All language subtitles for The.Rise.And.Rise.Of.Bitcoin.2014.1080p.WEBRip.x264-[YTS.LT]

Don't be filming
my passwords.

I used to have
a shirt in high school

that said
"technology must be used
to liberate the individual."

And I didn't really know
what it meant for years,

'cause I didn't
really think about it.

But today I look back
and I'm like, "oh man,
hell yeah, I like that shirt."

I'm glad I wore that shirt,
'cause it's how I really
feel today.

My name is Daniel mross.

Today is may 3rd, 2012.

I go through college
and watch the Internet come

and all these
different things.
And now, like, bitcoin,

it's just a single
technology built on top
of the Internet,

but it's so fascinating
because there's so many

freaking things
you can do with it.

It's also just
a big experiment.

There's no guarantees
with it.

We might just all be
wasting our time...

Exploring concepts
and ideas.

It's at this crossroads
of technology

and philosophy
and politics and everything.

Just be a part of it.
It's fun.

It's crazy though,
but it's fun.

Um, first question is

what is bitcoin?

I can't tell you
what bitcoin is

in just a few sentences.

It takes time
to understand it,

the same way it took
people time to understand

what the Internet was

back in 1994.

That little mark with the "a"
and then the ring around it.

- "At"?
- See, that's what I said.

- Mm-hmm.
- Katie said she thought
it was "about."

- Yeah.
- Oh, Internet is...

- That massive
computer network...
Right.

...the one that's becoming
really big now.

Allison, can you explain
what Internet is?

When the Internet
was taking off,

I was in college
at Virginia tech

studying computer science.

Looking back,
it's amazing to think about

how much the world
was changing.

Hey, Dan,
ready for the game?

I'm just finishing up here
with my new kayaking friends.

Kayaking friends
on your computer?

Yeah, I just got
America online.

That same type of innovation
is happening again

with bitcoin.

It's the smartest people
in the room

that are
the most excited about this.
So what are they seeing?

The Internet changed
the way the world communicates

bitcoin changes
the way money works.

You can basically put
a bank in your pocket.

Psst!

Wanna buy some
secret stuff?

There is now a new note

that people are starting
to talk about--

the bitcoin.

The money of the future.

Bitcoin was created to provide

an alternative
to the banking system.

We're in the midst

of a serious financial crisis

and the federal government
is responding

with decisive action.

Unlike most currencies,

bitcoins are issued according
to a set of fixed rules.

The idea was to create
money whose value

couldn't be manipulated
by a central authority.

The government, no matter
how many guns they draw,

cannot change
a mathematical problem.

They can point their guns
at "two plus two,"

but it's always
gonna equal four.

It's fascinating to imagine

what it means to have
global decentralized money.

And that's what's happening.

My five-year-old's birthday.

First round
of burgers is ready.

Second round is
going on in a second.

First round
of burgers is ready!

First round.

Dan has always been
an idea guy.

Bitcoin is the perfect
combination

of how can
I change the world
and make it better,

but how can
I also be a nerd?

So mostly I've just been
supporting him

in this craziness.

Eliza and I met in college,

and we've been married
for seven years.

We live in Pittsburgh,
where I'm from,

and we have three boys,

I've spent most of my career

as a database administrator.

But for the past
two years, I've been
consumed with bitcoin.

Bitcoins come
into existence through
a process called mining.

I build computers
to mine for bitcoins.

I'm glad that
it's finally getting
a little bit cooler out.

My wife won't be as angry
that the basement is so hot.

I've still got a bunch of mining
rigs running right now.

Actually they're
right down here, if you
wanna go take a look.

Here they are.

So what is bitcoin?

Bitcoin is
a revolutionary technology

that enables
a new way to send payments
over the Internet.

- You can think of it as
an open accounting system

where thousands of computers
all over the world

work together to track
ownership of digital tokens
called bitcoins.

When you send
someone bitcoins,

the transaction is broadcast
to the entire network.

After it's verified,

it's recorded
in a public ledger

called the blockchain.

The blockchain
contains a record

of every bitcoin
transaction that has occurred

since the system began,

and it's shared
and maintained on the network,

so everyone keeps the books,
so to speak.

Most currencies are issued
by a central authority

that controls
the money supply.

Bitcoin is
a peer-to-peer system,

so there is
no central authority.

Instead bitcoins are
issued to users

who help process transactions
in the network.

This is known
as bitcoin mining.

Bitcoin miners are
specialized computers

that do the work
required to verify

and record transactions
in the blockchain.

As a reward for their work,

the miners earn bitcoins,

and this is how new bitcoins
are released into circulation.

The system is programmed

so that only
21 million bitcoins
will ever exist.

And as time goes by,

the mining reward decreases.

The result is
a predictable supply

that's governed
by scarcity,

making bitcoins
somewhat like a digital gold.

It's the first currency
of the Internet.

And everyone
is free to use it.

With bitcoin, you can send
any amount of money

to anyone anywhere
in the world

as easily
as sending an email.

My brother Nick
is a filmmaker.

After hearing me
talk about bitcoin
incessantly for months,

we decided to start
documenting things.

Hey, I don't think
we'll need the small camera.

- It can't hurt.
No, I'd rather
just leave it behind.

I have so much equipment.
Do you mind?

Damn, you really
cramped it up, huh?

Not that bad.
What do you mean?

- Jeez.
- Dude, they're right there.

Right in the back.
Right there.

I was convinced that bitcoin
was going to be huge,

and I knew there were a lot
of others like me out there.

Zipped my keys in my pocket,
so I don't forget 'em later.

Bitcoin was created
by what's believed
to be a pseudonym,

a guy named
satoshi nakamoto.

Invented in '09
by a fictitious person

named satoshi nakamoto...

On Halloween 2008,

someone using the name
satoshi nakamoto.

Posted on a cryptography
mailing list...

The post contained
a link to a white paper

in which satoshi proposed
a new type of payment system
for the Internet.

It described a protocol that
used peer-to-peer networking,

proof of work
and public key cryptography.

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.

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.

It's unbelievable.

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.

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.

- 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.

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.

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. "

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.
- Bypass the fed.

- Right, yeah.
- That's what you should do.

My concern is how
the governments will react.

They can't kill
or stop bitcoin,

but they could impede it
and they could get in the way
of its development.

A few weeks later
across the ocean,

a financial crisis was
reaching a breaking point

on the island of Cyprus.

Cyprus is on the brink
of going bust.

The rest of Europe
has agreed to a bailout,

but only if Cyprus raids
people's bank accounts
for quick hard cash.

People tried to get money
out of the cash machines

but electronic transfers
have been stopped.

- Never did I think
that they would...

...in a completely
unprecedented manner

resort to stealing money

from people's
bank accounts.

The Cypriots had
placed their trust

in the banking system
and it had failed them.

As news of the crisis
spread around the world,

bitcoin believers
were quick to point it out

as an example
of why a currency

free from government control
was needed.

There's actually
bitcoin atms

apparently being
set up in Cyprus.

All of a sudden,
bitcoin looks

like an attractive prospect.

While this was
happening in Cyprus,

regulators
at the U.S. treasury

weighed in on bitcoin.

The financial crimes
enforcement network,
known as fincen,

issued its first
regulatory guidance
on virtual currencies.

The guidance implied
that bitcoin,

in and of itself,
was not illegal.

It was the perfect storm.

The situation
in Cyprus suggested

that bitcoin could function
as a financial safe haven.

And the approving nod
of U.S. regulators

was a green light
for investors.

The market agreed

and the exchange
price continued to climb.

It's moving from the super
super-early-adopter phase

to possibly
the early-adopter phase.

Bitcoin was getting

international exposure

and people were starting
to pay attention.

This is actually a live,
updated map of the globe

and the lines represent
bitcoin clients.

Basically where the bitcoin
software is running.

And the length
of the line determines

how long it's been online
or how active it's been.

And every time
I look at this,

I swear it gets more
and more saturated.

You can almost see
an outline of the U.S. now.

South America--
you're starting to get it.

But the big news,
in my opinion,

is this-- China.

You used to see one,
two, three, maybe.

And this is all within
the last three weeks or so.

That's the most
I've ever seen in China.

Look down here.
Indonesia, Singapore,

Australia, New Zealand.

The following week
it snowed in pittsburg.

I was eagerly
awaiting the delivery
of two avalon asics,

state of the art computers

with chips
specifically designed
for mining bitcoins.

