Given ground as you can in negotiation move sites had to listen to each other adjust deposition and true reading these 2 compromise this was a difficult negotiation for union as rugged as full United Kingdom. Part the British prime minister Tories amazed said she was happy to move the discussions onto a new stage I very much welcome the prospect of moving ahead to the next phase to talk about trade and security and to discuss the positive future relationship that is in all of our interests I've consistently said that we want to build a deep and special partnership with the e.u. As we implement the decision of the British people to leave at the end of March 2090 doing so will provide clarity and certainty for businesses in the u.k. And the e.u. And crucially for all our citizens the Israeli authorities have reinforced security in the West Bank and Gaza Strip to deal with more protests today following President Trump's decision to recognize Jerusalem as the capital of Israel from Jerusalem Tom Bateman reports Palestinian groups have called for a day of rage to mark their rejection of President Trump's decision while the Islamist group Hamas has called for a new into Fatah or uprising Palestinian official said dozens of people were wounded in yesterday's clashes in the West Bank and Gaza however the protests have not so far reached the scale of those during the summer when a crisis erupted over access to one of Jerusalem's holy sites the u.s. Has warned the Palestinians against cancelling talks with Vice President Mike Pence during his visit to the region like this month after a senior Palestinian official said he was not welcome Tom by men in Jerusalem a number of new wildfires have started in Southern California stretching firefighters to the limit coastal communities on the Pacific Ocean including the city of Santa Barbara a preparing for evacuations 3 firefighters have been injured by the blazes which are for some 200000 residents to flee their homes nearly 440 buildings have been destroyed by a huge fire immediately to the north of Los Angeles hundreds of race horses have been let loose to us. The flames firefighters from neighboring states who arrived in California Well news from the b.b.c. a Republican representative in the u.s. Congress is to resign over sexual harassment allegations Trent Franks from Arizona is the 3rd congressman this week to step down over such claims House of Representatives Ethics Committee said it was investigate his conduct Mr Franks admitted insensitivity when discussing Sarkozy issues with 2 women staff members but denied any attempt at sexual contact the u.s. Secretary of state Rex Tillerson will meet Lebanon's Prime Minister Saad Hariri in Paris shortly 3 days after Mr Hariri formally withdrew his resignation the state nominee said Mr Tillerson would encourage Lebanon and other countries to move more aggressively to limit what it called the destabilizing activity of Hezbollah. The Oscar winning Australian actor Geoffrey Rush has become legal action against a newspaper which printed claims he behaved inappropriately during a theatre production in Sydney Mr Ross says the allegations are false and harmful more from our Sydney correspondent how Griffith the allegations date back to production of King Lear by the Sydney Theatre Company 2 years ago the company's confirmed it received a complaint at the time alleging inappropriate behavior by Geoffrey Rush but it says the complainant wanted the matter to remain confidential Mr Russia's claims about the incident printed in The Australian Daily Telegraph. And have caused irreparable damage to his reputation he started a legal action against the paper in the strait encodes researches in Britain say professional footballers should be screened for exercise induced asthma after a study found that 30 percent of players could be affected scientists at the University of Kent use long tests to identify players with symptoms and improve their fitness after treatment elite athletes are known to be prone to ask more related problems because of their high intensity breathing. B.b.c. News. Hello and welcome to News Hour extra 0 in Bennett Jones and to begin this week I've just come down to one of the many shops of London that have a cashpoint a.t.m. But this one is a bit different it's a touchy point named after. The supposed foreign through the crypto currency and so you can buy pick corn here because that's not cheap these days the beginning of the year you get one for around affairs in dollars today $14000.00 so something of a gold rush is on the way so this is just a bubble irrational speculative activity that's the view of many foreigners and economists or is it really something new is this block the decentralized technology that underpins. Something as revolutionary as the Internet so that's what we're looking at today cryptocurrency is a brave new world or just another boom and bust so let's head back to the b.b.c. Studios to meet our panel. And our panel is Catherine Mulligan director of the Imperial College Center for crypto currency we've got Jordan Pearson who's in Toronto he is a reporter on crypt occurrences and he's had that beat as it was since 2014 frost this couple a former banker and financial journalist and all of all nuns but who is the founder and c.e.o. Of Bitcoin Brennan tells me as he walked in he has given up his job because of so much trading to be done well for him to facilitate that it's taking over his time full time and I should just say the things are changing so fast we recorded that little introduction you know just as we walked to the b.b.c. This morning and it's already gone up to 3. Since I recorded the introduction it is an extraordinary situation and let me just ask you'll 1st of all go put some was 2 which have been used about this and you can tell me which ones are right revolution the future of finance the. Of money a fraudsters dream what will become a normal boring currency question well again which one is that all of the above actually I think explained to me Well I think what we're seeing is a lot of different types of activity I think the underlying technology a block chain could be extremely useful outside of financial services but I think there's also a lot of fraud going on in particular in what we call the initial cooling offerings I think that we're seeing a lot of activity in that space that could be fraudulent We'll talk about them in a moment but as new currency is coming up the whole time exactly Francis bubble revolution bubble there is a revolution going on underneath it all agree on that that this is a transformation of finance we are going to see something new grow out of this but we're going to have to go to the ball bubble and bust 1st right and now all of a when your clients come to you saying I'd like to buy you know 20 but call ins whatever it is probably more what do you say to them because after all this is a bubble. I tell them 1st of all only by that which you can afford to lose we have no idea where this is going to go and if you are going to spend your own money that you've earned on crypto currency make sure it's a balanced fraction against the rest of what you're holding it's extremely volatile today we've seen price rise of 20 percent tomorrow morning we could wake up at minus 30 percent right as you say that you walked in with a laptop and the people all over the place you see glued to the phones and stuff looking at the prices of us Jordan Pierson in Toronto is that I would is there is there is much talk about Bric or is there is there is here Well absolutely I mean the thing is incredibly valuable and you don't have to be based on any particular geographic location to buy into