All language subtitles for NOVA S49E17 Crypto Decoded 1080p WEB h264-BAE (1)_track3_[eng]

♪ ♪

NARRATOR:
Cryptocurrencies.

With names like Bitcoin,
Ethereum, and Dogecoin,

today there are
thousands of them.

But what are they
and how do they work?

JANE PAULEY:
You can't hold it,

often you can't spend it.

FINN BRUNTON:
We're looking at something
that is

20% a working technology

and 80% a utopian vision
of how society could be.

NARRATOR:
Are they a flash in the pan?

ISAIAH JACKSON:
The future of crypto is that

99% of projects will be
rendered useless.

NARRATOR:
Or a new technology that's
here to stay?

SHEILA WARREN:
It's not going to vanish.

What it's used for

has yet to be fully determined.

REPORTER:
The art world has been

turned upside down again.

BRUNTON:
You have built a functional
replacement for

a lot of what a credit card
company or a bank does.

NARRATOR:
"Decoding Crypto,"

right now on "NOVA."

♪ ♪

NARRATOR:
Revolution...
Game-changer...

I'm a millionaire!

NARRATOR:
Experiment doomed to fail...

JACKSON:
The future of crypto is that

99% of projects will be
rendered useless.

REPORTER:
The carnage in the crypto world
continued today.

It is impossible to understand

where this is going.

NARRATOR:
There's no question
cryptocurrency

is having a moment.

Bitcoin is a new kind of money.

NFTs are sweeping the art world.

CLEVE MESIDOR:
Cryptocurrency is a
trillion-dollar market.

It cannot be ignored.

NARRATOR:
What is crypto anyway?

PAULEY:
You can't hold it.

Often you can't spend it.

Technologically,
it's incredibly interesting.

REPORTER:
Cryptocurrency kiosks
are appearing nationwide.

NARRATOR:
Crypto is a global phenomenon--

adopted by countries,

embraced by refugees,

and used by millions
around the globe.

Most people have heard of
Bitcoin--

the most well-known among
thousands of cryptocurrencies--

but find it confusing.

JOHN OLIVER:
Everything you don't understand
about money,

combined with everything
you don't understand

about computers.

NARRATOR:
It's talked about all the time

by people who claim to be
in the know.

I'm getting into crypto,
with FTX, you in?

NARRATOR:
Investors and speculators
have both made

and lost great deals of money.

WARREN:
But it's not at all

just about money.

It has a lot of different
applications,

many of which have very little
to do with financial services.

NARRATOR:
Some warn of possible perils.

NEHA NARULA:
There's a lot of hucksters

out there who are just trying to
sell their snake oil.

Fraudsters are buying
and selling millions of dollars

in illegal digital assets.

NARRATOR:
While others claim crypto

is a groundbreaking technology
with nearly unlimited uses.

The Constitution of the United
States is going up on auction.

Sold-- $41 million!
(cheers and applause)

Whether it's a movie or
it's our housing contracts.

A market for climate action.

NARRATOR:
Where did it come from?

BRUNTON:
This is one of the most

significant technologies

to have been created by someone
who is still wholly anonymous.

NARRATOR:
How does it work?

KEVIN McCOY:
It was just like,

"Whoa, that's amazing."

NARRATOR:
Is it just hype?

LANA SWARTZ:
Crypto has been embraced

by the mainstream,
but not in a way

that achieves any of its
original goals.

NARRATOR:
Or is it revolutionizing money
and more?

It's a safe and easy way
to get into crypto.

Eh... I don't think so.

♪ ♪

♪ ♪

NARRATOR:
Real estate investor Vernon J.

is trying to use a new kind of
money to reinvigorate

East New York, Brooklyn.

He thinks crypto could be the
key to expanding ownership

in neighborhoods like this one.

This may not be what
most people think of

when they hear "cryptocurrency,"

but some believe ideas like his

represent crypto's
true potential.

Hey...
Yo.

What's going on brother?
Good.

Yo, this is it?
This is it. Let's do it!

Let's check it out.
Let's do it.

NARRATOR:
Vernon and his business partner,

computer programmer Akil Ash,

plan to reclaim properties

like this vacant lot
to build affordable housing

owned and managed by people

who want to improve
the neighborhood.

VERNON:
We hope to get community
members to be able to

invest with us

where people from the community

can own fractions of

the property, can gain access

to the income

from that property forever.

Each token is worth $100.

NARRATOR:
Rather than go to a bank
for a loan,

Vernon is going to use
a new financial technology

to mint something called
a digital token,

which can be bought and sold
in a digital marketplace.

VERNON:
So these are the
EquityCoin investors.

So these are their

wallet addresses

where they get
sent their EquityCoin to.

NARRATOR:
Vernon's project,
known as EquityCoin,

is a risky experiment and
success is far from assured.

If it succeeds,
the community may benefit.

We'll be able to
restore this; it doesn't need...

NARRATOR:
If it fails, he and his
investors could lose real money.

♪ ♪

Today, there are thousands of
cryptocurrencies

launched by entrepreneurs,
coders, even artists.

Among them
are passionate advocates

who believe their projects

are evidence that crypto has

the potential to address
a wide range of

society's problems.

But that potential has yet
to be realized.

(pulls window up)

BRUNTON:
When we look at a technology
like cryptocurrency,

we're looking at something
that is

20% a working technology

and 80% a utopian vision

of how society could be.

♪ ♪

GRUNDFEST:
The technology is
several steps ahead

of where the regulatory
infrastructure is.