Yifu guo is
at the forefront

of the new generation
of hardware,

and is the first
to bring them to market.

Everybody,
including myself,

had severely
underestimated

the mining market
and how big it is.

When bitcoin began,

a standard laptop
was powerful enough

to mine hundreds of bitcoins
in a matter of days.

The technology evolved rapidly
over the past couple of years.

A lot of people
are getting into it

or still trying
to catch up.

I was on vacation
with my family

when the new miners were
scheduled to arrive.

The price of bitcoin
had rocketed to $77

so I asked some friends
to wait at my house

to get them running
as soon as possible.

- All right!

- I hope this is good.
I hope it's worthwhile.
- Oh, definitely.

These are
new computer parts here...

- Excellent, excellent.
- ...Fresh in from China.

All right, it's not
official until you sign.

There we go.

- Yeah, we'll see.
- Maybe down the road

you guys will start
accepting bitcoin
one day, I bet.

- That's cool.
- Just a matter of time.

- Good luck to you guys.
- All right.

I notified Dan

and he has
a little response here.

Welcome to
the financial renaissance.

192.168.1.140.

255.255.255.0.

192.168.1.1.

That's the default gateway.

My first pull is gonna be
stratum.Ozc.In, port 3333.

Port 80,
but I can do 3333.

And when everything's all
said and done, for at least
a little while,

it should be pulling in
10 to 12 coins a day.

That's gonna change though,
after another week.

It's gonna get
dropped down to, like, eight,

- just because the difficulty's
just going through the roof.
- Yeah.

Everybody's firing
these things up,

so it's always
a race to stay ahead

and try to be the first guy
with the hardware, you know?

Oh, I'm getting pings.
Whoo!

Yup, we're kicking.

We are accepting shares.

It is live.

We've got the Merlot!

Hey, that looks
like johan.

Say, "I'm going
to college 'cause
my dad mines bitcoins."

Dad going bitcoins.

So, big day today, huh?

Big day.
Look at that. 104.

Current bitcoin price.
Broke 100 today.

It is April fool's day.

The price rising
so insanely high

is kind of
a little bit unprecedented,

so-- I mean, it's bound
to pop a little bit.

Maybe.
I don't know.

Maybe it'll be at 225
in a week and a half,

so who knows?
Bitcoin styles--

could go up,
could go down.

As the price passed 100,

we took a trip to visit
Gavin andresen.

He is known to have
worked closely with satoshi

during bitcoin's early days.

Here's the train tracks,
and he did say

there would be train tracks
maybe passing through.

Here we go.
This is Gavin's house.

Gavin is one
of the last people

to communicate with satoshi
before he disappeared.

Morning.
This is my brother Nick

- and his wife Ashley.
- Nice to meet you.

- Hi, nice to meet you.
- Nice to meet you.

Found the place
okay, so--
- good.

We're very excited
to be here.

Come in.
This is my humble house.

- - That's where I work.
This is where I live.

- Beautiful home.
- Well, thanks.

- A little higher, please.
- Right there. Great.

- Got it.

How did you first
get into bitcoin?

Tell us a little bit
of the story of how
you got involved.

I had been working at umass

as a staff programmer

in the computer science

department research group.

My wife's
a Professor at umass.

I actually quit
that job before going

on a six-month sabbatical
in Australia.

I just happened
to read a little blurb

online in somebody's blog

that mentioned
this bitcoin project,

which is an open-source
attempt to do money.

And it caught my interest.

I basically
just spent a few days

read everything
I could about it

looked at the source code,
downloaded the source code,

thought about it
and I really couldn't
convince myself

that it would not work.

It seemed like satoshi
had thought of everything.

Since then...

I've just been sucked down
the rabbit hole.

Bitcoin is
open-source software.

With open-source software,

the code is
publicly available.

Anyone can look at it
and see how it runs.

And they can also contribute
their own changes.

Programmers like Gavin
were able to join satoshi
to work on bitcoin

simply because
they were interested.

Over time, I think
satoshi learned to trust me.

He could see
that I didn't make
very many stupid mistakes.

I never had any personal
connection with satoshi.

It was always
purely business.

And I think that's because
he was so worried about

people finding out
his identity.

I don't know why.
My last email to him

was telling him that I had

agreed to go visit
the folks at the c.I.A.,

so...

Whether that had something
to do with him

deciding to cut off
communication with me
entirely--

he had been
pulling away before then,

but the c.I.A. Invited me
to come talk at the c.I.A.

And I agreed to do that.

Knowing it would surely spark

conspiracy theories,
Gavin posted an announcement

on the bitcoin talk
discussion forum

to head off any rumors.

Having taken on
the lead developer position

since satoshi's
disappearance,

Gavin found himself
facing an increasing number
of responsibilities

and public scrutiny.

Do your neighbors
know that you're kind of
at the center

of one of the most
disruptive technologies?

I think-- I think
they know that I do
this wacky bitcoin project.

I don't think they know
quite how big it is yet.

Right now,

bitcoin's
a billion-dollar project.

When I started it was
this tiny little experiment.

And as it gets bigger,

the pressure
to not screw up

just gets
bigger and bigger.

Two weeks later

the price soared past 150.

And some bitcoiners woke up

to find out they were
bitcoin millionaires.

23-year-old Charlie shrem

is the c.E.O. Of a company
called bitinstant.

Bitinstant was one
of the first startups
in the bitcoin space.

In bitcoin's infancy,
people had to jump

through several hoops
to buy them.

One of the only ways

was through
the mt. Gox exchange,

but this process required
transferring money

through several
intermediaries

and could take weeks.

Charlie launched bitinstant
to streamline this process.

And to help people buy
bitcoins quickly.

Yeah,
that's good. That's great.

- That's pretty nice.
- You go like that.

Yeah, sure.

Today Charlie is
being photographed

for an article
in "businessweek."

One of the ideas they had

was that you're going--
throwing stuff up in the air

and they were gonna add
bitcoins in later on.

- Going like that?
- Yeah.

This bitcoin thing
can actually change the world.

But for this thing
to succeed,

we have to figure out
a way to get more money

in and out
of the ecosystem.

Look out the window a bit.
Totally-- yeah.

Then you can look--
yeah, that's good.

And not show that
I'm super stressed out
right now

and we have thousands of orders
that are being processed

and I'm bugging out,
trying to get the new
site launched.

- No, don't look like that.
- It's crazy.

I'm trying not to,
but it's really hard.

Things have been insane.

I haven't slept in days.

The price is just rising,
so a lot of people

are putting
money into it.

Normally, Charlie can
get bitcoins

to his customers
in about an hour.

But with the recent flood
of people

trying
to purchase bitcoins,

bitinstant can't fill
their orders fast enough.

When I pulled up our
customer service interface,

we have close
to 2,000 open tickets.

And that's just
from Saturday to this morning.

Nobody was ready

for this kind
of volume,

so we're trying
to catch up

with the volume
and keep everybody happy.

Can you just sort of
describe quickly

what the last week or so
has been like for you guys?

The last week or so saw
our support staff

go from two people
to five people.

When someone
offers you

a seat
on the rocket,

you don't ask
where the seat is.

You just
get on the rocket.

Further, our volume has
basically tripled

in the past two weeks,

going from a few hundred
transactions a day

to now two, three thousand
transactions a day.

You just came
onboard here, right?
- Yeah, I did.

Actually, today is
kinda my first day.

- Oh really?
- Yeah.

How does it feel to be
a part of all this madness?

Um, well, madness, yeah.

It's overwhelming.

And what do you do
for bitinstant?

I'm the c.F.O.

Can you give me
a daily estimate

of how much
money you're moving
through your system?

Um, it's in the--

in the six figures
every day.

All right.
Well, thanks, Charlie.

- I really appreciate it.
- Thank you.

I don't know how
the government will
react to bitcoin,

but I spend thousands
of dollars on lawyers every day

just to make sure that
I'm not gonna go to jail.

It's super terrifying.
I mean, I don't wanna
go to jail.

I don't wanna become
a martyr either.

Bitcoin was the talk
of the town.

Charlie was
in the limelight

and could barely keep up
with media requests.

Within hours,
the price passed $200.

First day of spring,

first day
bitcoin is over 200.

The start of a new era.

Hi. Nice to meet you.

I'm the nice
warm loving mom

that makes him
live at home.

'Cause we can't--
we can't part from him yet.

We love him too much.

This is where
it all started

and this is where
it still goes down.

I've been collecting money
from all over the world.