it I think all of it exactly right that we have no idea where this is going to go and if there's one thing I've learned in writing about crypto currency isn't that quote in particular is that it's not particularly helpful to definitively say whether something is going to happen or not because things will always surprise you but what I think it's patently obvious is that it coins price rises based on speculation and it's really a bet on the future of this technology and as we've already kind of discussed there's many different ways that this could go many different ways that the big question block chain could be used but frankly I think nobody has any idea which of those We're going to settle on and everyone's just hoping that we'll settle on one of them right I think we should just do director oceans of interest as it were so remember where I was coming from I should say I got to like corn in the 3 of the Seattle work and tell me all of a have you got great holdings I have very little holdings spread across a few currencies because I'm trying to understand how they play off against each other as a balanced portfolio my purse no investment is not so much in the cryptic currencies directly but rather in building a business which responsibly deals with this Francis on not you best is a tool because our account it is my job to participate join to. Same answer I'm a journalist I'm here to observe and report and as such I'm not invested Catherine Mulligan Yeah as an academic I'm definitely not invested mind to mind telling you no conflicts of interest so I can give academic perspectives right now then just tell us how this works there's a story in the papers with a man who lost his laptop. And he's apparently lost millions of dollars. So this I think will help explain how this thing works Julian what you could guess on how good of justice he's lost is not top of lost all his money. Well the thing about a big coin is that a bit coin does not physically exist it doesn't exist in the actual system of that coin it doesn't exist physically so what you have on a hard drive is not a bunch of coins whether digitally or otherwise what you have is a cryptographic private key which is a mathematically generated string of numbers and what that private key does is tell the rest of the Bit Coin people that you own a particular entry or number of entries on this ledger and that's called the block chain so people say you know the vantage of bitcoin is that you can be your own bank and this is really where we see the downside of being your own bank because if you lose that private key which is what I presume this person lost on that hard drive even effectively lost access to all of your money and there's no way to retrieve it nothing to be done. Did you did you say how many digits would be in a private I'm not sure of the exact amount of digits but it could be generated either randomly and right through malfunctions or could be generated through a cryptographic hash of a string of words so you actually just have to remember this random string of words to retrieve it instead of you know it being lost forever because you're not a computer you're a human being all of a you just might add something as if you knew how many digits Jordan is right the private key can be represented by a series of numbers which is actually the key to unlocking your software wallet but the underlying key within the actual block chain is a string of 32 to 34 alphanumeric characters or series or you could have done to keep a record of it you could write it on piece of paper and put it in under your pillow but he didn't he didn't so that was the most like Ok and we just need a bit more on the basics of how this works because it's so difficult to. Stan frankly. Francis could you just explain to me what. We've got Next I say because I rely quite well are they exactly what Jordan said because he's not a physical anything I mean I know is that the right kind of you can have things that go big that are called because that's a big one is essentially an address and so we went to an a.t.m. This morning so if I put 10 pairs into it from from a back account resume. What would I go back a sheet of paper and that would have that by key on it would have them all the key of ration So there's a number of ways to store because you could have a software wanted like on your phone or a hardware device like a u.s.b. Key but you can also have a paper wallet so what you're getting from an a.t.m. Is a printout of your public key which identifies who you are it's your address and your private key which is really the key to value and signs your transactions so Catherine with that almost like about it actually I mean there's a bit of paper which is maybe you can persuade something or someone is worth something well I mean you could use it as a you know a medium of exchange if you wish that note and then it would be functioning as money but not in the same way as the money that we have in our banks because because there is no central bank controlling the supply of money for example in recording all of the transactions are stored on every node in the network and as I understand it that's one of the virtues that big corn has in that it's got a limited supply whereas we all know imaginal currencies politicians when they get into a jam tend to say Could you just print some more money that's a critical question that was not if you think about big question as deflation right our current economic system is actually inflationary So how do these 2 match so a lot of for example central banks have research agenda on putting a fee out currency onto a crypto currency base which would mean you'd have a pound on a crypto currency base for example the problem with that is what happens to monetary supply as you just were speaking about for your nodding Can you just sort of really explain that so that we get it right anyway because and I think we should be specific about what we're talking about right is not all caps or currencies have the kind of hard limit the big point here let's just look at that point 1st of all some have a set number of coins that yes but not all do and some will be advances of them could keep a lot be like a treasury and just keep printing prints yet that's open to all some coins and you can be conscious you just because Bitcoin has a hard limit to 21000000 that could ever be. Produced on Bless they decide to change the code that applies to all cryptic conses it doesn't let me Tony because we are talking about the current She did his intern sickly deflation it's like a gold standard on steroids can imagine you've got a gold standard currency and you have mind all the gold that could possibly ever exist anywhere in Rome with us including on asteroids there will never be any more so that's what happens when you get your 20000000 on because what you know how is 831-2121 1000000 and how many have been produced so far. All over 17000000 of us cities and yes between 60 and 70000000 but 4000000 are lost forever going back to your earlier point about this man who lost his laptop because you know the story of your life this yes that's a tangential point that I was going to examine if the last the last forever and that's not so nice total supply would go down like you know the not like you can actually see them. Trying to you know that's on them might be quite a classic was an industry and still searching for a treasure trove inland in a landfill sites George just tell us what you were saying that you could you could see it's just the man who owns it couldn't get it precisely it's all on the block chain it's all there got to eat and just sort of follow on from what you said 21000000 informant