♪ ♪

NARRATOR:
Cryptocurrencies
are sporadically regulated,

and depending on who you ask,

many, most, or all
are doomed to fail.

WARREN:
There have been accusations
that all crypto

is a Ponzi scheme.

What I would say is that there
are tokens and projects

where the token will ultimately
wind up having no value.

I do think, however,

there is a period of time

in any innovation

where you just have to figure it
out

and you're going to have to
throw a lot of things

at the wall and see what sticks.

We're in that time right now.

♪ ♪

NARRATOR:
Supporters claim crypto is
superior to traditional money,

but to understand why,
it's best to start

with a deceptively simple
question:

what is money, anyway?

♪ ♪

ELLEN FEINGOLD:
Money has come in many forms
throughout human history.

And while we are all
very familiar with

coins and banknotes,

many other objects have
circulated

and been used in exchange.

NARRATOR:
This is part of the largest
historical collection of money

in the world.

Located at the Smithsonian
Museum in Washington, D.C.,

"The Value of Money" exhibit
features hundreds of objects

representing currency from
every inhabited continent,

spanning more than 3,000 years.

FEINGOLD:
They range from seashells,

large metal plates, clamshells,

large stone disks often known
as Rai from the island of Yap.

Really, anything can be used
as money

as long as a community
agrees to use it

and decides on a value.

NARRATOR:
Money has existed in one form
or another

for longer than written history.

But the fact it takes so many
forms raises another

interesting question:
how "real" is any of it?

BRUNTON:
All money is collective
belief, right?

Money that you alone believe
is valuable

is no more useful to you than
a language that only you speak.

Money relies on the ability
of large groups of people

to arrive at a shared consensus
about how much something

is worth and that it will be
worth that more or less

into the future.

NARULA:
There are some elements of,
you know,

is this a good form of money?

Can it be transacted easily?

Can it be transported?

Is it going to be inflated?

But beyond that, it's belief.

It's belief that it will

continue to be valuable

to people in the future.

SWARTZ:
It's sort of

a necessary fiction.

It's something that enables us

to communicate,

to have an economy,

to make basic transactions.

NARRATOR:
History reminds us that

virtually anything can be used
as money as long as

enough people believe
in its value.

Even in America,
what functions as money

has sometimes been quite fluid.

In fact, for nearly a century,

before the wide adoption
of the dollar,

people put their faith
in local currencies.

FEINGOLD:
The Constitution gave the
federal government

the right to coin money,

to establish
a national mint in 1792.

But it was silent on what
should happen with banknotes.

So instead, each of the states
issued charters

to banks and
private businesses,

enabling them to design
and print their own money

at whatever denomination
and quantity that they wanted.

And as a result, there were over
8,000 different banks

and private entities
making their own banknotes,

and you can imagine just how
wild and diverse that was.

There's no central bank or
overarching entity telling you

you could put your faith
in this and you can trust it.

NARRATOR:
Crypto is only the latest
new form of money,

and as most who've heard of
Bitcoin know, it's digital.

But since many of our
daily transactions

are already electronic
and don't involve touching

physical currency,
it's reasonable to ask:

how is this different?

SWARTZ:
We've been paying electronically

for a very long time.

You know, you swipe a card,

one account gets debited,

another account gets credited
and we kind of

don't really think about what
happens under the hood.

BRUNTON:
But all of that is still doing

fundamentally the same thing.

It is telling a third party,

someone who has access
to a ledger, like your bank,

that they would like to move the
following units on that ledger

from your account to
somebody else's account.

NARRATOR:
Today, we've come to
depend on banks

and credit card companies to
keep track of where our money is

and manage the flow
of digital payments.

Cryptocurrencies may seem
no different,

but there's an
important distinction.

They aim to do away with
the middlemen,

like banks who may decide,
fairly or unfairly,

who to loan money to,

and even governments,
who control the money supply.

What if we could remove all of
those intermediary players

and I could directly give you
the amount that I owed to you?

BRUNTON:
How can we have a ledger system
that exists just between us

that doesn't need us to rely on
an institution

to keep track of it for us?

If you can build a system
like this that actually works,

you have built a functional
replacement for a lot of what

a credit card company
or a bank does.

♪ ♪

NARRATOR:
It's not the kind of problem
that would keep

the average person up at night.

But for some
computer scientists,

and privacy advocates, building
a new financial technology

seemed of paramount importance.

MARK MILLER:
"How often or in what system
the thought police plugged in

"on any individual wire
was guesswork.

"It was even conceivable
that they watched everybody

"all the time.

"You had to live, did live,
from habit that became instinct

"in the assumption that every
sound you made was overheard

"and except in darkness,

every movement scrutinized."

in the late 1970s.

In the wake of Watergate
and the Vietnam War,

trust in the government was low,

and Miller was one of many

for whom George Orwell's classic
dystopian novel

seemed prophetic.

MILLER:
We were very terrified of the
totalitarian future that

"1984" had painted and we really

took it on as our responsibility

to figure out how to build
a system

that would be a tool
of liberation,

not a tool of oppression.

NARRATOR:
Universities were experimenting

with the first networked
computers.

What had originally been
designed as a Cold War

missile defense system
was laying the foundation

for what would become
today's internet.

Though initially,
only a handful of computers

existed on this
national network,

it was already clear
these interconnected machines

were going to radically
change communication.

At the same time,
networked computers could give

governments and others new ways
to monitor messages

and spy on citizens.

So some researchers were intent
on developing a new kind

of cryptography that would keep
communications secure.