And it's just something
I did way before bitcoin.

I've been doing it
since I was a kid.

So it's funny that
I'm collecting all this...

Fiat that's
not worth anything

and then all of a sudden
I get into this bitcoin thing.

I realized
during high school that

I could never work
for anyone.

I made up a term--

psychologically unemployable.

I started bitinstant
while I was still

in my senior year of college.

Bitcoin currently is
the largest social-
economic experiment

ever conducted
in the history of the world.

2013, possibly 2014,

will be the two years
that really make
or break bitcoin.

Bitcoin is the first product
that's digital,

but it's also scarce.

I got some good news
last night that

part of our licensing deals
that we've been trying to do

for the past
few months are finally,

hopefully,
coming through.

We got approved
to be licensed

in 30 of the 48 states
in money transmission.

I've been working very hard
on trying to be compliant

in the legal realm

and with fincen's
announcement,

setting up a way
for bitcoin companies
to legally exist,

that really changes
the whole game of bitcoin.

And for us,
it helped us get
that last push

that we needed
from all the banks

and the regulators
to finally, hopefully,

get that licensing
that we need.

Today, Charlie's meeting
with a realtor

to talk about
new office space.

Hi, Charlie,
nice to meet you.

- Hi, I'm Mitch waldman.
How are you?
- A pleasure.

- Got a minute?
- I have 10 minutes for you.

We're-- we're a company
with no boss, essentially.

Everyone has
their responsibilities.

It's just
one big executive board.

- It's just one big
executive board.
- Okay.

If I don't do my job,
these guys are all
gonna yell at me.

- So that's how we do it,
but we get things done.
All right.

We're outgrowing this space,
as you can see here.

- That's a good problem to have.
- Yes.

Now Rachel said
there was a great concern

- about security
in this space.
Yeah.

We're regulated,
so we can't share an office

- with another company
if they have access to us.
- I get that.

Our asset is our software.

Our software is processing
hundreds of thousands
of dollars a day

instantly.
Really quickly.

And that's on-site here?
Or is it in the cloud?

No, this is in the cloud.
It's all in the cloud,
but we monitor--

we have to monitor
everything from here...

- Right.
- ...And debug, fix,
take down, upload more--

- put up more workers.
- We deal with high-volume
data-oriented stuff every day.

Very very sensitive
customer data.

If there were not
a doorman,

at the very least
the space would be
designed in such a manner

that there'd be
a locked reception area.

If we want to pursue
a guard at some point,

we could have them
in that area.

- - I absolutely think

- it will be at some point.
It's just a matter of time.
- Really?

The potential
for theft is huge.

It's like operating
a bank, essentially.

That's pretty much it.

- Gotcha.
- It's basic stuff.

Yup yup. All right.

Any other words for me?

- Okay.
- Are you willing
to handle the task?

Sign me up, captain.

That night, the price
got as high as $266.

Every major news outlet
had taken notice.

Bitcoin fever was
at an all-time high.

It is getting
a lot of attention.

People are fascinated
by anything that
makes new highs

every day for weeks on end,
which bitcoin has done.

In terms of the total number
of the people

using the currency,
I'm not sure,

but you can say
that there's a huge amount

of fluctuation
in the volume of trading.

And then the price crashed.

Bitcoin lost more
than half of its value

in six hours.

From craze to crash.

It's the talk of many people
in the blogosphere,

and it's certainly suffering
some growing pains.

The value of the virtual
currency bitcoin has plunged.

It's been
a crazy day today.

I haven't slept
in like 40 hours.

Your order processed.
I don't understand

why we're still having
this conversation.

We refunded your order.
We sent you extra bitcoins.

I don't care, man.

When it comes to my money,
I don't fuck around.

- I know, man.
- You need your stuff.

I hear ya, I hear ya.
It processed.

Your bitcoins
are there, man.

So, Charlie, what's been
going on today?

- Crazy day, huh?
- Yeah, mt. Gox--

their whole system
pretty much failed

and their whole
trading engine is broken.

Pretty much caused-- almost--
us to shut down for the day.

Further, the bitcoin price
has just been

wildly swinging up and down

it was down $100 today.

It's gaining back up,
but mostly because people
can't buy and sell

and they can't withdraw
and they can't deposit.

'Cause the whole thing
is just-- it's just a Fritz.

So what we're trying
to do is figure out a way

to mitigate orders
somewhere else for now.

With mt. Gox stuck
in a nosedive,

the ripple effect
is creating chaos
in the bitcoin markets.

I'm trying to figure out

why our orders
aren't going through.

Rachel, am I allowed
to take another advil

if I took one
an hour ago?

They've been having problems
ordering anything off of gox.

Yeah, I'm getting a lot
of customers emailing,

saying "it says 'executed,'
but it's not showing
in the blockchain."

Dude, gox suspended trading.

- Really?
- Yeah.

"Orders placed
suspended until 2100."

What time--
what's 2100?

What? That's 9:00 P.M.
oh my God.

If you bought at 150...

And then you're at 260,

and then you watch it
dip down back to 150,

do you panic some?
Yeah, absolutely.

I don't know what a bitcoin is.
I just bought it.

Fuck.

You see buy orders,
people buying

and selling
at such a wide range.

It doesn't make
any sense.

The a.P.I. Is just
constantly failing?

Is that what's going on?
Or are we're not getting
any orders.

Don't care about the price.

Speculators can play
musical chairs

all day long
for all I care.

I'm-I'm-- I'm long.

I was focused on expanding
my mining operation.

The only people that
are gonna be shaken out

by this drop

are people that
are new to bitcoin.

Here's the avalons,
spinning away,

mining away.

And if everything
goes as planned,

we'll have 18 more
of these guys

in a couple of weeks.

Bitcoin is
a complicated thing.

You have to spend
some time looking into it

and understanding it
before you really care.

Now there's droves
of people that--

you know, are giving it more
than just that glance,

because the price
has gone so high.

And they have
dollar signs in their eyes
like Uncle scrooge.

It's so much more than that,

and I think that's why
the people who are mining

and the people
who believe in it

are just
kind of holding strong.

When trading resumed
at mt. Gox,

the price fell
even further, to around $70.

71 on b.T.C.-E.

Yeah, bitcoin--
it's volatile.

It's gonna be a long time
until we have stability.

That's the nature
of the beast.

Price discovery can be
violent and volatile.

There's gonna be a lot
of people that come and go,

and people
that scream wolf.

But at the end of the day,

the only thing
that really kind of
stinks right now

is that everybody is
trading on one platform

that isn't doing
the greatest job, so...

Over time, hopefully
we'll see some more
exchanges pop up

and get
some more options in.

People wanna keep
using bitcoin,

I'm sure the infrastructure
will come.

It's just gotten
ridiculously busy.

I get an email
every two seconds now

- and pretty much
more email than I--

--Than I can keep up with.

Jered kenna is
the c.E.O. Of tradehill.

The first U.S.-based
bitcoin exchange

to compete with mt. Gox.

He's also on the list
of bitcoin millionaires.

This is finnegan right here.

Guard dog.
Hey, finnegan.

Jered runs tradehill

out of a 41-bedroom
residential hotel

called 20 mission
that he also owns.

We mostly rent out rooms
to tech people,
startup people.

There's a lot
of bitcoiners.

I actually accept rent
in bitcoin,

which is great,
because we have a lot
of international people.

¶ Bitcoin! ¶

¶ Came to us
from the cryptogram ¶

¶ it came out of thin air ¶

¶ it saved us
from those nasty dollars ¶

¶ and won and yen ¶

¶ bitcoin. ¶

- that's all I got.
- I'm done.

Digital currency
is gonna happen.

I mean, it's--
it already is
happening,

and it will be
the future,

whether that's now,

10 years from now,
a hundred years from now.

We're going to be using
digital currencies

that don't depend
on fiat government.

Jered originally launched
tradehill about two years ago,

but ran into problems
with a payment processor

and was forced
to shut down.

Recently
he met Ryan singer

and together they are
relaunching the exchange.

The business
we're in is

helping people
speculate, right?

Markets are

price discovery mechanisms.

That's what they're for.

People--
they buy, they sell,

there's the bid,
there's the ask

and the price moves.
And when it levels out,

then that's what
the market price is.

I can't even count the amount
of people that have said,

"bitcoin's not backed
by anything.

At least dollars
are backed by gold."

I've realized that a lot
of people believe that.

My grandfather,
he got me into investing

when I was a kid.
I was five years old.