of the missing who were virtually at the point where the fulls production has been completed because are released on a periodic basis by design we know exactly when the last big Queen's going to come out that's going to be in 2140 and when someone for the supply just gets hard on a periodic basis as part of the mining process and that's the part of the definition of because if that changes it's a different currency so how narrow we in terms of time but numbers I mean how many how many are still 34000000 away but hang on you just have 70000000 to be made and that the total supply that has been mined since the Genesis block in 2009 is 16 to 17000000 and all of those around for sure last Ok understood and children as we. Approach this diminishing supply Oh Cohens Is that why it's all going mad at the moment because we're reaching a point where all that money left to be made I don't think that the very simple supply and demand economics of Bitcoin which is that there's a set amount of Bitcoin just like there are 7 amount of gold in the ground and the price is determined by people's excitement about owning some of the owning an entry on this ledger or owning a piece of this called on this ground I mean look in under 12 months we've gone from the currency being worth about $700.00 to now being worth around $15000.00 us the actual release schedule of coins is very predictable but the price is not going up like necessarily in the same predictable manner so I mean it's a function of that supply and demand it's just a very simple fact there's a certain amount of bitcoins to go around I mean at least in 1.0 denominations because Bitcoin is extremely divisible which we can talk about later but no I don't see the prices being directly tied to this supply and demand economics with a limited supply of coins at least right now it's it's people betting and the entries in a ledger being useful for something one of the other nodding heads I think that's a great point Jordan the key difference between Be Koreans scarcity and say gold scarcity is that because as you rightly point out is highly divisible but there is a psychological power to holding a unit of this to hold one Bitcoin means something to people irrationally you have you find out you know sort of getting people coming to you saying I want to buy and they sort of I'd like a big point of that is a common conversation you know I don't Ok now don't listen to Charlie Shrem who was an early adopter which I guess makes him a lucky man and although I did movies bracing himself for a crash he has got a new story about how he got into this and where it led him so I asked him 1st of all how did he get into bit Cohens I got it. In 2010 when I was in university someone started telling me about Internet chat room and I was really excited about it so as I wrote about it. And so what did you do I just started paying attention and chatting with people and reading the internet forms you know back then there was no Quinn community there was no support network or something where you can just do there were no companies that worked in the space there was nothing was a bunch of kids on Internet chat rooms that were talking about it right and then you presumably sufficiently insured to try and buy some would not be right. I. Realize it's very difficult to claim it was your heart and I realize that this thing was going to take off and people were going to you know get involved in it that I need to make it easier to clean so I started a company with my business partner at the time. I see so you do so as a basically a trading platform and. This is still machine figure that early on you you had something like 30 percent of the Bitcoin market going through your platform you know basically almost all of the processing that was going on at that point spaces going through my company you know Ok as a kind of big deal and then it went wrong because the government go interested in what you would doing just tell us what went wrong. Basically there were a lot of people that were buying the coins from our companies back then and we had hundreds of thousands of customers and a customer of ours. And then he went on to know so at the time and then resold those big people who are then presumably going to buy like drugs and stuff and so this is this is on the dark web so basically the money was big the big Going to being used for criminal purposes and under American law that you have some responsibility then absolutely So what happened I want to present for a year right and the crime was aiding and abetting the operation of an unlicensed transmitting business did you feel it was fair you went to prison. I committed a crime according to you know I think Law and Order to life. Prison for that crime so according to the law yes I deserved to go to prison right and did you knowingly commit a crime did you understand what was happening. Yes. So you understood that there was a problem with the way the these transactions happened bison Yeah. And so what would you what is your take you mean yours is very familiar with the whole story of Bitcoin What is your take on the phenomenon. It's a phenomenon Doc's It's like the Internet in the early days and a lot of people want to be involved but they don't really understand it so I really implore people to really try to understand that calling but there's not just because they're a lot of other projects too like a theory I'm on there's Genesis vision and there's vibrate and there's all these different projects that people are using in the space that really further block technology and surely I'm told that when you're in prison you're a bit of a baby she will service Listen I was a big b.b.c. World Service listener I used to be up really late at night and listened to the. 6 am newscast and that jingle that I used to hear used to wake me up and I loved it you guys are great. And I don't think we should say that most of us as a force to listen in that way but that was Charlie Shrem on his experience it just takes on this whole narrative for old and I want to just understand that because. We got a quote from a British National Crime Agency let me read to that. The vast majority of cryptic errancy use is not criminal says this Britain's top body on this criminals are mistaken if they believe the cryptocurrency is around traceable provide total anonymity so it's not a feeling that that fraud period is passed or is it still very much active who's got something on that it's still very much actress's copula still very much active I think it's moving though I mean I think about because any guestimate it's fair to say that it going perhaps isn't quite as anonymous as people would like to think and things are traceable but some of the activity now has moved to other currencies like an arrow and see cash you know and there is this group of criminals that's cool and by their correct name who can go dark web users who are constantly looking for something that they can use basically to further their activity on the Web We should remember for example that ransomware like want to cry the ransom demand hit quite a lot of computers last year nearly always made it to current says journalist but Cohen just be clear about the fraud is the fraud of someone issuing a dodgy new currency that's And then there's the fraud of using a currency for criminal purposes and that's the 3rd thing I want to ask you about which is that there's the fraud of people hacking into making making stuff you've got something on that can hurt Well yeah I mean so any time there's any kind of store of value in digital exchanges you'll find people hacking at bicyclists so you know if you've got we have this morning I think 