BRUNTON:
The history of cryptography
for thousands of years

is defined by
one single problem.

No matter how you make
your code, right,

the key that you use to encrypt
the message needs to be

the same key as the other person
has to decrypt it.

NEWSREEL ANNOUNCER:
Here the important work
of decoding messages

whose information must be

carefully guarded
and transcribed

with perfect accuracy.

NARULA:
Now the problem with that is

that if anybody figured out
the secret code,

well, then you were kind of
out of luck.

They can now read all of the
messages

that you were going to send back
and forth.

NARRATOR:
This is what happened

when the Allies famously cracked

the code of the Germans'
Enigma machine in World War II

and helped turn the tide
of the war.

BRUNTON:
That was the fundamental limit
to your ability

to create secret messages
for all of human history

until the 1970s,

when a group of
computer scientists

make a series of
extraordinary breakthroughs.

NARRATOR:
The big breakthrough was
figuring out how to replace

the vulnerable
single-key system

with a novel two-key approach.

Each side holds a pair of
mathematically linked keys--

essentially a string of
characters--

one shared publicly,
the other kept private.

The sender encrypts the message

using the recipient's
public key,

the message can only
be unscrambled

using the recipient's
private key.

The sender can also use
their private key to encode

a unique digital signature
into the message,

proving that they sent it.

The thing that's really cool
about this is that I don't need

to know your secret key.

No one needs to know
your secret key.

It never leaves your device or
your piece of paper, your home.

It stays completely secret.

The only thing that leaves
is the public key.

And I can't figure out
what your secret key is

from your public key.

NARRATOR:
As long as everyone's

private keys stay private,

secret messages are
essentially uncrackable

and signatures can't be forged.

The trick lies in how the keys
are linked

through a type of math problem
using large prime numbers,

which is easy to compute
in one direction,

but nearly impossible
to reverse engineer.

NARULA:
It's very easy

to take a set of factors and see

that they multiply to a number.

It's very, very hard to take

a large number and figure out

what the factors are

that divide into it.

It would have required even

someone with a supercomputer,

you know, hundreds or thousands
of years to try to break

the cryptography and get access
to the information.

MILLER:
That is a revolutionary
change in the world.

Up to that point,
we were all kind of helpless

against efforts by those forces
that would target us.

And now, suddenly,

mathematics had given us
this amazing gift,

this, this tool that we could
now use to communicate secretly

in a way that even those
large forces cannot corrupt.

NARRATOR:
A column in
"Scientific American"

described the breakthrough,
but the actual algorithms

remained unpublished in a paper
at M.I.T.

Miller feared the approach,
known as public key encryption,

was so powerful
that the government might try

to classify it as
a military secret.

MILLER:
I saw this as a
hard fork in the road

that was bigger than me.

And I decided

I have to do what I can

to make sure that this idea is
not suppressed.

So I went to the M.I.T. campus,
and I hung around,

and talked to people
until finally I managed to

get my hands on a paper copy.

I went to a variety
of copy shops.

Never made too many copies
in any one place.

And I mailed it from
a variety of mailboxes

to home and hobbyist
computer magazines

and clubs all across
the country.

And I also gave copies
of the paper

to a few select friends of mine,

telling them, "If I disappear,

make sure this gets out."

I have absolutely no idea,
and I will never have any idea

whether my actions
had any influence at all.

But the cat was out of the bag.

NARRATOR:
The paper was eventually
published in 1978

and the ideas spread
like wildfire.

The government tried
to keep these algorithms

from the public,

but determined to fight
against centralized control,

programmers put the codes
on everything from t-shirts

to their own bodies.

BRUNTON:
Cryptographers were in
the unique position,

especially once people
started getting tattoos of this

string of characters,
of being able to say

like characters in
martial arts movies,

that their bodies were
classified as deadly weapons.

(whistling)

What?
You want a public key?

(crowd laughing, groaning)

NARRATOR:
Some coders joined forces,

working in loose groups
to design technologies,

including new forms of money,

that could free people
from centralized control.

BRUNTON:
We could call them visionaries,
we could call them radicals.

We could also call them weirdos.

Eccentric, technologically
sophisticated, very smart,

deeply strange people

who wanted to change the world

through transforming
how money worked.

WOMAN:
Ah! A Space Alien!

SWARTZ:
They anticipated that
there was a coming economy

that was going to be built
around all of our data,

the surveillance of our data
that very soon we were all going

to be living more and more
of our lives

communicating through
digital technologies.

And a crucial piece

of this puzzle that hadn't

really ever been fully solved

was figuring out how to do

money online.

COMMERCIAL ANNOUNCER:
Where will you find a world

of ideas for your child?

Only at eToys.

NARRATOR:
For the first time,

public key encryption made it

possible to securely use

credit cards and conduct
other private business online.

Without it, online commerce

might never have become
a reality.

But for activist coding groups,
the fact that banks

and credit card companies kept
a ledger of all transactions

opened the door for Big Brother.

The most infamous of these
groups was known as

the "Cypherpunks."

JACKSON:
Their culture was,
"Hey, we want to create privacy

because we can see where
this is going."

They had the foresight to see

that any big enterprise,

there are going to be big

companies and, and regulators

who will try to control it.

NARRATOR:
The Cypherpunks

mostly communicated through a
mailing list.

BRUNTON:
The hard core of the
Cypherpunks

looked at digital money as a way
to not just guarantee privacy,

but as a way that they could
potentially destroy

existing governments and states
completely.

JACKSON:
It was basically developers
creating tools for freedom.

And one of those tools
was digital cash.