I could explain a p/e ratio,

and what a bid
and an ask was,

and the difference
between a limit order
and a market order

and all that stuff,
so for me,

I saw this as a way
that the average person

could actually take control
of their finances.

I just grew up
pretty nerdy.

I don't know.
Then like at 15 years old,

I decided I didn't want
to be a nerd anymore,

which was a mistake...
'Cause...

'Cause now I realize
it's pretty awesome.

In 1999
I joined the marines.

I was originally
with an engineering unit.

2005, I went over
to Afghanistan.

I was mostly working
with the Afghan national army.

It changed me a lot
as a person.

I've always been interested
in economics

and finance and technology
and cryptography.

I was
in a cryptography forum

and somebody I'd never met--
who was anonymously

in this forum
that I was chatting with--

sent me 10,000 bitcoins

just as a way to test
the system out

and see how it worked,
and I got 'em.

I'm like, "that's cool,
but what can I do with them?"

And he said,
"well, nothing yet, but...

If people believe
it has value, it will."

At the time, there was really
only one bitcoin exchange

it was mt. Gox.
I said, "we need
an alternative.

Who cares if the technology
is decentralized

and the method of transfer
is decentralized

and the people are
decentralized

if all the trades are
in the same location?"

I thought that building
another exchange

to give more people
access to bitcoin

would be a key part
of bitcoin's growth.

The day we launched,
we got a quarter-million
dollars in from user deposits.

And we said,
"oh shit, this is--
this is real.

Yeah.

Hey.

We're all fans
of "the big lebowski,"

so we're gonna have
a "big lebowski" party.

Nice!

It's a...
Very exciting day.

30 gallons of white Russian
and hallway bowling.

Yeah!

We work hard,
but we party hard too.

Okay.
Okay, I'm good.

- All right.
- I'm good. I'm not dead.

Yeah, I'm
the first one
in the house...

That opened
a tradehill account.

What happened?

In the same day
they went down to 90--

$65 or something,
or $90 a bitcoin.

I stopped smiling.

Tradehill, round two,
we optimized for success.

We launched expecting
to have to do

hundreds of thousands
of transactions a second.

Right now we've got
about 15 people

in addition to that,
we've got about eight
attorneys externally.

A lot of people are
depositing dollars.

A lot of people
are depositing bitcoin.
We're getting more trading.

We're pushing that
from a business perspective.

Also, we're talking to people

who want to do more automated
trading on our platform.

Get robots trading
against each other.

We've stress tested this

and we can handle about
500 times as much volume

as mt. Gox was seeing.

So we'll see
what happens here.

The interest in us
is pretty crazy.

Just the news
with bitcoin

has really kind
of validated everything.

Now people are like,
"oh, you're not this
crazy person

talking about some
digital made-up currency."

It's like,
"oh, I've read about it
in 'the wall street journal'

and 'the New York times.'
It's real."

We had an investor come in

and he said,
"hey, I really appreciate

your scrappy nature
and how you're hustling,

but I think it's time
for you guys to spend
30 grand a month on rent.

When you have
a billionaire client

and they want to come
check out your office

before they send you
a multi-million dollar wire,

asking them
to walk past pawn shops

- is not always the right feel.

So we're leaving
the mission. We're driving
into soma right now.

We're gonna go
take a look at what
may be our new office space

pretty prestigious address--
one market.

Right now we're trying
to forge this path,

and we're trying to comply
with existing laws

and anticipate
future laws,

which is extremely expensive
and extremely difficult.

- Is there parking here?
- Yes.

Okay, is that
included with--

Of course.

- Right, what does that--
how much does--

How much does that cost?

That's not terrible.

Whoa.

That's pretty sexy.

Twitter was here
for over a year.

- Yeah.
- Amazon comes and go
every single year.

- Oh, fantastic.
- I have Macy's, I have
j.C. Penney.

All the big ones,
they come over.

They are part
of the club.

- Sounds good.
- We'll be here tomorrow.

- Picking it up.
- Thank you for the business.

- Thank you.
- I appreciate it.

Thanks so much.

- We move in tomorrow.
- Just like--

- just like that, huh?
- Just like that.

- That's how we roll.
- It's pretty surprising

that that deal
just happened so quickly.

What was it?
You just liked the space

and decided, "hey,
there's no point in waiting"?

We like the space,
we like the address.

We just don't have
the time to spend either.

We've got all kinds
of important stuff
we're working on

and if we spend a week
trying to find an office,

and he and I put
20 hours into it

or 50 hours into it,
it's a huge waste of time.

I thought they'd be
in multiple bags

rather than one big one,
but hey...

I believe that bitcoin
will do to the banking industry

what email did
to the postal service.

It didn't make it irrelevant,

what it's forced
the post office to do

is concentrate
on their strengths

and less so
on their weaknesses.

Mike Caldwell is the creator

of physical bitcoins,

known as casascius coins.

They're often featured

in mainstream media
coverage of bitcoin.

They're a novelty item,

collectables
that basically act

as physical carriers
for bitcoins.

But they do something
very important.

They give bitcoin a face.

Come on in.

Sorry, the kids
are sleeping,

so I'm just being quiet
so we don't-- you know.

Each coin has
its own bitcoin address.

And the private key
required to spend it

is hidden
underneath the hologram.

This is where you make
the physical bitcoin.

Yeah. It's a random
smattering of things,

but I'm pretty careful
about the way I manage--

you know, the--

basically,
this is the credentials.

This is the hologram
and the private keys.

I'm pretty careful
about those and don't
keep them here.

I normally do them
on this mirror

'cause that helps me get
the fronts and backs right.

There's so many things
that cryptography
can do for us,

that if the world
just knew,

so many social problems
could be solved.

Cryptography can bring
fairness to elections.

It's too difficult
for people to understand

and someone needs
to bridge the gap.

Right now we're using
bitcoin to send money.

But many believe it will
revolutionize much more.

The technology
behind bitcoin

can be used to build
decentralized systems

with rules
that can't be cheated.

Now see, this is
my wife and my space.

- This is, you know--
- awesome.

It is what it is.

The more time goes by,

the more legitimate
bitcoin gets

and the more proud I am
to be associated with it.

Now what does
your wife do?

She does crafts.

She's a lot like me.

We just sit around
and make things all day.

It's just our obsession.

No, I'm not a drug dealer.
No, I'm not a criminal.

No, I'm not a terrorist.

I believe
in the rule of law.

I believe in structure
that builds society.

I believe in families.

I believe
in corporations.

I believe in all
the essential elements

that a civilized society
with law and order

need to be able
to function.

Focal length matters.

Cryptography is the basis

for us being able
to implement the values
we say we believe in.

This idea will never die,

the technology that bitcoin
brought to the forefront.

The genie is
out of the bottle.

Since the crash,
the bitcoin price

has been hovering
around $100.

Bitcoins seem to have
weathered the storm,

but there's still
much controversy
surrounding the currency.

The same cryptography that
insures a user's privacy

also allows it
to be used anonymously.

My father decided to retire

and he had an old
failing print shop.

I basically took it over

and I converted it
into an Internet place.

We're the only place
in L.A.

That supports
bitcoin right now.

This is
my linux system here.

It's a system that
also mines for bitcoins.

Makes about a dollar a day.
I just do it for fun.

I was really really
into the Internet,

literally in 1990,
1991, 1992,

and I had
the hardest time describing

what the Internet was
to people.

I would tell people,
"well, it's like this
network of computers.

And the network
of computers

can talk with other
networks of computers

and then you could
exchange information."

And people would have
no idea what it was.

- When people ask me
what bitcoin is

I have the hardest time
describing what it is.

And I'd surmise it as,
"it's basically money.

It's basically
an anonymous PayPal.

It's one of those things
that you have to use

before you understand.

Politically, I'm not
a very big fan

of either the banks
or federal reserve,

and bitcoin allows me
to get around that.

One of the programs we support
is a protocol called "Tor."

And basically what Tor does is
it allows you to communicate

to a website anonymously.

Tor is a program
that allows you to get on
the silk road.

And this is silk road.

Basically, any drug
you want is available.

There's a lot of weed.
There's a lot of cocaine.

There's a lot of ecstasy.

But there's also
unusual drugs,

like if you want some sort
of anabolic steroid,

you can type "steroid."

You'll get
all the different types

of steroids
that are available.

Silk road itself is
not selling the drugs.

This is basically
a matchmaker

between buyer and seller.

Both the buyer and seller
don't know each other.