34000000 was hacked off one of the exchanges like shut it down on last everyone to change their passwords This is the very near us think so you know we got I'm told it's going to $64000000.00 a really young other lost quite a lot so what happened that well I think what they've done actually is hack the exchange itself which obviously holds the account details on behalf of the users and through breaking through their security they're able to access those big Queens and still them Jordan you've reported on some of this fraudulent stuff yeah it's a huge problem and hacks come from all swear. Different angles like you have that classic malicious hacker who wants to break through an exchange of security and steal the funds there you also have for example in the world of the theory I'm Do you have like really popular digital wallet software that is just moved vulnerable and you have someone who just realizes that go in and take all everybody's money and they're not necessarily hacking they're just exploiting a vulnerability in the code and then finally you have hacking that is just basically social engineering and it's purely I think exploiting an environment of low information high speed trading on the part of i.c.a.o. Is because some of the biggest hacks have simply been for examples an attacker compromising a website and just replacing the address that people are supposed to send i.c.a.o. Coins to with their own and even if the hack is discovered in 10 minutes they can still make millions of dollars and that is purely a function of a very vulnerable weak link in security which is a website and human greed and it's really not all of I want to ask you about this because obviously there have been bank robberies forever but the difference is the u.k. Anyway if you have a question if we're going to be out of money I guess of 2007 it's guaranteed you know even if something goes wrong the government buys the back of that money. In this case when you get clients coming to you and they also question what happens with a mix my digital currency the answer is you lose if you're holding your digital assets yourself in physical form say a paper wanted to or allegedly even on your phone it's just as vulnerable to theft as holding cash in your hand there's that aspect and how exchanges on mitigating some of this risk is by putting at least the responsible exchange the doing as the vast majority of the digital assets in cold storage and only keeping just enough to keep the liquidity at the daily trading in and out active so they're trying to limit the amount that it could be stolen off right now but from the point of the individual investor if they affected by. That they've lost their money they have I was very nearly subject to this I received an email pointing me to the theory and fork on the website which looked very similar to my ether want it's what they've done is replace the w. With 2 V's and it was it was a very good write phishing attack which nearly caught me I think it's really important to people who are investing in this understand that there is absolutely no insurance and no guarantee there is no backup at all if I could just make one comment about the security I think that's one aspect that a lot of people overlook a lot of the new ones ceo's for example are using cryptography that is not actually well tested that's another massive security risk because cryptography protocols really need to be run through the tests so I pick one has built some well established ones but some of the new ones are not they're not tested or tools so they're completely onsite lessers like a short break characters remind you you're listening to news are extra you can come talk to us news out extra b.b.c. Don't care about u.k. Tweet b.b.c. And h extra at the poke us the b.b.c. 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And forty's but what few people knew was that she was also an accomplished inventor the documentary bombshell tells Lamar's amazing story Friday at $330.00 on the brain. Coming up on news hour extra in the next half hour we've got more on digital currencies we'll be asking might governments or central banks try to get in on the act and if they did what would that look like what would it mean for the banks and also in the 2nd half we'll try to work out what could be ahead for cryptocurrency is so far the whole thing's been totally unpredictable is that kind of volatility set to continue all that coming up after this summary of the world news b.b.c. News with Nick Kelly the European Commission has said sufficient progress has been made in the 1st phase of BRICs it talks to allow discussions to move on to Britain's future relationship with the e.u. The announcement is a key moment in the negotiations on Britain's departure from the bloc the Israeli authorities have reinforced security in the West Bank and Gaza Strip to deal with more protests today following President tranced decision to recognize Jerusalem as the capital of Israel Palestinian groups of called for a day of rage while the Islamist group Hamas says there should be a new into Father uprising. A Republican representative in the u.s. Congress is to resign over sexual harassment allegations Trent Franks from Arizona is the 3rd congressman this week to step down over such claims a number of new wildfires have started in Southern California stretching far fighters to the limit coastal communities on the Pacific Ocean including the city of Santa Barbara preparing for evacuations 3 firefighters have been injured by the blazes which are for some 200000 residents to flee their homes the u.s. Secretary of state Rex Tillerson will meet Lebanon's Prime Minister Saad Hariri in Paris shortly 3 days after Mr Hariri formally withdrew his resignation the State Department said Mr Tillotson would encourage Lebanon to limit the activities of Hizbollah 3 people are being killed in another injured as a well known Shinto shrine in Tokyo what appears to have been a family feud the suspect is reported to have 1st killed his sister the chief priest asked at the shrine and then killed another woman before taking his own life and the Oscar winning Australian actor Geoffrey Rush has become legal action against a newspaper which published allegations that he had been guilty of inappropriate behavior towards a woman he said the allocation had caused irreparable damage to his reputation. B.b.c. News. You're listening to news director from the b.b.c. World Service with Bennett Jones we're looking at digital currency is this week we've got Catherine mulligan from Imperial College Jordan Pearson a reporter with motherboard in Toronto Francis Coppola a former banker and financial journalist and all of a man who's running a brokerage for crypto currency is now that is a very surprising aspect of this which is the use of electricity when I couldn't believe what I started reading about this that the amounts of electricity it takes to sort of generate these bitcoins is so great that it is becoming an issue I mean it's almost unimaginable scale the electricity that is that being used so Jordan just tell us how how does this come about why is so much power being used well it's it's very simple which is that the computers that create new big corns are performing frankly useless math functions that only prove that they've done some work and that makes it too expensive to mess with the network and that's where bitcoins security comes from so it uses a lot of electricity to create these new coins and it's a completely arbitrary system which is some people might say is just fine but where I think it really becomes a problem because look the big coiners answer to you know the system takes up too much