NARRATOR:
Not just digital transactions,
like the banks were providing,

but a new kind of money
altogether.

Across dozens of new forums,
there were a number of attempts

to design a system
of digital cash.

And then, on Halloween 2008,

a new name-- Satoshi Nakamoto--
appeared.

Enter Bitcoin.

Called by its inventor a

"peer-to-peer electronic
cash system."

Even now, no one knows
who Satoshi Nakamoto,

the inventor of Bitcoin, is.

But the paper was revolutionary.

BRUNTON:
This is one of the most

significant technologies

in recent human history

to have been created by someone

who is still wholly anonymous.

McKIE:
Who is Satoshi is a question
that may never be answered,

but in actuality, that sort of

mystique is kind of what adds

to the allure that made Bitcoin
really interesting

to begin with, I think.

MESIDOR:
When you look at
who Satoshi could be,

I say it has to be a group of
women because men

would have taken credit
a long time ago.

(laughs)

JACKSON:
Whoever Satoshi is,

it's amazing
that they were able to fit

all of what they wanted
Bitcoin to be in eight pages.

NARRATOR:
Satoshi's paper synthesized
decades of work

by hundreds of cryptographers
and computer scientists

into an elegant whole.

It showed how to create
a digital payment system

based on a new currency
that eliminated banks...

CROWD:
All day, all week,
occupy Wall Street!

NARRATOR:
...At the exact moment
the 2008 financial crisis

shook the public trust that
gave them their power.

REPORTER:
It was a manic Monday
in the financial markets.

(bell ringing)

The DOW tumbled more than 500...

People were like, "If the
world's financial economy is,

"you know,
like taking a big hit,

"how do we make ourselves
more antifragile

towards these things
in the future?"

SWARTZ:
What Bitcoin proposed to do,

what Satoshi proposed to do,

was produce a kind of
digital cash

that didn't require
those intermediaries.

Instead of transactions

going through a web of connected
computers owned by banks

and other intermediaries,
it would go through

a web of connected computers
owned by the people

conducting that transaction.

NARRATOR:
"Bitcoins" were simply "bits"
of computer code

in a digital ledger.

Each person would hold
their coins

in an anonymous digital wallet,

identified only by
its public key.

The holder of that wallet
could only spend those coins

by using their private key
to sign the transfer

and authorize the transaction.

But the real breakthrough
was something called

"the blockchain"-- a technology
that ensured the ledger

hadn't been tampered with
and that people hadn't spent

the same coin more than once--
all without needing a bank

or other central authority
to keep track.

(clacking, beeping)

SWARTZ:
The payments would instead
be conducted through

a decentralized infrastructure
of payments that would run

on any number of computers.

BRUNTON:
There's copies everywhere
and all the copies update.

As you make a change,
as anyone adds something,

as anyone does anything,
everyone's copy updates,

which means that we all,

in a sense, together witness
every single thing

that's taking place.

NARRATOR:
The blockchain records
the precise order

of transactions-- if someone
tries to send two people a coin

when they only have one,
one transaction is approved,

the other denied.

DASH:
Well, how do you trust
strangers on the internet?

That's a hard problem.

And that's a lot of what

blockchains are designed to do

is to be able to say, "We're

all collectively anonymously

"asserting that this copy,

"this record of this sort of

"database of information
is the same, and it's accurate,

and hasn't been tampered with."

(beeping)

NARRATOR:
Satoshi's blockchain proposed
an ingenious solution.

Every ten minutes or so,
a record of every

Bitcoin transaction made
anywhere in the world

during that period is assembled
inside a digital "block".

That block is then run through
a cryptographic algorithm

called a "hash"--
essentially, a way of converting

any piece of information into
a short, unique identifier

like a label that describes
the contents of a box.

But this is no ordinary label.

If anyone changes the contents
of the box

by even the smallest amount,

then the next time it's run
through the hash function,

the label changes completely,

making it clear someone
has tampered with what's inside.

BRUNTON:
Imagine a machine that you
can put information into.

Let us say "Moby Dick," all of
"Moby Dick," the entire novel.

You put it into the machine and
it gives you back a little code.

That code is the summary,
the expression,

of all of the data
that makes up "Moby Dick."

And now, if you put in
"Moby Dick,"

but you have changed
one single word,

if you have altered a space,
if you have removed a period,

the code will be different.

You're going to be able to tell
that something has changed.

With such a machine, you could
then take, say, a transaction--

me sending you ten dollars-- you
can put it into that machine.

You're going to get back
a little code that corresponds

to all of the data about that
transaction.

That code will not be the same
if you change anything

about that transaction data.

Now, you take that code
and you add that into

the record of the
next transaction,

linking them all
into a single continuous chain

of verification.

NARRATOR:
Each block begins
with the previous block's hash,

creating an ever-growing chain
of blocks-- "the blockchain".

Users from across the network
take turns hashing blocks

and adding them to the chain.

The other computers on the
network

verify the block is
hashed correctly,

and update their copies,

effectively
creating a decentralized ledger

that all users agree on.

VIVIAN BRIGHT:
That's good, Vernon.

Oh, okay.
I don't need a whole lot
of water.

NARRATOR:
Today, people are using

other decentralized systems
modeled on Satoshi's blockchain,

to try to move money
beyond the control of banks,

governments, and other
traditional gatekeepers.

BRIGHT:
Okay, If I was to
give you $1,000,

what would happen
with my $1,000?

So, if you put $1,000 into,

let's say,
a $100,000 property,

you have
one percent ownership

in that asset.