Both the buyer
and seller are anonymous.

It goes
on this web of trust.

If you want to, let's say,
buy this testosterone,

you'd click on this.

He has
99.3 positive feedback

from more
than 300 transactions.

So even though the contracts
aren't enforceable by law,

the reputation system
makes it so that

the system works
pretty well.

Oh, there's
a fireworks section now.
I didn't know that.

Florida I.D.,
1.88 bitcoins,

which is around $150,
something like that.

A forged
auto insurance card,

forged passport.

There is over
9,000 entries for drugs.

That's a lot.

I would say there's around
maybe five customers

that know about it
and use it.

It's a very small percentage
of the people that come in.

But the people
who do know about it,

specifically
come here to use it.

What the customers do
with the computers

is pretty much
their business.

Another day in the office.

You gonna do
drug dealing of any sort,

silk road is
the place to go.

How many people are
selling cannabis right now?

It looks like 2,011 people
are selling cannabis.

They call me
Mr. bitcoin.

I probably been
dealing drugs

since I was like 17.

Right now I'm 26.

I think of it
as a global thing

when I'm on the computer.

I'm doing business
with the world.

Let's see,
they have blue dream,

sour diesel,
pineapple thai,

purple kush,
girl scout cookies.
Purple pays.

When I first
heard about it,

I was laughing about it.
It took me a week

to just even think
about this for real.

"I can really make money
off the Internet?

Selling this type
of stuff on the Internet?
You sure about that?"

This something I probably
may buy right here.

They have looks like
some good kush.

And some of these things
only take a day to get here

with no harassment
from nobody

instead of just being
on the streets.

Once you get the hang of it,
it's actually kinda fun

just looking through
different things.

"Mr. bitcoin."
I'm running with it.

I like the name.
You know what I mean?

I'm not gonna lie.
I get Booty off this.

I kinda like talking
about this stuff with girls.

Girls like that shit hot.

"Oh, you're street, and you got
a little nerd knowledge?

This is great."

I have a lot of bitcoins
saved up already.

My business is doing good.

It's a fun way of doing
hustling these days.

The future brung
a different way to hustle

and I like it.

With so many people
using bitcoin

in so many different ways,

it's becoming apparent
that it can't be ignored.

- Let me see
your driver's license.
- Oh sure.

This stays at the desk
until you leave the building.

Today I'm visiting fincen,

a bureau
of the U.S. department
of the treasury.

Despite having
released guidance
on virtual currencies,

there's still
a lot of uncertainty
surrounding their outlook

on the future
of bitcoin regulation.

Straight ahead
and in the big
fishbowl-looking--

okay, great.

I'm not gonna say
we're gonna have

every answer
for you today,

but I mean...

Oh yeah.

Jennifer shasky calvery
came onboard

as fincen's
director last year.

During her career,
she spent 15 years

at the department
of justice

where she specialized
in fighting money laundering

and organized crime.

Virtual currencies
have been on my radar

for a while,
even prior to coming

to this position,
because of,

unfortunately, the abuse
of some of them.

Bitcoin,
on the other hand,

is one that really
didn't come on my radar

probably until
I arrived at fincen.

Depending on
who you speak to,

the issuance
of our guidance was

either the best thing
that ever happened to bitcoin

or the worst thing that
ever happened to bitcoin.

Some accusing us
of trying to kill bitcoin

and others saying that
it somehow legitimized it.

Of course, neither
of those things I think
is probably true.

And certainly
neither of those things
was our intent.

One of the clear lines is
that if you're a consumer

who's using bitcoins
to buy goods and services,

the guidance
doesn't pertain to you.

We're focused more
on the places where we think

we have risks
to the U.S. financial system

from money laundering
and terrorist financing.

And I think
that might be kind of--

a lot of the bitcoin community
has a little bit of a fear

that bitcoin
may be characterized

in a way so as to tie it
to some bad actor ruining it
for everyone,

when a lot of people that
are interested in bitcoin,

including myself, see it
as just this technology
that we don't--

really don't wanna
see it falling

into the wrong
categorization

with all the potential
that's there.

Sure. So that innovation
around bitcoin

and the virtual economy

is really one of the more
interesting aspects,

I think, of this story--
the idea that

it can be used
to potentially serve

the unbanked out there,

just to provide
some really new services

that are convenient
for consumers.

The flip side of it
though

is that to be a part
of the financial system--

the U.S. financial system,
the global financial system--

also comes
with some responsibilities.

And those
responsibilities include

not allowing
your institution to be used

by criminals
and by terrorists.

There's always
been a concern

that the government might try
to stamp out bitcoin.

But perhaps they see the risk
of being left behind.

In may 2013,
the biggest gathering to-date

of bitcoin enthusiasts
and entrepreneurs

happened in San Jose,
California.

We're at bitcoin 2013.

It's the inaugural conference
of the bitcoin foundation.

Bitcoin is worldwide
and the vast majority of people

haven't even heard
of bitcoin yet.

It's more powerful
than every computer

on the top-500 list
combined.

It's an awfully
big world,

an awful lot
of things
could happen.

Really, we've been
on a roller-coaster ride

and I expect, at least
for the next few years,

we're gonna remain
on a roller-coaster ride.

I happen to enjoy
roller coasters.

I think they're fun.

Just a few weeks earlier

Cameron and Tyler winklevoss,

known for their involvement
in Facebook,

announce that
they own a 1% stake

of all bitcoins
in existence.

Worth around $11 million.

- How's it going? How are you?
- Nice to meet you.

They also made
a $1.5 million investment

in Charlie's company,
bitinstant.

We started looking
seriously at it

at the end
of last summer

and started purchasing
around that time.

I think a light bulb just
went off and we said, "wow.

The implication of this
could be enormous.

If everyone in the world
could have a bitcoin address,

everyone in the world
could be banked
fairly quickly.

And when you consider that,

it's a very powerful idea.

And bitcoin can
make that happen.

We're going
all over the world.

We're going
to the u.K.

We're going to Australia.

We're going to--
we're already in Russia.

We're going
to South America.

We're already
in Brazil now.

You can buy bitcoin
at any of our locations.

It's fun to think that
satoshi might be here too.

I always wonder
if somebody is--

if someone here
somewhere is...

- Yes. I was planning--
- ...Standing in
the corner going--

What would he do?

What talks would he
be attending, you know?

We're seeing the bitcoin
players in the market

meeting with
the venture capitalists

and they're all
beginning to posture

and that's
very exciting,

because
it means that

there's gonna be
a lot more

infrastructure
built out,

and lot more money
flowing into the space,

and it's really gonna be
a big bull market for bitcoin.

One of the companies
best known for making

bitcoin accessible for commerce
is Atlanta-based bitpay.

They are pioneers
in bitcoin

and provide a service
that enables merchants

to accept
bitcoin payments

without dealing
with its complexities.

We've grown about
a factor of 10

since the beginning
of the year.

We were doing about half
a million dollars a month...

- Yeah.
- ...Around the turn
of the year,

and now we're doing
about $5 million a month.

This is people using bitcoins
to buy real goods and services.

They're not day trading.
They're not exchanging.

They're actually
buying things.

I'm confident that bitcoin is
the most important invention

in the entire history
of the world since the Internet.

Roger ver is an investor

in several
early bitcoin companies,

including bitpay.

His passion and enthusiasm

has earned him
the nickname "bitcoin Jesus."

It is going
to change everything.

And all of you here
in this room

you're at the very
very forefront of that.

Roger lives in Tokyo

but travels the earth,
spreading the good word
of bitcoin.

The last couple of days
we've been setting up

a business per day
to accept bitcoin here
in the bay area.

Today's business
is going to be

this super kyo-po
Korean supermarket.

So for you-- you accept
credit cards right now?

- Right.
- The credit card companies
are charging you 2% or 3%?

- Right.
- For bitcoin,
you can do the same thing,

but they'll
only charge you 1%

and you'll still get dollars
in your bank account.

If you want,
you can choose to split

some of the payments
that you receive

into bitcoins
and then some into dollars

in whatever ratio you want,
so you can keep 99% in dollars

and 1% in bitcoin or 99%
in bitcoin and 1% in dollars.

- Okay.
- However you want.
You can decide that.

Roger is describing
the service

provided by bitpay.

They take the volatility
of bitcoin's price

out of the equation
for merchants

by immediately converting
bitcoins to dollars

at the time of sale.

