money earned 336 00:19:50,280 --> 00:19:55,560 through crime which is particularly worrying authorities. 337 00:19:56,960 --> 00:19:59,520 There are three to four billion pounds worth of dirty money 338 00:19:59,520 --> 00:20:04,480 being laundered each year in Europe through virtual currencies. 339 00:20:04,480 --> 00:20:06,720 It's still a small proportion of the overall amount, 340 00:20:06,720 --> 00:20:09,360 but it's quickly growing. 341 00:20:09,360 --> 00:20:12,400 And of course because this is an unregulated area, 342 00:20:12,400 --> 00:20:14,280 highly anonymised, it's very difficult for the police 343 00:20:14,280 --> 00:20:19,560 in most cases to identify who is actually cashing this out. 344 00:20:20,360 --> 00:20:23,600 But we're also seeing a trend where drug money 345 00:20:23,600 --> 00:20:26,400 is being converted into Bitcoins - cash buying Bitcoins and then 346 00:20:26,400 --> 00:20:29,480 the criminals distributing that money through multiple accounts used 347 00:20:29,480 --> 00:20:31,200 by individuals that are not seemingly connected 348 00:20:31,200 --> 00:20:35,800 with a criminal organisation. 349 00:20:35,800 --> 00:20:39,640 There are then darker sides to Bitcoin and virtual currencies, 350 00:20:39,640 --> 00:20:43,240 but there is also a lot of money to be made - if you get 351 00:20:43,240 --> 00:20:48,400 your timing right. 352 00:20:49,880 --> 00:20:55,040 I'm travelling to the heart of this new movement - San Francisco. 353 00:20:55,160 --> 00:20:57,520 In the 60's, this city brought the world hippy culture 354 00:20:57,520 --> 00:21:02,800 and free thinking ideas. 355 00:21:03,840 --> 00:21:06,040 Today, it's an anti-bank revolution the people here want. 356 00:21:06,040 --> 00:21:08,640 And these early adopters are far more interested in cold hard 357 00:21:08,640 --> 00:21:13,880 cash than free love. 358 00:21:14,240 --> 00:21:16,840 I've come to the Cryptocastle - a New Age commune of 359 00:21:16,840 --> 00:21:21,640 which Jeremy Gardner is the king. 360 00:21:21,640 --> 00:21:23,520 So tell them to look at the volatility. 361 00:21:23,520 --> 00:21:26,920 It's something you google. 362 00:21:26,920 --> 00:21:28,000 Look at Bitcoin. 363 00:21:28,000 --> 00:21:30,200 Now "The Castle" is actually a three storey house 364 00:21:30,200 --> 00:21:34,800 which this 25-year-old sublets to other cryptocurrency enthusiasts. 365 00:21:34,800 --> 00:21:37,920 I am surprised there are so many bunk beds in a house that 366 00:21:37,920 --> 00:21:39,320 accommodates so many millionaires? 367 00:21:39,320 --> 00:21:41,400 The millionaires, once they make their millions, move out. 368 00:21:41,400 --> 00:21:43,120 Right. 369 00:21:43,120 --> 00:21:46,240 In 2013, he put all his savings into cryptocurrency, 370 00:21:46,240 --> 00:21:51,320 and after four years of growth... 371 00:21:51,400 --> 00:21:53,760 I've made an extraordinary amount of money relative 372 00:21:53,760 --> 00:21:58,480 to what I ever conceived. 373 00:21:58,480 --> 00:22:03,720 To me, crypto assets are like social security for millennials. 374 00:22:04,120 --> 00:22:07,000 In theory, young people who invest today have the potential to see 375 00:22:07,000 --> 00:22:09,240 a lot of their wealth being generated just 376 00:22:09,240 --> 00:22:11,840 by holding these crypto assets as they appreciate in value over 377 00:22:11,840 --> 00:22:17,120 the next years and decades. 378 00:22:17,400 --> 00:22:19,200 It's an investment opportunity of a lifetime. 379 00:22:19,200 --> 00:22:24,400 I've lived through crashes in the value of these assets before 380 00:22:25,600 --> 00:22:28,440 and if my net worth dropped 95% tomorrow, it would have no 381 00:22:28,440 --> 00:22:31,160 effect on my happiness. 382 00:22:31,160 --> 00:22:34,040 It strikes me that even if it drops 95% you are still 383 00:22:34,040 --> 00:22:35,240 going to be very wealthy. 384 00:22:35,240 --> 00:22:37,680 I'd still be fine. 385 00:22:37,680 --> 00:22:41,920 You know I don't want to come across as too obnoxious. 