930in716 January 19, 2018 Bitcoin 101

Friday, January 19th

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Her kids 930. In 716. All of the out bitcoin your computers at all hookup to each other. And those computers verify who owns what we how many of these tokens. To wit the entire crypto mania is back. This is not like investing in stock so like investing in a bond or even investing in. A collectible I'm Tim linger on the podcast powered by the Brothers of mercy a five star rated skilled nursing residents offering affordable living in. A country setting. So bitcoin it's dropping sharply as traders worry that regulators in South Korea will crackdown on trading of digital currencies like he would. Bitcoin is slumped about 30% this week alone after South Korea's finance ministers said Tuesday. The government could still ban trading in virtual currencies an idea. Another official discussed last week so what is it after all what do we need to know about bitcoin first of all I love that you're talking about this so much thought first Jill Schlesinger with Jill on money heard Saturday afternoons on WB yen. She checks in with Susan rose and Brian mess around ski. Here's want to take. Don't call it digital currency just think of it as like a I could actually create some like OK I can buy cocaine on line that's like that it. Forgetting that everything else and the technology behind buying and selling that token is essentially that their computers at all hookup to each other. And those computers verify who owns what we how many of these tokens. To wit the entire crypto mania is back. And the reality is that went to the thing is to either like them to wait one is that technology that backs this up. And then there's this crazy mania around them that token itself. So that the technology is a real it's called blocked chain. It to be adopted right now and trying to a lot of become be turned speaker had to use it to like let be huge computer networks sync up with each other keep track of stuff. And that would get rid of middle men in theories industries not true reading or meet logistics. Is that hokey at media. You're only going to be 21 million. Eight point released and the limitation. Of that the total amount available has created bit of frenzy around. Trying to buy and hold this currency or this these tickets and and that's kind of what it is and to be on a city it's crazy it's volatile it's. Sort of halfway regulated but now really and it was very dangerous for ordinary individuals to do it unless you're just plain currently with the house's. And Jill I think for most people the whole block chain part of it that's where you start to lose people but. Two people really need to know what's behind the currency can they just focus on you know measure said the token itself. At this app you don't really know how your email as turning your computer that went. When else's right and I know I'd never easy magic right so there's sort of magical part of it just happens if you considered that there is going to be. There is this technology. Behind these keeping track of tokens around the globe. That. If you sort of sit diving down and seeing what is that what easy blocked chain just imagine that some entity if it's really cool technology. And it allows you to transfer money. Instantaneous. Like within an hour anywhere to anyone any place. And to really the power of it. You know it's like to attack from Yahoo! finance yesterday and the way kind of looked at it you know. It has a different applications let's say that. For example you're a year here on WB it you're listening great. And you want to go on to the website and you click through 1 am by an article deep diet articles about it. Now that Libya and connect yet to go out like I beat your PayPal account to your credit card. But if you simply click a button and say here's ten cents for that article take consents of Mike tokens. That would be really easy so that. Miracle on the technology that's behind this is essentially a for countless transaction. Click transaction. And that's why people are going buddy of the technology. Again that big point highs and lows the ether highs lows. I mean it's fun to watch but it's not so you actually want to start reading accurately unless you get your money it's it to our. Are you know I have that I have a good understanding now now I'm gonna ask it this. The Amazon HQ two finalists came out yesterday buffalo was not on the test and I should remember not too long ago talking to you about this. He set you didn't think we'd make it and you said. Boston and Austin. You put your money and they're both finalists. I got a two at twenty chance. Yeah I mean. I think it you know you think about I think Austin I thought Austin was gonna be a higher chance a lot of people are saying no wait it. That it's going to be Austin. You know the the it looks to me like at this point you know this is going to be about money right what the tax incentives and what he needed to sweeten might deal. And that and the ams that are going to drill down and start to really take a hard look. At the cost of living in a lot of these places as big criticisms at a Amazon's expand to Seattle is that those 40000 employees have written op. The cost of living in Seattle and I think that there are some places that are or be expected it yes you wanna be in New York fantastic but. It's going to be expensive to have eight middle tier worker live in new York and have a good life verses say