Whatever the income
is for that asset,

you get one percent
of that income.

NARRATOR: Community property
developer Vernon J.

who has lived in
East New York, Brooklyn,

for more than half a century.

We need a light.

And if Vernon, and this new

money business

is going to be the light,

let it be the light.

Let it be
the beacon that we need

to revitalize our community.

(indistinct chatter)

All right, all right.

How's everybody doing tonight?

MAN:
Well, thank you.
All right.

NARRATOR: Equity coin has

attracted interest online,

but Vernon also makes his pitch

to the community face-to-face.

When we talk
about cryptocurrency,

when we talk about
blockchain technology,

what that does is it actually
gives you a chance to

remove the intermediaries.

So, those banks that have been
declining you, you know,

those organizations that say,

"Actually, no, this is not
going to work,"

you have the opportunity
to create this system

where people
can invest with you

without the intermediary,
right...

NARRATOR:
Because he's dealing

with real world properties

and needs to hold a deed,

collect rent, and pay taxes,

the Securities
and Exchange Commission

regulates Vernon's coins

like shares in
a traditional company.

But he thinks crypto offers

a more direct connection
with investors.

What I wanted to do was
mix in affordable housing

with blockchain technology
and create a system

where we can actually
replace the bank

with community.
MAN: Yes.

NARRATOR:
If Vernon attracts
enough interest,

he'll launch his coin,

joining thousands of others

in a volatile crypto ecosystem

where people can get rich,
or lose everything.

So this is our time,
this is our time.

NARRATOR:
But all of this
raises a question:

if decentralized blockchains
eliminate the middlemen,

who runs the network?

NARULA:
Why do people even participate

in this network?

why do they gather
these transactions

and add them to the end

of the blockchain?

And how do we make sure that

they're doing that in a secure
way?

NARRATOR:
Satoshi's answer came
in the form of

an incentive system called
mining

that rewarded users
who added blocks to the chain

by granting them
newly minted bitcoins.

These "miners"
group transactions

from across the network
into a block,

and run it through
a hash function,

like the machine that created
the label for "Moby Dick."

In order for
everyone's ledger to match,

only one miner at a time
can add a block to the chain.

So how does everyone agree on

which miner
gets to add the next block?

Satoshi's solution--
have miners race to solve

a cryptographic puzzle.

NARULA:
A node that wants to add a block
to the end of the blockchain

actually engages in solving

a computationally expensive
cryptographic puzzle.

So the sole purpose of
this cryptographic puzzle

is just to show that I've spent
a lot of time and energy

trying to solve the puzzle.
That's it.

The idea is that
it needs to be expensive

by some resource
to compute this puzzle.

If it's very cheap
or very easy

or very quick
to compute the puzzle,

then it won't do a good job
of securing the network

and making sure
there's only one blockchain,

one version of history,

which is very important.

NARRATOR:
This puzzle--
called "proof of work"--

means miners
who spend resources

in the form of
hardware and electricity

get to add a block of new
transactions and earn bitcoin.

Start her up, Johnny.

NARRATOR:
In the early days,

mining was a cottage industry;
people built rigs at home,

expanding the network

and sharing their setups
on social media.

MINER:
This is a little overview of
what we got-- four machines.

MINER 2:
I should clear right
at 2,800 a month.

NARRATOR:
Mining also is how new coins

are introduced into the system.

Instead of banks and governments
controlling the money supply,

it's automatically regulated
by the software.

As more coins are mined,
the reward decreases,

and the proof of work puzzle
gets harder to solve

and requires more energy.

Giant mining farms exist

all over the world,

using as much power as
some countries.

JACKSON:
About 30% of the mining

done in the world
is in America,

and most of that mining

is starting to be done in Texas,
because they

have a lot of energy.

Also, a lot of the mining

is done where it is cheaper,

places like
Iceland, Kazakhstan.

China was huge in mining for a

while and then they banned it.

NARRATOR:
With about one percent

of the world's electricity going
to crypto mining,

some are pushing to find
alternative sources of power.

JACKSON:
What's become huge now is

hydroelectric energy,
using water as

a as a way to mine bitcoin.

And also, we're starting to
see more of the solar panels,

wind energy.

WARREN:
Ironically, Bitcoin actually

provides a way to think about

standing up different kinds

of renewable architecture

around energy

that wouldn't
otherwise necessarily

have capacity or
the ability to be stood up.

NARRATOR:
But others don't buy it,

particularly when considering
the entirety of the Bitcoin

mining enterprise
spread around the world.

DASH:
There is a tendency to point to,
in some cases valid,

but mostly not,

renewables as part of the
energy consumption of Bitcoin.

There are people that sort of

wave away the seriousness,

the gravity of that damage,

that harm that they're causing.

And I find it immoral.

BRUNTON:
We see the construction
of a vast machine

that might be one of

the most purely wasteful
machines ever built,

a system that,

that burns processor power,

and coal and generates nothing

but heat and the solutions to

deliberately
meaningless problems.

NARRATOR:
But early on, things were
very different.

Mining was easy, and
Bitcoin essentially worthless.

SWARTZ:
In the early days,

there were websites
that had Bitcoin faucets,

which were basically just
a site you would go to,

click on it, you know,

create a wallet

and it would enable you

to just get free Bitcoins.

♪ ♪

NARRATOR:
Satoshi didn't seem interested
in making money,

and in 2011 sent a final email

before disappearing for good.

Other early adopters saw the
promise of the technology,

and tried to generate
belief in its value.