386 00:22:44,240 --> 00:22:47,600 Hang around with these guys for just a little while and you do get 387 00:22:47,600 --> 00:22:49,480 the sense that something really is happening here. 388 00:22:49,480 --> 00:22:50,720 They talk a good game. 389 00:22:50,720 --> 00:22:55,920 But Jeremy is only a Bitcoin millionaire. 390 00:22:56,760 --> 00:22:59,360 Next stop, a billionaire - recently named by Forbes as one 391 00:22:59,360 --> 00:23:03,200 of the richest cryptocurrency investors on earth and one who truly 392 00:23:03,200 --> 00:23:08,480 believes it will change everything. 393 00:23:09,720 --> 00:23:11,600 This is the future. 394 00:23:11,600 --> 00:23:13,960 You're not going to use pounds and dollars and euros 395 00:23:13,960 --> 00:23:16,880 and whatever anymore. 396 00:23:16,880 --> 00:23:21,360 In five years, you're going to walk into a Starbucks and you're 397 00:23:21,360 --> 00:23:23,960 going to try and pay the pounds or dollars or euros 398 00:23:23,960 --> 00:23:25,800 and he or she will laugh at you. 399 00:23:25,800 --> 00:23:28,240 He or she will laugh at you and they'll say, 400 00:23:28,240 --> 00:23:31,040 wait a minute, don't you have any Bitcoin? 401 00:23:31,040 --> 00:23:34,320 Tim Draper owns hundreds of millions of dollars worth 402 00:23:34,320 --> 00:23:36,960 of cryptocurrency himself - so maybe it is in his interest 403 00:23:36,960 --> 00:23:39,400 to talk up its value. 404 00:23:39,400 --> 00:23:43,280 Mind you, back in 2014, he did predict, almost to the month, 405 00:23:43,280 --> 00:23:47,640 that the value of one Bitcoin would hit $10,000. 406 00:23:47,640 --> 00:23:52,760 But now he accepts that that value may be out of control. 407 00:23:55,760 --> 00:23:57,080 Bang the gong. 408 00:23:57,080 --> 00:24:02,280 It could easily go to one million or 2000 per Bitcoin in any given 409 00:24:03,520 --> 00:24:08,240 period of time because depending on people's perception and how 410 00:24:08,240 --> 00:24:11,120 excited they are and how the press portrays it and how governments 411 00:24:11,120 --> 00:24:16,400 push it around. 412 00:24:17,960 --> 00:24:20,320 This is the greatest thing that's happened to the world 413 00:24:20,320 --> 00:24:24,720 economy in centuries. 414 00:24:24,720 --> 00:24:27,320 Depending on who you talk to, you get two very different 415 00:24:27,320 --> 00:24:32,600 visions of cryptocurrency. 416 00:24:33,400 --> 00:24:36,040 It's either the future of money, and you should grab it 417 00:24:36,040 --> 00:24:37,040 and get in early... 418 00:24:37,040 --> 00:24:38,120 Or... 419 00:24:38,120 --> 00:24:40,520 This is something to me which is a classic bubble. 420 00:24:40,520 --> 00:24:42,880 It's an irrational movement in prices and ultimately I think 421 00:24:42,880 --> 00:24:48,040 investors who put money into this risk losing a lot. 422 00:24:53,200 --> 00:24:56,200 The process of building a bubble means that individual investors have 423 00:24:56,200 --> 00:24:58,560 to have almost a religious faith in the future value 424 00:24:58,560 --> 00:25:03,920 of the crypto currency. 425 00:25:05,680 --> 00:25:10,880 And because they believe this is going to unlock 426 00:25:12,640 --> 00:25:15,040 riches in the future, they are prepared to pay more 427 00:25:15,040 --> 00:25:16,480 and more money for that today. 428 00:25:16,480 --> 00:25:18,320 And the bubble keeps on inflating. 429 00:25:18,320 --> 00:25:22,040 At some point either the price becomes too absurd or circumstances 430 00:25:22,040 --> 00:25:25,240 change or it's revealed that there is not going to be 431 00:25:25,240 --> 00:25:27,440 any fantastic value in the future and the bubble 432 00:25:27,440 --> 00:25:32,680 will come crashing down. 433 00:25:35,400 --> 00:25:38,240 The hype and excitement surrounding the promise of riches is all too 434 00:25:38,240 --> 00:25:43,520 familiar to this guy. 435 00:25:44,880 --> 00:25:46,960 The key to making money is to position yourself 436 00:25:46,960 --> 00:25:49,000 before the settlement. 