So right now we have
it set to 100% dollars,

so anybody that
pays here with bitcoin,

they'll deposit the money
into your bank account

the very next day
with only a 1% fee.

And I guarantee you
over the next couple of weeks

you'll have
lots of computer nerds

that love bitcoins
will be coming in here

specifically to shop
at your supermarket,

so that they can pay
with bitcoin.

The credit card companies,
just for processing the payment,

they take anywhere from...

1.5% to over 3%

and then on certain cards

there's even
a per-transaction fee,

like 20¢ per transaction

plus the percentage
of the transaction.

...$11,000, $12,000 a month

on the average
that they just take
right out of our account.

I honestly think that

there's a really good chance

that bitcoins will be
more than $1,000

by the end of the year,
because everybody who
hears about--

"wait, I can send money
to and from anyone I want?"

It's impossible for anyone
to freeze your account,

it's impossible for anyone
to block you from sending
or receiving these bitcoins.

...Euros,
so you can see

all these different currency
exchanges around the world

that exchange
to and from bitcoins.

You can see there's
maybe between 50 and 100
exchanges now.

When I first heard
about bitcoin and started
telling everybody about it,

if you looked
at that same page,
there were less than 10.

And there's no central
office that they could raid
or anything like that?

There's no central--
it's amazing.

There's no central office,

there's no central place
they could go to

and say,
"take Steve's bitcoins,"

or, "give Steve's
bitcoins to Kevin."
Do this or do that.

So who's the owner
of bitcoins?

- Everybody that owns bitcoins?
- Yeah yeah.

Just like who's
the owner of gold?
It's whoever owns some gold.

Short of shutting down
the entire Internet

in the entire world,
there's no way to stop bitcoin.

And hit "request payment."

And that's the q.R. Code
for your bitcoin address.

So I'm gonna scan that...

So now I have your bitcoin
address on my phone.

I think this is $2,

so I'm going
to send you $2

worth of bitcoins.

There it is.
You just received
that many bitcoins

from me,
directly with no fee

and if you hit
the little green square

it'll show you
the equivalent amount
in U.S. dollars.

So you just received
$2 worth of bitcoins

directly from my phone
to your phone.

And you can send
money just like that
anywhere in the world.

You could've told me
your bitcoin address

by email or posted
on Facebook

or Twitter or anywhere.

So I could print this
and have it at the register.

Yeah. Yup, and you can
check right on your phone

any time that you
received the payment.

- Okay. Thank you, Steve.

- All right. Thanks.
- Thank you for the tea.

One of the newest standouts
in the bitcoin space

is a San Francisco company
named coinbase.

They operate
a digital wallet service

that makes it simple to buy,
use and accept bitcoin.

I would not be surprised at all

if Google, square, PayPal--
everybody--

is looking at adding bitcoin
in one or two years.

By then we need to have
50 million wallets.

If we can make this
easy to use,

it's gonna be huge.

My involvement in bitcoin
is not politically motivated.

- Yeah, dude.
People are realizing
large capital gains.

When professional
investors enter the realm,

the stakes
definitely change.

We raised $5 million
from union square ventures.

Fred Wilson led
the round there.

I think bitcoin is still

actually a little bit
under the radar.

I think it's moved
past the stage where
people dismiss it,

but I don't think
that it's totally

gone mainstream either.

I think we're in that
middle stage right now.

At the end of the conference,

jered from tradehill
threw a party

to celebrate
how far things had come.

- You guys
are hot right now.

- Yup.
- Congratulations
on the raise.

- Thank you.
- It's good money, man.

- Swell do.
- Yeah.

- I mean--
- hopefully it's an advancement
for the community.

I am completely
pro-compliance.

I think if you don't want
to attach your identity to this,

- just can't work with you.
- Yeah, so I thought
I just need to--

I mean the libertarian side
of me is like, "ehh.
Yeah, whatever,"

but like,
from a business perspective,

if people don't play
by the rules,

- you're not gonna last.
- Yeah, I completely agree.

- You're gonna just shut down
or you're gonna go to jail.
- Yeah.

Noticeably absent
from the conference

were representatives
of bitcoin's

biggest exchange, mt. Gox.

Just days earlier
the department of homeland
security

seized more than $5 million
from their U.S. accounts.

The seizure warrant stated
that mt. Gox had failed

to register
as a money transmitter,

putting them in violation
of the new fincen guidelines.

I'm traveling to Tokyo
to meet mark karpeles,

mt. Gox's reclusive c.E.O.

No bitcoins on here.

Not yet.

That will make this
completely unnecessary.

But for now it seems
kind of primitive

that we're exchanging
paper for paper.

- And losing.
- And losing value.

Someone's taking a cut.
Someone's taking
a little percent.

Mark and his
business partner gonzague

are French but they operate
mt. Gox from offices in Japan.

Originally mt. Gox was
an exchange for trading cards

- used in a game called
- The gathering."

M.T.G.O.X. Stood for

The gathering
online exchange."

In 2011
mark's company tibanne

bought mt. Gox,
and his focus has been
bitcoin ever since.

One of the conditions
of my visit

is to refrain
from any discussion

about the d.H.S. Seizure,

due to the ongoing
investigation.

We've arrived at mt. Gox.

This is
mt. Gox right here.

There's no big sign
or anything, no-- no--

it doesn't look like
a crazy commercial
establishment.

Despite
their legal problems

mt. Gox still
handles more volume
than any other exchange

and is processing around

$6 million worth
of bitcoin trades every day.

We had, last year,
an average of 10,000
new customers a month.

January, it was 20,000.

Then 30,000, 60,000,

150,000.

With what's going on,
we go down,

but we are reaching
100,000 new customers

- for may.
- That's amazing.

- In a month?
- In a month.

- Wow.
- So it was like this...

Zip, bup!

But still,
after what happened

I thought that a lot
of people will go away

or don't create
a new account.

But still,
100,000 new customers

it's... wow.

And here we've got
the office.

Mt. Gox employs 18 people

not only is mark the c.E.O.,

he's also the c.F.O.,
the lead developer

and performs
all technical operations
to keep the exchange running.

- C++.
- C++.

Is that your main--
is that your main

- programming language?
- No.

I've got a lot of main
programming languages.

Yeah? What's your favorite
programming language?

Really depend
on what I need to do.

I create a good something
really quick

and I don't care
about performance,

I use p.H.P.

If I care a little bit
about performance,

I will use c++
with q.T. Available.

And if I care
a lot about performance,
I will use axum.

When we go in,
cameras down first,

- until we get to your servers
and then back up.
- Exactly.

Okay.

Getting ready
to go into the mt. Gox
data center location.

Okay, cameras down.

We were allowed
to snap a few photographs

If mt. Gox's new trading engine

can really support
100 million orders per second,

it should be able
to scale with the demands
of professional traders.

But with complex
legal problems and
increasing competition,

mark's attention is pulled
in many directions.

Do you work seven days
a week, typically?

- Yup.
- It seems that you do

the majority
of all the heavy lifting.

- Literally.
- Yeah.

You need to remove
your shoes in the entrance.

Mark is a talented man

in one of the world's
biggest cities...

But maybe he should stick
to computer keyboards.

Okay, I messed it up.

- Awesome.
- Yay.

Yeah.

Erik voorhees.
We are here in northern
New Hampshire

for the porcupine
freedom festival.

And this is an event
put on each year

by the free state project.

Basically it's just a bunch
of crazy anarcho-capitalists,

libertarian types
in the woods,

with freedom
and families.

Pretty much
all of the vendors
accept bitcoin.

Ahh!

It tastes much better
when bought with bitcoin.

Thanks, guys.

Soups, salads and smoothies.

I would say one-third
of our sales

have been in bitcoin.

It's 20 bucks.
So you're gonna pay
in bitcoin?

- Uh, yeah.
- All right.

Last year was
our first year accepting it

we did maybe 18 transactions,
20 transactions at the most.

And now we're
up to close to 120.

This community is really
one of the largest groups

of people
in the U.S., I think,

that is truly adopting bitcoin
and using it as a currency,

because of what it stands for
and because of what it enables.

The world is
seriously changing now

and it is changing
in a very interesting,

very radical,
decentralized,

and, in my opinion,
positive direction.

Shoot.
Here it is.

"Price breaks
the all-time high."

Vitalik is only 19 years old,

but he has a profound
understanding

of the complexities
of bitcoin

and a gift
for explaining them.

As lead writer
for "bitcoin magazine,"

he's been traveling
the world, covering bitcoin
for the past year.