SWARTZ:
Once Bitcoin was
developed enough

to be a kind of largely
functioning piece of software,

it had to actually

be used
in order to become money,

so one person on the Bitcoin
message board said,

"I will pay someone to--
with Bitcoin--

to order me two pizzas
with lots of toppings."

(keyboard keys lightly clacking)

And someone else,

on the other side of
the country,

ordered that pizza,

sent it to him,
and got paid in Bitcoin.

JACKSON:
He essentially paid about
40 bucks for two pizzas.

And those 10,000 Bitcoin
are well over,

I believe, $200 million now.

But that transaction had to
happen in order to show that,

"Hey, people do
want to pay with this."

Bitcoin is now up to $111!

NARRATOR:
But as more users
joined the network

and the price increased,

something changed.

The hottest investment,

on or off Wall Street,

are these cryptocurrencies.
They are soaring!

They began to see it
less as money,

that is as a transactional tool
that you would actually use.

They started to see it
instead as a kind of asset.

NARRATOR:
Despite wild fluctuations,

Bitcoin's value
increased over time--

and other coins emerged
on their own blockchains.

While most chased profits,

one early Bitcoin user saw

a different kind of potential,

and helped invent
what would become

one of crypto's
most famous uses.

KEVIN McCOY:
I'm an artist,

and have been an artist for

a long, long time,
but I wasn't always.

I studied philosophy

and literature,

and that was my main
kind of interest.

NARRATOR:
In the early 2000s,

Kevin and Jennifer McCoy were
successful digital artists--

their works shown by
prestigious galleries.

But unauthorized copies were
appearing all over the internet.

They realized there was no such
thing as a "digital original"

that they could
actually own and control.

McCOY:
In a digital environment,

of course,
it's always a copy

and it proliferates,
you know, everywhere.

And, you know, and so there is
no original.

NARRATOR:
But Bitcoin gave Kevin an idea.

McCOY:
That system created

for the first time,

an idea of digital scarcity.

All of a sudden,

the everyday norm that you had
about digital technology,

that it's
infinitely reproducible,

that it's, everything is
just copy and paste,

that didn't apply
in this case.

If I send you my Bitcoins,

I don't have them anymore
and you have them.

That's scarcity;
it's not everywhere.

It's only somewhere.

And so I had
this realization that

if it was possible
via Bitcoin

to create uniqueness
around currency,

then there had to be a way
that you could create

uniqueness
around a digital artwork.

But I didn't know how.

I'm really excited about
this last pairing...

NARRATOR:
Kevin attended a conference

where each artist was
paired with a tech partner

and given 24 hours
to develop a new idea

they'd present to an audience.

What we want to talk to
you about today is

this idea we have of
monetized graphics.

And how we can put
digital artworks in chains.

So almost immediately after

I was paired up
with Kevin McCoy,

he and I sat down and started
sketching out ideas

for how could you make an
assertion on a blockchain

to say that
a certain digital work

was an original,
unique item.

♪ ♪

NARRATOR:
After an all-night
coding session,

Anil Dash and Kevin

announced that they had

registered a video
on a blockchain.

DASH (voiceover):
It was a segment of
a video work

that Kevin and Jennifer McCoy
had created together,

and I actually
found it mesmerizing.

McCOY (voiceover):
And this was our
on-stage example

of taking this file

and creating a
blockchain-based record of that.

We've created a system
that will

establish verification
and provenance

over digital files,
digital artworks.

That provenance
is a chain of ownership...

NARRATOR:
Anil and Kevin created
a record of ownership

that would live
on the blockchain.

Whoever held
the key to access it,

owned the digital original.

DASH (voiceover):
We did pull it together

in a couple of hours.

So given that it was
something we sort of did

over the course of an evening
and into a late night,

it was a pretty good
first version.

Do you got 20 bucks?

DASH (voiceover):
And we sort of

said we'd negotiate
a price for it.

(on-screen):
Can I pay you in
U.S. dollars?

Sure, that's
cool with me.

I have four dollars.

(laughter)

Jesus! Really?

NARRATOR:
It was the first transaction of

something that would eventually
come to be called

a non-fungible token,
or NFT.

♪ ♪

Today, NFTs can act as a
digital proof of ownership

for things far beyond art--

from tickets to a concert,

to membership in a club,

operating like keys that
unlock benefits to the owner.

You can imagine
rolling it out

into a more
platform-oriented thing...

NARRATOR:
But back then, Kevin's notion
that it was possible

to own a digital original
didn't immediately catch on.

McCOY:
You know that

it's new, you know
that it's a novel thing.

You know that it's... you can
feel that it's important.

And nobody cared.

(bell chiming)

NARRATOR:
Kevin's idea may not
have taken off,

but he wasn't the only one
hoping blockchains

could go beyond Bitcoin.

In 2015,

a 21-year-old coder
named Vitalik Buterin

launched Ethereum--

a new blockchain

designed to decentralize
much more than just money.

VITALIK BUTERIN:
Ethereum community is, uh,

I think unique in the
crypto space for its diversity,

like it's not just one
community, it's, you know--

there's a lot of different
sub-communities.

There is something in it
for everyone.

NARRATOR:
Today, Ethereum is

the largest blockchain
in the world,

running ten times more
transactions than Bitcoin.

Like Bitcoin, the blockchain

incentivizes users by
rewarding miners

with a currency--
in this case, Ether.

But the range of
what Ethereum can do

goes beyond a
simple monetary transaction.

KARTIK (on microphone):
We want to have

a quick interview

with a person who needs
no introduction.