electricity is you know how much electricity does Visa's company take out or a Western Union and Suppose you Nakamoto I think that anonymous inventor of Bitcoin their own answer was that you know because it's going to be so useful that it's actually more of a waste to not use this Elektra city on this and I think that's all fine but I think the problem that we're coming up against now is that we're actually not seeing those use cases justify the electricity waste because in the early days you had people saying that they were made to mean cases one is as a currency a way to pay for things the other is as a basis for applications now. Well it seems less and less likely that because it is going to be a way to pay for things and on the application side you have experience and other sort of projects that are taking up that and now all of a sudden you have people cheering bitcoins main use case as a store of value as just a stable place to park your money and quite honestly I cannot imagine a more damning indictment of how our economy creates a value then just parking money in a system that is spun up out of unvarnished environmental waste with right no other year so this is a very clear position to take Mary Catherine just as you 1st of all explain why it uses so so much when I say so much electricity I read this because it is that the because it is now using as much electricity as Denmark Yes that's correct but 2020 it would be as an assignment as the United States of America by 2020 that's the that's the estimations today yes that's totally unsustainable it's completely and utterly unsustainable Yes I mean there have been some innovative attempts to combat this for example is something called solar cooling which is using solar electricity 100 samples only but I do tend to agree with Jordan a bit you know using it so was a store of value process that's fine France is just slightly ahead of ourselves can you explain why it uses so much of the tricity it's actually mining itself it's it's actually if you think about we talk about it as money but what they really doing is talking back to the entire world internal transactions to make sure there be no do you think it's a minute it's a novel of the obviously the bigger it gets the moral and indeed that takes up more computing power that takes up and the the moment it uses so just a couple long story short. To make the system work. And I'll spare you so yes I'm going to resize details but it involves as massive computing power I want to say massive These are huge warehouses of computers right. I've even read that they they do in cold countries because they don't pay for the academics they do it and when they can get cheap cheap so sensible it to city actually so one of the big places is China where the using cheap and interesting produced by coal fired power stations that are evolving into mightily as well yeah among go yeah yeah because cheap electricity Welshman's another one where they've got him so it's almost like I did you the leg outlets that because I couldn't Yes I'm a stern tiger that's what's good for backwards good to know yeah but I can think of more more kind of sinful ways. All over. As you have just given up your job of going into digital currency brokerage Are you worried that when if that prediction is correct we get to observe the market's virtuously being used that the government is going to say no I mean this is going to stall I think that is a real possibility but they are alternatives and the most compelling one is proof of steak where we're not trying to demonstrate that we've gone through the entire block chain by using a lot of electricity to do a lot of cryptography and that that system is called proof of work the alternative is a proof of stake where you can only mine or validate transactions cording to how many coins you actually have so there's an inbuilt economic incentive to not to be a bad actor and it doesn't require gigawatts of electricity just explain that your basic center different rules for these different currencies and for example pick corn is just set up in such a way that it uses these absurd amounts of electricity but other ones are set up in a different way which uses less electricity exactly right well let's just think a little more about how governments might respond to all of this that So George let's start with you and I'm going around the table saying do you expect governments to quite soon say you know what this is going to stop Well we've already seen it in certain governments Venezuela is an interesting case obviously Venezuela's economy isn't a good. He'll of trouble right now and their energy grid in particular is in a good deal of trouble but you have people here who are mining big corn and electricity in Venezuela it's important to understand is heavily subsidized to the point of basically being free so it's a social contract that everyone in society undertakes that said you know electricity is going to be free for us basically But you know we're all going to use our fair share but Bitcoin simply cannot sustain that social contract on electricity and society's use of resources it simply cannot because if you don't mind those coins you lose money because only makes sense in any society where electricity is a commodity good that you can buy in a market and if you have more money you can always buy more and if you don't have money well you're going to have a cold apartment in the winter so that's where we don't really with government regulation maybe because of the energy issue all of this also presumably just the good management issues so you're running a brokerage and you're probably not very regulated but if you were trading in potatoes I mean you'd be much better regulated quite right the Financial Conduct Authority who regulates the u.k. Are actually in favor of change technology and they are supporting and nudging banks and other parts of the British infrastructure to support them but those definitions are still not ready but that will come I have to come in so inevitably France is where do you see government regulation Well I think we would be seeing growing regulation across the pacing crypt occurrences and around the world one things that's really pushed this has been. The new ones yeah the new ones because with the best renewal there are a lot of folds and what is comes in and regulators around the world have been very concerned about it in some countries have even banned them South Korea I think is beyond them Catherine we saw in 2008 in the big financial. Crisis that when things crash you know it affects people's lives and jobs and homes and has big implications is that something governments going to be thinking well if this really carries on like this we'll need to regulate to avoid those are the problems you know I think in and lot of this discussion is a story in a lot of discussions we've been having with government agencies a lot of the discussions around consumer protection so how do we ensure that investors are properly protected when it comes to our C.E.O.'s how do we make sure that people are able to understand what bitcoin actually is if they're using it you know it raises new questions around teaching people how to back up money if we go back to the question of losing your key you have to teach the average everyday person on the straight back up money you know a lot of other governments you know in particular are also looking at using it for a base for the fee at currency So for example the leeks bank in Sweden so the central bank there is looking at how they might put the Krajina onto a crypto currency guys let's talk about that that's the next thing should governments do this kind of what happens