living in a place like. You know balance so I wonder and again als is certain metals I don't know. Maybe it's Atlanta will say it's gonna be it's gonna be interesting process of course it's sort of nauseating this kind of company that has gazillion dollars at any taxpayer temperature and offered at all. Now in depth really really in depth on bitcoin 101. Well the first thing that people should look at is that for most people this is not really a good investment and Hutton is director of the financial markets laboratory at Niagara University a regular contributor on W the yen this. Is not like investing in stock so like investing in a bond or even investing in. A collectible. Here I would go back and and if people remember back. 120 years ago or so this idea we had these things called beanie babies. And these were cute little collectible toys in the whole idea was that there was a certain. Limited. Addition of certain only babies writer or that and so people would go out. And they would say well I got this particular beanie baby and I just heard that it sold for. 5000 dollars are gonna say from my college so they're gonna pay for my cop that's right this is my retirement in these media days. And because that there was eight limited supply of those people expected that the value would go up and so people actually investment. Windows. Has it turns out. There the company that made at Sidwell you know what if these get to be valuable will just make more them. Guy and the value cell and so what we're seeing right now is that one of the things that's happening is that. While bit Coleen are rare there's a limited number of them. There's a lot of other digital currencies right now like ether and other types of things. Which basically it do the same sort of thing and that's one of the things that's leading to the fall and for most people this is not good investment. Joining us live in studio this morning is the director of the financial markets laboratory at Niagara university and Putnam were talking all about Dick kind of epic calling 101. Now somebody's accident. Big point it's backed up. Buying nothing. Was backed up by this thing called. A lot chain which at I'm gonna explain to you my three year old as a college grass I'm watching basically a way of verifying transactions. And encrypting them. But the question I have is how exactly is that worth money. Yet we're elected to do try to give an analogy 0:4 am. What happens in block Tina let's think about getting a gift certificate he has a feud might get it gets it to me let's say don't coffee shop. And that gets a ticket you know I got one of those cards. 2.5 dollar cart to wanted to copy shots and I know that I can go and that coffee shop. And by eight point five dollars worth of coffee and elements that sort of thing and expect up that's guaranteed. By the by the donut shop itself okay. And so I don't I have some value that said that sonnet card. What blocked chain does is it block team realizes that there is a vulnerability there. Because if that coffee shop goes out of business then I don't have any valley. And did we have that coffee shop if somebody is for some interest did. Some reason interested in what kind of caught him by angle they can see get the records of that coffee shop where they can act in and they can learn an awful lot about me. What block changes is a really revolutionary technology that says instead of their being a central backer. For this you know like the coffee shop instead what we're gonna deal. Is we're gonna have everybody that hole has of those cards record. Every time I buy something. Or get more credit in an encrypted database and that's all it is it's an encrypted database I have the particular key. And I will then I have a particular amount of credits and if I go to spend those credits to exchange those credits with somebody else. They can use that key and say oh yeah okay he does have twenty dollars. In purchasing power. Now where I was just saying before that I thought that bitcoin was not integrated investment I think it these block change technologies. In terms of investment right now is probably going to be has significant some people say as the Internet. Ed Hutton joins us live in studio he's the director of the financial markets laboratory at Niagara University humor talking all about the coin now and in our last segment. Trying to explain to us so little bit about block change basically the technology. Behind it bitcoin and how that translates into actual money. Say you have some big point how do you get the money. Out of it well X that's where the problem has been right now is it do we saw that with the rise of because especially over the last year. The price of bitcoin rose dramatically over the last year and so what that meant that when we talk about what the prices are what we can do is we can look at. What his one bit calling sold for the somebody else. And so if there was a transaction where someone solo bid calling for at one point last year as high as 191800. Dollars I believe was that. That top so we we see that we see somebody sell one big point for 191800. Dollars and if we have multiple bitcoin we think ourselves were rich. And well whenever we feel rich we wanna spend some of that money but of course. There's not that many places that we can spend our bitcoin and so what we wanted to do was that convert that into dollars. And in order to do that what happened just recently is that whole bunch of people tried to sell