So without further ado,
let's welcome Vitalik Buterin.

(applause)

♪ ♪

NARRATOR:
Ethereum lets users create
their own programmable tokens,

using "smart contracts"--

instructions in the form of
computer code

that execute rules on
the blockchain.

Instead of just adding or
subtracting money from a ledger,

these "smart contracts"
make it possible for anyone

to mint a token and embed it
with nearly any functionality,

from tracking music royalties

to encoding money with last will
and testament directives,

doing for the blockchain

what the iPhone's App Store
did for the cell phone.

Today,

conferences like
this one in Amsterdam

attract thousands of coders
and entrepreneurs.

MASSIMILIANO GERARDI:
So the young people
are excited now

about blockchain

and all the possibilities

that blockchain can give.

And I haven't seen

this kind of excitement

since the time of
internet was born.

NARRATOR:
Because anyone on the internet

can see and inspect the ledger,

proponents claim
blockchains like Ethereum

can make transactions
more transparent,

and, because they
eliminate the middle-man,

more efficient.

There's an idealistic quality

to many of the hopes
surrounding the technology.

GUNDEEP BHAMRA:
Everything which we want to

preserve for eternity

can and should
be on the blockchain,

whether it's a movie
or it's our housing contracts

or the way we...

interact with,
let's say, Uber,

or rent, rent a car.

So right now, when you have

a paper will,

there could be a lot of drama,

a lot of debates between

family members when you pass
away.

But at least if you
actually do that on chain,

on the blockchain, actually,
you can actually get a say,

and you know that it's
going to be guaranteed

to go to those people
when you pass.

MARCUS:
We are enabling individuals

and organizations to access

a market for climate action

in an efficient,
low cost manner.

And by bringing these existing

certificates onto a blockchain,

we unlock much greater
efficiency,

lower transaction fees,

and much faster
settlement times.

NARRATOR:
Most projects like these

are still in their early stages
and not yet viable,

but one of Ethereum's
most popular uses

helped Kevin's original idea

for putting artwork
on the blockchain take off.

SNOOP:
♪ 2021, Snoop D-O-dub ♪

NEWS ANCHOR:
Now to the latest trend

that's sweeping the internet,

the skyrocketing prices

for digital art sold as NFTs.

NEWS ANCHOR 2:
NFT sales now topping

a half a trillion dollars...

NARRATOR:
Today, NFTs--
or non-fungible tokens--

seem to be everywhere.

Nyan cat is, of course,
a meme of

a cat with a Pop-Tart body
prancing through space

with rainbows
flying out of its butt.

NARRATOR:
Most of them are registered

on Ethereum,
where they exist as

smart contract tokens
on the blockchain.

It's been surreal to go from

this personal collaboration
with somebody

and a transaction that was
about collecting their art to

the last few years,
as it became

this big hype cycle.

REPORTER:
The art world has been

turned upside down again.

NARRATOR:
NFTs for nearly
anything imaginable

sell through
online marketplaces,

but even
traditional auction houses

have gotten in the game.

Some of the most coveted--
and expensive--

are essentially digital brands
that people desire.

DASH:
Part of what's so compelling

to a lot of
people that collect NFTs,

especially when they're part of
a large edition of them,

is that each individual work

is digitally identified
as being unique.

And, you know, that
has meaning to people.

To the fans and enthusiasts,
they kind of

feel like they're
collecting baseball cards.

The big one is called
Bored Apes,

which have kind of
become almost

a cultural brand
on its own.

This is your ape?
That's mine, yeah.

Well, we're debuting it.
That's really cool.

It's like,
I want something that

like kind of
reminds me of me...

SWARTZ:
It would be really strange

to see a celebrity like Paris
Hilton

go on a late-night talk show

and talk about a penny stock

that they are investing in

and recommending that others

do the same.

But NFTs have become

a acceptable topic for
late-night conversation.

♪ ♪

NARRATOR:
The frenzy around

new blockchain applications

doesn't end with NFTs.

Blockchains are even being used

to create new platforms
for cooperation.

Called Decentralized
Autonomous Organizations,

or DAOs for short.

One was even involved

in an attempt to buy

an original copy of
the U.S. Constitution

at an auction in New York City.

And the idea here was

a group of people came together

and they decided they wanted

to pool some funds and purchase

a copy of the Constitution.

NARRATOR:
A digital collective
formed on a chat group,

and created a token on
the Ethereum blockchain

that allowed members

to contribute money
to the project--

and have a vote
on how it was run.

This started about a week ago.

I just got some friends
in a group chat

texting one another,
they found out the Constitution

of the United States
is going up on auction.

And we said we need
to raise a lot of money,

and can we do it?

As soon as the money
starts piling in,

we just got shocked that

people actually, like,
have their faith in us,

and we're like,
"Okay, now we have to deliver."

NARRATOR:
Over the course of seven days,

nearly 20,000 members
joined the DAO,

raising more than $40 million,

well beyond the document's
pre-auction estimate.

And now, let's begin
the auction.

Lot 1787, the Constitution of
the United States of America.

We'll start the bidding here
at $10 million,

At $10 million, $11 million,
$12 million,

at $13 million,
now $14 million...

NARRATOR:
Ironically, in the end,

the group's transparency
was a liability.

sold!

$41 million, paddle 411.

(crowd groans)

NARRATOR:
It was outbid by
a hedge fund C.E.O.

who could see how much money
they had raised.

WARREN:
But I think what's fascinating
about DAOs

is they really are providing
these micro experiments

in how do we organize and govern
ourselves and our activities.