I'm a big fan
of the decentralization
concept, in principle.

You know, have lots--
lots of different societies

operating according
to whatever people's
own beliefs are.

Bitcoin has unique properties

that no other system
in the world has had before.

It really seems like
the only practical way forward.

As you move away
from cash

into your debit cards
and your credit cards,

you essentially
are giving up

a certain degree
of your privacy

without even
really knowing it.

It's important to understand
that bitcoin is not

automatically,
perfectly anonymous.

But what it does is it
enables you to be anonymous
if you wish to.

Erik voorhees is
the founder and part owner

of a hugely popular
bitcoin gambling site

called satoshi dice.

Satoshi dice is
the first of a new breed

of provably fair
betting games

that use bitcoin.

Since all bets are public,

anyone can verify
the odds and payouts.

At its peak,
satoshi dice was responsible

for more bitcoin transactions

than all other uses
of bitcoin combined.

It played an important role
in bitcoin's development

as one
of the first applications

to really test
what the bitcoin network
could handle.

Recently Erik moved
his entire operations
out of the U.S.

And into Panama.

He started a company
called coinapult

that lets you send bitcoin
via s.M.S. And email.

I think most people,

at least in America,

believe that when they put
$1,000 into their bank,

the bank is holding $1,000
in its vault for them.

And they don't realize
that 99% of all the dollars
are digital.

The fact that
we have these tokens
called paper cash

is the exception
to the rule.

People see the cash
and they think that
that's what the money is,

but it's all digital
and it's been that way
for decades.

You guys moved
your business to Panama.

What was the primary driver
in that?

If you're a U.S. company,

you have to follow
the arcane U.S. regulations

for all of your customers
around the world.

So if you do business
with some rural farmer
in Africa,

you're gonna need to get
his social security number,

you're gonna need to get
all this information

that Washington tells you
is important.

We did not want
to have to apply

the U.S. financial
regulatory scheme

to customers
in sub-saharan Africa.

I don't think
the developed world's

gonna be where bitcoin
really takes off, long-term,

because our banking system's
worked decently well.

Many people around the world

don't have any
bank accounts whatsoever.

Ultimately, those are
the types of people

who will find
the most value out of bitcoin.

- One month later
- Erik announced

he had sold satoshi dice
to an anonymous investor.

The price?

126,315 bitcoins,

worth around
$11.5 million.

Most of the new
offices in this city
are in this condition,

all still
what's called "gray."

Not ready, no Internet,
no electricity-- nothing.

But we actually got one
that was finished,

so we moved in and we are
super excited about it.

You can see
all the skyscrapers

of new banks and everything
getting built up here.

This is the financial center
for central America.

So it was fitting
that we establish
ourselves here as well.

Still setting up the office.

We've been here
for two weeks.

We're getting
walls put in.

We've got furniture.

This is the brains
of the operation.

- This is Mr. ira.
- Howdy.

He can program anything,
and you can see all these
books he's reading.

What have we got here?
We've got "cryptanalysis."

We've got
"everyday cryptography,"

"introduction
to mathematical cryptography."

I read all of these,
of course, when I was
much younger,

but ira's trying
to catch up with me.

The bitcoin phenomenon
is trying

to take control
of money away

from the state and return it
to individuals.

It's trying to separate
money and state

in the same way
and for the same reasons

that it was important
to separate church and state.

There's a wonderful quote
from one of the rothschilds--

"give me control
of a nation's money

and I care not
who makes its laws."

So I'm trying to play
my part in that narrative.

Outside of the United States,

billions of people
don't have access

to basic banking services.

Bitcoin can level
the playing field

and help bring
developing nations

into the global economy.

Cheers, cheers.

Eventually people are
going to use a currency

that is as free
as the Internet

because people
will seek out freedom
wherever they can.

And just as
the government can't
stop the Internet

and the freedom of speech,
it can't stop bitcoin and
the freedom of money.

So we're just gonna
have to see how hard
they try to do it.

It's scary
but it's exciting,

because at the other end
freedom typically wins.

We just have see how long
it takes to get there.

As summer rolled on,

the bitcoin industry
continued to flourish.

It's hard to remember
the days where I was

running this thing
out of my basement

and with one or two people.

Bitinstant was just
a domain name.

Charlie and bitinstant

moved into
their new offices

I always wonder
if satoshi knew

that he was gonna build
something that would foster

companies like this,

where we're actually like
a company with jobs

based on something
that someone we don't know
wrote a paper on.

It's kind of creepy
if you think about it.

I wonder if he's watching us
right now or something.

In San Francisco,

jered and tradehill had moved

into their new space as well.

It sounds funny.
It's not a $100-million
market anymore.

It's grown beyond that.

More professional people
are in the space

and they're expecting
to deal with other
professionals.

But just as things
were ramping up,

regulators started taking
a closer look at bitcoin.

Some bad news
for bitcoin, or is it?

Its days of glory
could be ending.

At least
two dozen companies

have been subpoenaed
by New York's

department of
financial services.

Can't be a good thing.

Bitinstant, bitpay, coinbase

and winklevoss capital
were all issued subpoenas.

We want to make sure that
as this enterprise grows

and if it does become
a place where

a lot of people are engaging
in financial transactions

that we have sufficient
protections in place.

With increased pressure
in banking compliance issues,

bitinstant was forced
to suspend services.

Jered faced
similar battles.

Due to a lack
of regulation,

many banks decided to cut ties
with bitcoin companies.

Without a U.S. bank account

tradehill can't operate,

and jered was forced
to pull the plug.

Regulation typically evolves

much more slowly
than innovation.

And regulations
cannot keep pace

with the pace
of innovation.

Explaining bitcoin to a bank

feels like explaining
Amazon.Com

to Barnes & noble.

Until lawmakers catch up,

startups like tradehill
and bitinstant

are left out on a limb.

Banks do not want to bank
bitcoin companies.

When you have regulation,
you can comply with it.

When you don't
have any regulation,
they're not exactly sure.

And if the banks aren't sure,
they just default to "no."

New regulation takes
at least one year to develop

propose and adopt.

And in many cases,

it can take
much longer than that.

I won't let this go.

I will fight till the end
for bitcoin.

Whether I have
to work on the street
or sell lemonade,

bitcoin's gonna succeed
one way or another

and I'm gonna be
a part of it.

Over the past several months

the bitcoin mining landscape
has changed significantly

When I started,

bitcoin mining was
a hobby for geeks.

Now it's big business.

In order to continue mining

and continue playing
in the game

and be competitive
and be profitable,

I would have to spend

hundreds of thousands
of dollars on gear.

The 18 miners
I ordered from avalon

never arrived.

And the units
from butterfly labs

took over a year to ship.

By the time I got them,

bitcoin mining was
so competitive,

that I would never
be able to mine back

all the coins
I used to buy them.

See that computer?
That computer makes bitcoins.

And this is all
the other computers that
are making bitcoins too,

and it goes straight up
in a line up in the air.

And that's 'cause
there's a lot people

that are making bitcoins
with computers like that.

As my new units
are arriving,

I'm selling them
for bitcoins

to try to recoup
what I can.

If you don't mind grabbing
those other cables,

- I'm not coming back up.
- Okay.

I'm taking a pretty big hit...

But overall
the mining experience

has still been worth it.

My mining days
may be over,

but I'm still very involved
with bitcoin.

With bitcoin,
it's a money system where

it's backed by math.
It's back by the laws
of mathematics

and by the rules
of the protocol.

I keep thinking
that there's gotta be
an easier way

to just set up
a secondary protocol

to trade private keys.

Every time I log on,
I see another dot on China

and I'm like, this is why
right now the price has gone up.

The price is
nearing 150 again.

Many attribute it
to the explosion

of bitcoin's popularity
in China.

What's happened recently
is Chinese people

have really come
and adopted bitcoin.

As a culture,
as a nation

Chinese people are keen
to learn about

things that are
on the Internet,

things that involve
math and science.

We think that China can really
contribute in this space

and help bring bitcoin
to the mainstream.

Germany's another part
of the world

where bitcoin
has found a home.

It's starting to get normal
if one person a day

comes in and buys
a coffee with bitcoins.

People are looking
for a new way of paying--

not through banks,
not with Euros,

not with dollars.
Something new.

The German ministry of finance

even became the first
governing body

to officially classify bitcoin
as "private money."

I believe if we want to get

some justice back
into our society,

we should reduce
the importance of the banks.

Bitcoin is banking
without banks,

so here we go.