is that governance is a good activity they're not will do that and David Clark is head of policy at a think tank called Positive money which has been lobbying on this in the u.k. You may all be familiar you have actually lots of nodding heads so I asked him what's the difference between 1st of all a so-called digital currency and what we all do with online banking which in a way is just digits on the screen as well so what's the difference in additional currency and online banking the idea of a central bank digital currency is that you make available at electronic version of cash of physical notes and coins and that's a way of storing money or making payments people listening to this might think you already have the ability to do that with the money in your bank account. The difference with a central bank to you to parents is who technically owns that money the money in your bank account technically the property of the bank exists is an IOU a promise that the bank will deliver on when you want to withdraw cash will make payments a central bank digital currency will be owned by everybody who has a unit of it and it would be risk free excess bought used any time this is so much talk now about Bitcoin encrypt occurrences out of big impact on what you could become pretty honest for quite a long time on the decider you're a bit of a digital sort of foreign currency so there is help your home due central banks are nervous about what's happening to the payment system that is in part the nervousness about the proliferation of cryptic errancy like because and the extent to which that means that central banks are losing control of the payment system they're much more nervous about the big thing that's happening which is the move away from cash to move to digital payments which means that increasingly payments are being made not in central bank money but by private banks settling payments with each other and that means that the payment system is more and more in the control of the hands of institutions which makes the payment system less resilient it means that some people are left out because they don't have access to bank accounts and the big threat for central banks is that they lose control of the money supply altogether that they can't influence the monetary policy becomes ineffective because actually most people are using a form of payments that they don't control and that's the David Clark from positive money Sarkozy some people around the table nodding at what he said this is a central bank digital currency that's what he's talking about Catherine you just talk us through that why is that a good idea in countries like Sweden for example to have a big problem with the cashless economy which causes actually problems when. Money supply in the country as a central bank usually controls that too cashless Yeah it's too cashless Ok bicycling you know is now is about to have cash Well you would think so wouldn't you but not necessarily And so the answer is that digital cash one of the answers could be to have a digital currency that is for example a digital Krone or a digital pound in the moment if you're in Sweden you've got a credit card or something if you're buying a coffee for a small amount of money it's just swipe your card that is digital money in a sense isn't it so was a different strain that dish what happens now what you're talking about so what you do when you swipe your card that is the bank moving the money for you and when you put your big queen wallet to pay for something you are moving the money to another end user don't touch the bank accounts the bank accounts Exactly so that's the big difference in France is that means that central banks might take over some of the activity if there is a central bank to organize this that they're undermining in a way the big banks Oh yes it would be but I think we should be aware that you know the way we traditionally think about a bank you know where it's a bank that would take deposits at risk and pay interest on those deposits and lends at risk and make money on the difference between what it charges for lending on the price of posters that's a traditional model of the bank that action the last 50 years banks have taken another enormous role which is the total control of that the way in which we move money around because of what we've increasingly adopted electronic money that is created by banks and it's that that really we're discussing here about whether it is right that we should embed within our banking system whose job it is to take risks and occasionally something so crucial to the economy positive margins argument is actually should properly be the function of a central bank I see so we're not talking about broad economic policy and the creation of money which is a central function of government always has been but surely that's controlled by the government saying to the banks you can only create so much of. Is not how it works. There's a number of angles to this Personally I'm in favor of having a national currency on a digital block chain one of the upshot for a government is clarity and transparency for taxation say if you know how much money is flowing back and forth you know exactly how much to tax it'll take a while before we get there but in the meantime the banks are you know are evolving and there's some really exciting things happening with challenger banks like Revolution today released the ability to buy and sell cryptic currencies within their banking app so they're $1000000.00 plus customers now suddenly have access to cryptic currency we're going to see more like this where banks come into the digital age and my long term view is that all money will be digital within 25 years if not so you know the Bernard Parish over a little when you can print Bitcoin on a piece of paper I don't see a need for printed cash right now Joe this is sort of beginning to give us an impression of the scale of the change those are the way that we've already heard about American scale of electricity very needed and these massive solar potential changes rather beginning I said you know is finance and revolution the right way to look at it and what I'm hearing is Jordan that it really is I mean this could change a lot of a lot of the way we live. I think we really need to ask to why do we need a block chain to run our money system from a national bank like it 1st it really defeats the purpose decentralization which is the main thing with bitcoin and without the centralization all you have is an extremely permanent and data mine of all ledger where all of our daily activities are being stored and infant has a 1000000 parsed by this opaque bank and I don't I don't really that makes me uncomfortable sure Cinelerra so you don't as you're saying because you don't see why a central bank would use the same technology as these currencies the it was just. As you know they wed Ok because it makes their business easier and more efficient and I frankly think that's the most boring thing in the world and honestly if a bank wants to run my finances on a block chain and data mined me and keep my I mean they already do know exactly what I spend money on I mean why I want it exciting and all I can say is me France is a concert I've invited to agree or disagree with you because they both want to make a point I think I was disagreement actually just joking really because actually if you look at what banks do you know in the way they do it's a double entry counting and what having this applies equally to central banks there isn't any obvious advantage in having a currency basis a centralised not just system at all you can still have a full Nordic Track of transactions you don't need to have