What we've just accomplished
in the last four days

was (bleep) insanity.
It was amazing.

And we have to be
proud of ourselves

for rallying together
to do something

that no one has done
in history before.

And now we get
to plot our next move.

What do we want
the future to look like?

What do we want to build next?
What do we want to do?

♪ ♪

NARRATOR:
As thousands of experiments

like ConstitutionDAO
take place,

blockchain use is skyrocketing,

as are the environmental costs.

So Ethereum engineers
have been working

to implement a replacement
for Satoshi's energy-intensive

"proof of work" mechanism.

It's called "proof of stake."

DANNY RYAN:
When we move from proof of work
to proof of stake,

the energy consumption of

the Ethereum platform will be

reduced by 99.95%

and not to grow again.

(beeping)

NARRATOR:
Instead of spending
costly energy

to solve a
computational problem--

and earn the right to
add a block to the chain--

in proof of stake,

the system randomly
assigns the right

to add a block to
those who already own coins.

The more coins a user owns,

the more likely
they are to be chosen.

In this way, proof of stake
makes it possible to secure

the blockchain without
burning huge amounts of energy.

Other blockchains
already use proof of stake,

but it's never been tried

at the scale of
Ethereum's network.

And what amounts to
a giant software update

could put the system at risk.

DASH:
The classic metaphor we
use in tech is

it's like
trying to change the engines

in a plane while it's in flight.

The reason it's hard
is because millions of people

and way more millions of
lines of code

are relying on the system
as it functions today.

All right we're
one minute out, guys.

NARRATOR:
Still, in spring 2022,
after six years of work,

a test suggests the upgrade
might soon be ready.

(cheers and applause)

♪ ♪

Huge questions remain
about the transition,

and whether it will end up
trading one problem for another.

It's more
environmentally responsible,

but perhaps less fair,

since the wealthiest users
will be able to stake more coins

add more blocks,
and earn even more coins.

But in the meantime,
as crypto technology

continues to evolve,
the question

no one can answer yet is

will it be able to live up to

its decentralized promise?

RYAN:
Ideally, these
blockchain platforms

can help disintermediate
the power that exists,

locked up in a
handful of corporations

and kind of put
that back into communities,

back into individual users,
and...

and maybe shift the trajectory
from here to maybe over here.

♪ ♪
(keyboard clacking)

NARRATOR:
Back in Brooklyn,
that's the hope

of Vernon and
his programmer Aakil,

who are finally ready
to launch Equitycoin

on the Ethereum blockchain.

VERNON:
We're going to allow
for the sale of

10,700 tokens at $100 per token.

So it's $1.07 million that

we're going to be raising.

♪ ♪

NARRATOR:
By selling tokens,

he hopes to
raise enough money

to purchase the properties,

and investors hope
they'll get a return.

Vernon believes that
trust will grow as people see

how their interests
are coded

right into
the token's contract.

VERNON:
Smart contracts take
the rules and regulations

of a normal contract

and embed them into
an automated system

so that both parties
can adhere to those rules

and regulations
without trusting each other.

It's a trustless way
of doing business.

NARRATOR:
Vernon hopes for

a decentralized future,

where crypto removes
the gatekeepers

and levels the playing field.

NEWS ANCHOR:
JP Morgan rolling out
the first cryptocurrency

backed by a U.S. bank.

NARRATOR:
But the original promise

of crypto may be in doubt...

Fortune favors the brave.

NARRATOR:
...As big business increasingly
gets in on the action.

WOMAN:
Get started with crypto

on Venmo.

NARRATOR:
Today, nearly all crypto
financial transactions

go through centralized exchanges

that enable users to
buy and sell.

WOMAN:
Binance-- exchange the world.

NARRATOR:
They can decide which users

can hold accounts,

and can freeze funds
at the touch of a button.

This has drawn the interest

of financial regulators.

A battle is brewing
in Washington

over how to regulate
the cryptocurrency industry.

We have tremendous amounts of
financial regulation,

and some of it is there
for a very good reason.

It's to protect consumers.

But preserving
the ability for competition

and for people to innovate

is also very important,

making sure that
we don't unintentionally

regulate into a world of

a few very large,
powerful intermediaries.

I think that's
very important as well.

The struggle to decentralize,

I think,
is never ultimately won.

Every time you win it,
at one level,

you create a, a system,

in which you can lose it
at the next level up.

There's a real concern
that the future of crypto

will look a lot like
the present of the internet,

just kind of a re-entrenchment,

of the same old forms
of exploitation,

just on new terms.

NARRATOR:
One way or the other,

many believe blockchain
is here to stay.

WARREN:
You don't un-ring that bell,
it's not going to vanish.

What it's used for is
something

that has yet to
be fully determined.

(phone chimes)

DON (on phone):
Vern, Great Rising!

Don, what's going on,
brother?

NARRATOR:
At last, Vernon gathers his team
to launch Equitycoin

and start raising money
from the public.

Let's do it.

Let's do it.
Let's go!

BRUNTON:
I look at cryptocurrencies

as being the
very, very early days

of a better technology.

I think,
in the language of tech,

we are using
the alpha rollout--

the earliest, jankiest,

least-figured-out
version of something.

T-minus three, two,

and one.
Boom.

ASH:
We just launched our
investment packages, everybody.

VERNON:
Boom.

♪ ♪

(electronic chiming)

♪ ♪

ANNOUNCER:
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Or call 1-800-PLAY-PBS.

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are available with Passport.

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♪ ♪

♪ ♪