437 00:25:49,000 --> 00:25:52,640 Played by Leonardo DiCaprio in the film The Wolf of Wall Street, 438 00:25:52,640 --> 00:25:55,320 Jordan Belfort made a fortune from persuading ordinary people 439 00:25:55,320 --> 00:25:58,360 to invest in shares he promised would inflate in value, 440 00:25:58,360 --> 00:26:00,240 before the scheme collapsed and he pleaded guilty 441 00:26:00,240 --> 00:26:05,440 to fraud charges in 1999. 442 00:26:06,480 --> 00:26:08,280 If anyone knows about cons and bubbles, it's Belfort, 443 00:26:08,280 --> 00:26:13,600 and he doesn't see Bitcoin - or any cryptocurrency - ending well. 444 00:26:14,200 --> 00:26:19,080 So what would the Wolf have made of Bitcoin? 445 00:26:19,080 --> 00:26:22,160 God, if I had Bitcoin back when that was, thank god I didn't. 446 00:26:22,160 --> 00:26:24,800 Right, I would have made $50 billion seriously, this is so, 447 00:26:24,800 --> 00:26:28,480 it's almost a mirror image of what was happening at my company. 448 00:26:28,480 --> 00:26:33,680 Belfort says he recognises all the signs of market manipulation. 449 00:26:34,200 --> 00:26:37,120 They're out there putting out these sort of false narratives and these 450 00:26:37,120 --> 00:26:40,200 half truths that if you read them or hear them and don't fully 451 00:26:40,200 --> 00:26:44,040 understand the big picture, it is very easy to think 452 00:26:44,040 --> 00:26:46,880 that they are right, that this thing is going to the stars, 453 00:26:46,880 --> 00:26:52,160 it's going to be the next big thing and that you throw your money in... 454 00:26:56,240 --> 00:26:58,680 People are mortgaging their homes, people are taking loans out 455 00:26:58,680 --> 00:27:00,560 on their credit cards, they're putting their last 456 00:27:00,560 --> 00:27:01,680 dollars into Bitcoin. 457 00:27:01,680 --> 00:27:04,800 You know the ones at the end of the day that typically get 458 00:27:04,800 --> 00:27:06,880 slaughtered the most are the average mums and dads. 459 00:27:06,880 --> 00:27:10,040 So far, Millie has lost a small amount of money on her trades 460 00:27:10,040 --> 00:27:12,720 but she is still hoping for good returns. 461 00:27:12,720 --> 00:27:15,400 I'd like to buy a house, I'd like to leave my 462 00:27:15,400 --> 00:27:17,400 children lots of money. 463 00:27:17,400 --> 00:27:21,240 I think I want all the things that other people want, 464 00:27:21,240 --> 00:27:22,640 just the normal stuff, enough money to open 465 00:27:22,640 --> 00:27:24,680 a pug sanctuary! 466 00:27:24,680 --> 00:27:28,560 But maybe the idea of becoming a Bitcoin millionaire 467 00:27:28,560 --> 00:27:31,320 is a perversion of the real, original intention of Bitcoin - 468 00:27:31,320 --> 00:27:33,920 to reinvent money - to move power away from the few, 469 00:27:33,920 --> 00:27:39,120 and give it to the many. 470 00:27:40,960 --> 00:27:42,360 These currencies are here to stay. 471 00:27:42,360 --> 00:27:45,000 They might fall in value, they might rise in value 472 00:27:45,000 --> 00:27:47,400 but the underlying tech is not going anywhere and more 473 00:27:47,400 --> 00:27:52,600 and more people are going to start using them. 474 00:27:53,120 --> 00:27:55,920 And I don't think governments are ready for that yet. 475 00:27:55,920 --> 00:27:58,000 The people behind cryptocurrencies designed an almost perfect way 476 00:27:58,000 --> 00:28:03,240 to wrest control from the financial system - and governments. 477 00:28:04,480 --> 00:28:06,960 But I wonder if they expected their model to be 478 00:28:06,960 --> 00:28:12,200 jumped on by investors, scammers, and criminals. 479 00:28:13,240 --> 00:28:15,880 And I wonder if they thought they could escape the grip 480 00:28:15,880 --> 00:28:18,480 of the financial authorities that they so railed against. 481 00:28:18,480 --> 00:28:20,840 As those authorities start to awake, the battle to impose 482 00:28:20,840 --> 00:28:26,000 control on cryptocurrencies is only just beginning.