a block chain to that you're also saying that the technology the train again the technology that's being used by these digital currency has there's no advantage in a central bank this particular you know advantage for Central Bank and the whole point to current cc's decentralized the whole point of a central bank is that you centralized through I'm not sure I said we disagree by the way. Probably probably very. Or one of the other problems with you know a central bank current sort of central bank putting the currency on to the crypt but yes is the problem around triggering the market so for example in 2008 financial crisis the government was moving money to banks and if you had handed on a distributed Ledger a Public Ledger everyone would have gotten a warning let's say I don't know b.s. Was about to get cash injection from the government that would actually trigger even further flood down upon I seriously thought I wondered about that the American site summarizing that by saying if there is more we get more of these digital currency is that become more important that it reduces government power to actually sort stuffies at times of crisis which arguably happened in 2008 you know it could have been much worse if it hadn't been for government big government actions which would not be possible if they didn't have the control they now enjoy. I don't know if I agree about control to a ton of the have control at the moment the degree of the degree of control I think is the degree of transparency currently a lot of the decisions that are made and banks nobody knows about but if you have a distributed lead just suddenly all of those become public and I may not be going it may or it may not be it's something that needs to be considered Ok Can I just ask you all about the technology behind it is there are people saying that the book chain this basically this is this legit which underpins the whole system could be a very good and useful thing even if you're skeptical about the currencies Francis Why is that I think a loss not c.s. Is for a fully complete and fully ordered to pull and immutable audit trial of every transactions ever happen I mean I can take a look she says for that I'm not only in the money world odds are I think are some of the best use cases for block change or actually outside money to things like land registry one of the strongest uses it I've seen is actually what we call trade finance which is often about shipping documentation so lots of don't not yet lots of data people all the people a is in the chain really need to be able to see because they're old in different countries at different times that moment they don't see it they've been reliance upon physical transfer messages between them if it Dave it was all to get in one place they could see the entire chain from end to end it actually might speed things up and make things a lot more a lot more secure however I think there's a great use cases particularly the Land Registry for countries like. Poor countries which don't have great controls but in this whole block chain distributed Ledger fever that's taken the technology world by storm and ask a couple of years people have begun applying it to use cases which may not be quite as relevant where they used to use a database they may try their business model on a block chain instead and that doesn't always make sense well I just got a challenge is this we did a program on digital voting and all the experts that we spoke to all said the same . Thing which is basically you can't trust it and you'd be better off with Piper because it is manipulable and you'll never have the confidence in the system that you have been hacked and here I'm hearing you saying these are rock solid systems and are generally sell a bit suspicious the block chain is a very simple thing it solves exactly one problem and that is to prove that a certain piece of information existed at a certain point in time and that is it and that solution cuts across a whole bunch of different problems it does that very well like you know what maybe maybe because it doesn't work as money but the block chain works as a ledger and the block chain has never been altered to my notice yes because it has been hacks millions have been lost but I do not ever think that Ledger has been altered let me ask the question this way Catherine if your vote was registered in a voting machine would you completely completely trust it. If it was registered in a block would you completely trust it but I don't even know I wouldn't actually know in today's world if there were significant advances in cryptography and all the other systems solutions around it then I might trust it but this idea that China will require any of these things are inherently secure is for me as an engineer a little bit of a fallacy all of I have to say listening to all this I'm worried for you neither you gave up your job to run this brokerage because it's signed so. Vulnerable on so many fronts it is vulnerable even the most secure aspect which we see in block chains the fact that transactions are encrypted using very strong cryptography even that is vulnerable and this is probably a subject for a whole different conversation but quantum can cryptography is on its way something Catherine can probably speak a lot about and this takes the computing power to orders of magnitude greater than we have today is not a threat now but what's. This space into 3 is Ok so I'm not going to ask you will to do what we tend to do this program which is to cross things forward and in this case I mean you know normally we're talking about politics which is awfully unfathomable but this it was unfathomable in a whole new degree. Digital currencies 20 years from now what's going to look like well I'm either going to be paying point 000-000-3654 my morning coffee. Or a little bit later on yet or billionaires are going to be as storing their money in it in which case it doesn't affect me at all and it's going to be incredibly wasteful or it's not going to exist so one of those 3 gosh well that remarries it by men. Doesn't speak to block chains or other cryptocurrency is by the way this is specific to see say Ok well then deal with. Their additional currencies that don't rely on the same technology is as big Cohen and we explained earlier is that that fundamental difference in the way that creates it so for the other ones you think they've got a most solid future here I think they have more of a shot to be useful. And therefore maybe would last longer Ok Catherine 20 years please 20 is I think we will see an increasing number of digital currencies being used to think actually they'll be pretty much mainstream I think they will be probably some form of strict regulation under control of what we consider government today I think what we see in big queen is an absolutely fantastic experiment I think it's a brilliant experiment and I think we're going to have to watch carefully to see the results my personal opinion is that and it probably will either have petered out or it will have morphed into something new from source if I might also that 1st by going back 20 years to a very very $997.00 which is it starts the dotcom boom. And we had a massive massive period of enthusiasm about own man a new Internet start ups Internet based Allsopp's of Australia majority of which haven't survived but if you haven't Yes I've become very big and there's things now that we can't imagine being without and I think we are to some in the face and looking ahead 20 years I think the vast majority of what we're looking at now won't exist in 20 years time but what will exist will have transformed the way we do not only finance but a whole