their bid calling. When you sillier bit calling you so limit to dollars but that floods the market. With bitcoin and there are no buyers are the buyers are not there. And the only way to entice the virus to dramatically lower the prices of what we're going through right now is that you might. Think you're wealthy but then when you go to convert that into cash into the art. The what you're describing it it seems like a stock but it's not this stock it's a form of currency. We does this change this way we talk about the echoing as more and more places. Accepted as they do cash and share their odds that there are. Places right now where in the world. Where. It's really there really aren't ATM's there's just for security reasons for technology reasons for other types of things. We'll think about somebody in a remote village somewhere. Who might want to who subscribe to Netflix. Well they don't have a credit card. In they don't have a credit cards so they can't. They they can't do that they have Internet access now a lot of places. So they wanna be able to subscribe to Netflix and they have to pay 1112 dollars a month. It's very difficult without a credit card to be able to do that boat with bitcoin that does allow someone to be able to to do that and so what we're starting to see is that there are more and more places. That especially. In areas that are not well served by banks that are starting to accept it and so. That's one of the places of course one of the other the dark side of bitcoin and block change is that because there's no central authority. It's were allotted some pretty nefarious transactions are attending to take place is is this concept. The way of the future. Even if it's not bitcoin if it's something else yeah IE 88 I think it really years if you look at what's happening right now in the banking industry in the financial services industry. You'll see that one of the biggest concerns that people have right now is with hacking. OK with people breaking into bank accounts transferring money. 80% of the transactions on the stock market right now are executed between computers. That right now instead of the into the physical traders we're seeing. And at some point even worse than it is there is going to be additional crash is they're going to be additional hacks like that. And this blocked chain technology when he gets fully implemented for a lot of people they think that that's the eventual solution. So that very very disturbed. Now is that move. It would make us safer. Would it also mean that. You know the dollar bills that too that I have left in my pocket don't exist anymore that you know even though we do pay for everything it seems electronically now that. I mean that would literally be everything is electronic well yet I need it Egypt and again just. Hey you were mentioning it here today if you anybody under thirty if you ask them how much money how much cash do you carry around. Now. It's it's just a few dollars you know a few dollars where it might have been. Many many dollars in the past here yes it's an electronic form of payments getting more and more. Is getting more and more used. The problem the problem is that it did what happen especially last week is that we saw a number of countries. In China and in Korea and now in Europe. Saying that they're thinking about putting very tight restrictions even outlawed in some cases the use of its clients as a payment mechanism. Just because they can't track it and what it does is it leads to concerns about money laundering. Beck to bitcoin is it goes mainstream we're kind of doing a bitcoin 101 this morning with at Hutton who's in studio from Niagara University. Edit just got to bring this up that bitcoin as you're trying to help us all understand it it's been compared to gambling do you get that. We sure I do yet with the out that's the problem with that. With gambling is gambling is speculation without anything really backing it up here and one of the things that they're trying to do right now with be calling is to be able to. Be able to have a mechanism to be able to determine its value. You know because anytime you wanna use anything in a transaction you wanna know what its value. And what it thinks it happens if we think about other things tickets they get traded like car and oil and gold. Will they take place their trading takes place on organized exchanges and those organized exchanges do a lot. To be able to rein in the volatility reigned in the price changes so that even though it might change it changes in a more. Predictable pattern or more predictable range. And that's one of the things that's changing now with it Cohen is just a few weeks ago. The exchanges the Chicago Mercantile Exchange the Chicago board options exchange established. Futures contracts on bitcoin. So that what that did is that allowed you for the first time to be able to invest. Not in the bitcoin but rather in to a security. Whose value was tied to a bitcoin. Wins and a pretty out stable and well known exchange so for a lot of the people who would want to make an investment in bitcoin. This gave them the opportunity not only to invest. Because they thought the price was going up. But also to sell short because they think the prices going down and hopefully what that's going to lead is a more stable Pryce Macon. So I'm gonna go get some. Cash that is we're back Monday. That's 938 in 716. We're back tomorrow with a net irritation from the studios of WD EA and buffalo law.