The FBI today shut down
what it's calling

the most sophisticated
Internet site

in the business
of selling hard drugs,

including heroin,
cocaine and LSD.

In the Sci-Fi section

of a San Francisco
public library,

undercover agents
surprised a young man

quietly working
on his laptop.

They arrested a 29-year-old
software engineer

named Ross Albrecht

and accused him
of being the mastermind

behind the silk road.

People have always tied
the silk road to it.

Media has always
tied the silk road to it,

as if silk road is bitcoin,
but it's not.

This may be a sign
that bitcoin is growing up.

It's funny. My friend
just I.M.'D me and said,

"silk road got raided

and the government seized
$3.6 million in bitcoin.

Is there a way
to invalidate bitcoins?"

I replied, "no."

People are starting
to finally realize

that bitcoin has nothing
to do with how people use it.

It's just money.
It's like gold.

Of course,
not everyone thinks

bitcoin is the way
of the future.

Bitcoin will not be able

to survive or thrive

without becoming legitimate.

I don't see it

having a serious place

in our financial system.

There are
really good reasons

why we have central banks

that have the power
to put out financial fires

by printing money.

I'm worried
about the technology.

As darth vader once said,

"don't put all your faith
in technology."

I think
10 years from now,

we'll look back on this
and just kind of chuckle

at the bitcoin fad.

"Oh yeah,
I remember bitcoin.

Oh yeah,
I remember that."

It's financial freedom.

Come on, bro.
This is the new world, bro.

Others are more optimistic.

I think
within 10 years,

you're gonna have a lot
of people using bitcoin,

but they're not
gonna realize that
they're using it,

because it's gonna
be a protocol that's
imbedded underneath

whatever financial service
they're using today.

And by bitcoin
being open-source

it's what can allow
all these different
mobile wallets

and all these
financial technologies

to all talk to each other,

especially
around the world.

Whoever the hell satoshi was,

he should go down in history
as one of the greatest people

or groups of people
that ever existed.

This is a technology
that mankind has needed

for thousands of years.

People have been dealing
with monetary shenanigans

since the Roman empire
clipping gold coins.

And finally people
can escape it.

I'm cautious to try
to predict the future.

We don't really know.

I tend to be
a technological optimist.

I see the democratization
of technology

as being
a really positive thing.

And I think that's
a really powerful force

that is really
only just beginning.

Not bad. Oh!

Recently, as the price has
been floating around 200 again,

I have a lot of friends
that have asked me,

"are you gonna cash out
some of your bitcoins now?

The price is really high.
You should get some dollars
out of it."

I kind of tell 'em,
"no, don't you see it?"

I've met so many
interesting people

and there seems to be
one thing that kind of binds

a lot of them together,
and that is that

they're willing
to face opposition

and follow through on the ideas
that they believe in.

The people who try
the crazy ideas

often fail and then everybody
likes to point their fingers

and laugh and say,
"that was such a stupid idea."

But once in a while
it works out.

I think bitcoin
is proving to be

one of those things.

The decision to bring
virtual currency

within the scope
of our regulatory framework

should be viewed as

a positive development
for this sector.

I'm here to testify,
because I believe

that digital currency
represents

one of the most important
technical

and economic innovations
of our time.

We are enthusiastic
about the potential

of virtual currencies

and the digital economy
for social good.

This latest generation
of technology

which we're talking
about today

takes things to a whole
new level.

There's a bit

of a shared
responsibility here

in trying to figure out
how to make this work.

It is a little strange
that bitcoin--

we don't know who
the creator is

and so that often

conjures up the idea
that there's

some risk here that
we have not--

you don't think it was
Al Gore, do you?

If you think a little broadly,

this could, again, have
huge huge implications.

2013 was the year bitcoin
first entered the mainstream

and 2014 got off
to a dramatic start.

Just as we were wrapping
things up on our film,

Charlie shrem was arrested

after returning
from a bitcoin conference
in Amsterdam.

He could be facing
up to 30 years in prison

on charges related
to his activities
at bitinstant.

In j.F.K.,
you walk right off the plane,

and you go straight
to customs.

About three agents
in front of me

and then four agents
behind me said,

"Mr. shrem,
please come with us."

They took me
to an interrogating room,

told me that
I'm being arrested

on federal crimes
of money laundering,

running an unlicensed
money transmission business

and failing to file
suspicious-activity reports.

- The indictment alleged that
- Charlie had sold bitcoins

to a reseller that operated
on the silk road.

What sucks
is the house arrest.

I have to pretty much be here
all the time, every day.
I can't even go outside

unless I'm going
to my lawyer's office,
which is once or twice a week.

I pretty much lost
my freedom,

lost everything
that I've built
over the past year.

Charlie's arrest wasn't
the only bad news

that rocked the community
in the new year.

For months there had
been rumors that mt. Gox
had become insolvent.

And in February
the site went offline.

Do you still have
everyone's bitcoins?

I'm not touching you.
I haven't touched you.

Do you still have
everyone's bitcoins?

The rumors turned out
to be true.

Mt. Gox had reportedly
been hacked

and nearly half
a billion dollars worth
of bitcoin were missing.

Mark was forced
to step down as c.E.O.

And mt. Gox went
into bankruptcy.

A national
magazine claims
to have identified

the mysterious founder
of the worldwide

digital currency
called bitcoin.

Tonight he is
speaking out,

but he says he has

nothing whatsoever to do
with bitcoin.

Why did you create
bitcoin, sir?

Okay.

Sir, can we ask you
about bitcoin?

- No no no no no.
- Why were you involved
in bitcoin?

Okay, I'm not involved
in bitcoin, okay?

- Who's involved in it?
- Wait a minute.

I want a free lunch first.

I'm gonna go with this guy.

I want a big one.
Yeah.

Oh, okay. Yeah,
this will be good.

- Oh jeez.
- We have some water.

Hey, where's yours?

"Newsweek" claimed
the creator of bitcoin

had not used a pseudonym.

They connected the dots

to a 64-year-old
Japanese man

living in Los Angeles...

Named Dorian prentice
satoshi nakamoto.

Nakamoto immediately denied
the allegations

and said he'd tell his story
to the first reporter

who agreed
to buy him lunch.

The main reason
I'm here is

to clear my name,
that I have nothing

- to do with bitcoin...
- Yup.

...nothing to do
with developing.

I was just an engineer
doing something else.

As the media
frenzy escalated,

"newsweek's" claims
started to unravel.

Holes in the story
led many to believe

it was nothing more
than sensational journalism.

There was
no conclusive evidence

tying Dorian to bitcoin.

Amidst the uncertainty,

on that same day...

A comment suddenly appeared

on satoshi's long-dormant
profile page which read...

Maybe we'll never know
who created bitcoin...

But the truth is

it doesn't really matter.

Bitcoin belongs
to everyone.

And the future
is ours to build.

Put $100,000
on market orders
right now.

- Why?
- Let's do it.
Let's do it. Come on.

- Come on.
- Why? What's
gonna happen?

Buy 100k worth
of bitcoins right now.

- Why?
- Do it.

- I don't wanna do it.
- Do it.

You owe me
$100,000. Do it.

I'll send you
$100,000 in bitcoins.

No, you buy it.
But 100k right now.

Dude, I can't. I need
the floating gox
for volume.

Closing bell
for satoshi square!

All right,
does this look right?

1-n-p-w? Yup.

Yup, okay.

And I owe you 0.2?

- Uh... 0.18.
- 0.18.

This is for
bitcoin t-shirt.

I got 'em.
A pleasure, sir.

Great doing
business with you.

- Gonna wear your
shirt proudly.
- Do it.

That's one thing
that's interesting
about bitcoin.

It's like, how do
you declare losses?

You point to two
transactions that
happened on the Internet

and you tell the I.R.S.
That you owned that?

"Oh, I used to own
that and I lost
the private key."

And then if you
really do lose it,

how do you write it
off for taxes?

Oh, that's gonna
be interesting.

We love bitcoin.

Okay, guys, we're gonna
play a special version
of hopscotch

called "bitcoin
blockchain hopscotch."

Oh, you lost
all your bitcoins!

Who is satoshi nakamoto?

I'd... rather
not tell you,

- but yeah.
- Oh, do you know?

Uh, maybe not, maybe.

Oh.

You know,
I have a bitcoin
and a half myself now.

Which I think
probably in 10 years

When you think
about it hard enough

on a global scale,
this is a net gain
for humanity.