lot of other things too in a more steady way full better full Wes you know you know everything can be used for good or evil and what transforms the world is not necessarily make it better it just moves on all of it when you want to see your old fashioned bank manager I presume to raise the money for this magnificent enterprise you have and he said all she said So tell me a young man was this guy got 20 years should I should I give you a loan for this what happened. I think the conversation goes along the lines of if if I lend you $20000.00 pounds does that mean in 10 years time it's going to be worth $50000.00 pounds if it's if it's going to run so that's a silly example is it going to be with a large multiple of what it is now and am I going to be able to exchange it from pickling back to that large value and there the answer is hopefully you won't have to and we and we won't be hoarding digital currencies digital currency of the holding and currencies there's a 3.0 making the point that of the moment advocates of digital car system to say look you can make some money and change it back into real money I mean there's always a I do you know saying maybe in 20 years the critter currency will be the real money quite direct and I was my personal view I'm a strong strong believer in the future of digital currency So you think in 20 years people will be using them. Absolutely I do it may not be big corn it may be one of these. Old coins or derivatives of big quaint but it has enough momentum and understanding and enough community and physical infrastructure and you know and a huge ecosystem around it that I can see this reversing Ok Well look thank you all very much you've been very patient trying to explain this and I'm very grateful to Catherine Mulligan Jordan Pearson Francis copper and all of a man's book comments new Saddleback b.b.c. Don't you can tweet b.b.c. And h extra podcast The b.b.c. News extra cost but from our actually here in London and in Toronto that's it thanks for listening oh and by the Germans Good Bye Katie c.c. Supporters including heirloom l.a. Offering Complete Organic holiday meals and platters available for delivery or pick up and offering their signature dish lasagna cupcakes handheld liaison years for holiday gifts more at heirloom l.a. Dot com This is 89.30. P.c.c. Pasadena Los Angeles community service of Pasadena City College named by the Aspen Institute one of the top 10 community colleges in the United States learn more at Pasadena dot edu getting rid of an old vehicle can be a tiresome process we have a simple solution for you donated to k p c c We can put that old car to good use proceeds from the sale of your vehicle help pay for the news and programming you listen to every day will come out and pick up your vehicle whether it works or not and will handle the paperwork it's an easy way to support fact based journalism on k p c c plus if you get a tax deduction for more information go to k d c c dot org slash cars. Very good morning to you welcome to New Day on the b.b.c. With me. A breakthrough on Brick says the European Commission says sufficient progress is now being made in the BRICs a talks that means they can now move on to trade in what Britain's future relationship with the e.u. Will be like cute upbeat British prime minister getting to this point has required gave to take on both sides I very much welcome the prospect of moving ahead to the next phase to talk about trade and security and to discuss the positive and on the ships future relationship that is in all of our interests reaction from a former British government minister a key supporter of BRICs it on the way Also coming up this weekend could see protests about the Filipino president's war on drugs we'll talk to the sister of someone killed this year. Here how are searchers a found the oldest ever only 500 pounds Mint is a key moment in the negotiation on Britain's departure from the block the president of the European Commission. Said he was confident the leaders of the of the 27 e.u. Members who meet next week will allow the talks to progress the British prime minister Theresa May said she was happy the talks with moving forward getting to this point. It's required give and take on both sides and I believe that the joint report being published is in the best interests of the whole of the u.k. I very much welcome the prospect of moving ahead to the next phase to talk about trade and security and to discuss the positive and ambitious future relationship that is in all of our interests in the past half hour the European Council president Donald Tusk has warned that while breaking up was hard building a new relationship would be even harder we needs more clarity on how the u.k. Thief's our future relations after it has left the single market and Customs Union . Either for proposals to mandate our negotiator to start exploratory talks with our British friends about this problem. A correspondent Chris Mason says that while there's been progress crucial questions have been left on onset particularly on Irish border issues but still a huge amount of detail that we don't have about how exactly the various Sawyer's will try and ensure that isn't a substantial border between northern Ireland and the Republic because what will be in the European Union you know the white but it will be different economic rules and it was a desire on all sides that the border should be as good as invisible and trying to square that circle has been the essence of the challenge that's what you and once they've cleared the hurdle that the challenge still remains the Israeli authorities have reinforced security and the West Bank and Gaza Strip to deal with more protests today following President Trump's decision to recognize Jerusalem as the capital of Israel from Jerusalem Tom Bateman reports Palestinian groups have called for a day of rage to mark their rejection of President Trump's decision while these are missed group Hamas has called for a new intifada or uprising Palestinian official said dozens of people were wounded in yesterday's clashes in the West Bank and Gaza however the protests have not so far reached the scale of those during the summer when a crisis erupted over access to one of Jerusalem's holy sites the u.s. Has warned the Palestinians against cancelling talks with Vice President Mike Pence during his visit to the region like this month after a senior Palestinian official said he was not welcome this is the world news from the b.b.c. . A Republican representative in the u.s. Congress is to resign over sexual harassment allegations Trent Franks from Arizona is the 3rd congressman this week to step down ever such claims the House of Representatives Ethics Committee said it would investigate his conduct Mr Franks admitted insensitivity when discussing surrogacy issues with 2 women staff members but denied any attempt at sexual contact. A number of new wildfires have started in Southern California stretching firefighters to the limit coastal communities on the Pacific Ocean including the city of Santa Barbara preparing for evacuations the blazes have some 200000 residents to flee their homes the photographer and filmmaker went to film one of the and quickly found himself. The fire just came over the hill and kind of caught me by surprise with my peripheral vision and it was about the off from getting to my vehicle so I literally kept a camera rolling and was talking you know. Her super loud and went on tree. Branches near hitting me and my camera 3 people have been killed and another. Shrine in Tokyo in what appears to have been a family feud Police say the suspect is thought to 1st killed his system the chief priest at the shrine.