Explainer: The history of bitcoin

Rebecca Jarvis breaks down the basics of bitcoin, where it all started and why the cryptocurrency has hit record highs
23:55 | 12/01/17

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Transcript for Explainer: The history of bitcoin
Hi everybody hope you are doing well today Rebecca term is ABC's chief business technology economics correspondent coming to you. From my office for might ask. Inside ABC news out just closed up 20000. For the first time ever in record territory. And there's a ton of interest from all of you in bitcoin a lot of you have been asking for me to do it quite breakdown. So here I am gonna get to that I just want to make sure that we do cover. The stock markets numbers today because it was a record close best in here with the Dow up more than 300 points 331 points. 24272. The final closing number on it now. A lot of you who are saying hello welcome to all of you are saying how. We're gonna talk about all of your questions whether it's market or be going bring it into all of that many here but as far as the stock market is concerned. You saw today stocks were supercharged. A lot of this driven in this moment by hopes for a tax plan. Idea that 20% corporate tax rate would certainly help a lot of companies and where he really did see. Today. A lot of the stocks where he's the big high flyers were in financial companies pinks. Things like that because banks tend to pay higher taxes in weight substantially benefit. From the lower tax rate banks acts a lot of support today also one of the areas that we've seen since Black Friday and says the big shopping weekend over Thanksgiving. Is that companies like the retailers have been doing well in a big part of that is that. We went out Americans went out. And spent more money over that holiday weekend and many were expecting and that has really helped a number of companies that are retailers that one other area. Our oil companies the energy companies that silent today in part that is because oil prices have been going higher recently. But today what I really wanted to get in Q were some questions about. Bitcoin because I know a lot of you have been asking me about it for some time and in the last couple of weeks. Even days bitcoin has had an incredibly volatile ride it's been it's been up. A wild one to watch. I'm curious to know who out there has been watching this because. For me just even see in the last year but cooling aloe last year is up 900%. One top be cooling investor at wrote this down he said it's been a wild wild roller coaster ride. Of raw. And rot that's how he thinks of this key piece of this going forward and just in the last 72 hours. Yesterday Wednesday. Bitcoin popped above 111000. Then it dropped to nine so that's. A drop of 20% in just a very short span of time today I looked out at the last time it looked at it. Maybe someone has looked at an even more recently it was in that 9007 undergraduates come up a little bit. But that is being equally is just very. Mysterious I think for a lot of you I think there's a lot of people out there who don't know. A lot about the cooling because it is a relatively new thing that you're just starting to hear about in the news people are starting to talk more about it so. I would be great what you guys today. A bitcoin how the whole thing worse. What were seen in bitcoin cell. I'm an answer your questions you ask questions I will be looking here to see about your bitcoin questions so you let me know somebody just that I could care less about the Dow. Demeco I want to just answer that because I think it's a very interesting point. Only 50% of Americans have. Any thing invested in the stock market so as greatest is if you happen to be shareholder in the market if you happen diary that borrowing okay. As great as it is. When you have money in the market on days like today I am fully aware that a lot of you. Don't have any money in the market but a lot of people out there so it's not all about that the real economy. Your jobs what's happening here we ages what's happening in your community. That's something else that cover and follow your ABC news so look out for that coverage as well today we're talking also about bitcoin and teary Terry Conner asked what his. Quite okay great starting point what is it collect so bit cool again in the last year. Has gone up 900%. It hit an all time high on Wednesday yesterday. Of 111395. Dollars now today it's back down to 9700. Dollars so what exactly is bitcoin will be quite. Is it digital currency lives online you can't touch it but it has value. And there's a little supply of big coins in the world 21. Million. Is that total number of big coins which means the supply is fixed so lifted me up. Then the price should go to the value should go up to because ultimately there's only that much supply 21 million. And one reason that people are so attracted to be calling. Is that it's not overseen by any government it's not overseen by any one company it is outside of the control of any government or company. But and I want to be really specific here clear what you guys according bitcoin. Is somewhat similar to owning stock in that. If you own bit calling. The value of that vehicle can go up or down just like a stock and just like stock are really bad stock could go out of business. Bitcoin could tank as well and we've seen that too in these last couple of days just like the last 24 hours we've seen huge volatile swings in bitcoin. Out bitcoin that I think is really interesting is how it got its start so the whole thing is really shrouded in mystery. In 2000 eat. There was the first discussion. Of bitcoin in the nine page white paper written by someone named sit toe she knock him out. And sit toe she Comodo who we don't even know Lisa Toshiba Comodo one person is a group of people who have decided to name themselves so she not Comodo. They called it appear to appear electronic cash system. Appears appeared electronic cash systems that this was 2008 this is before there even was such a thing is bitcoin. There was just a white paper about it. So she got Comodo wrote about it then comes 2000. And situation Comodo builds out on her now. Oh wait actually tree bitcoin to actually have this software to make bitcoin which was and I DN 2008. A reality in 2009. An app is time. Situation Comodo becomes really active in all of these online communities talking about it in chat rooms sending emails. That's what happens two years later sit Toshiba Comodo in 2011. Completely disappears off and got no more sightings no more recognition never heard from again. So that's the history of bitcoin. And if you got it going back then in those early days you have made it a considerable on this considerable amount of money. As of today nap tomorrow. Who in the house but as of today. You've made considerable amount of money and I say tomorrow renounces if you don't sell your bitcoin today they're not locking in the Alley. For yourself. Now some of these owners and it quite and I have a couple of like I have some special things I can show uses some of the biggest owners and bitcoin. Bill winkle must twits who remembers the winkle must witness. Okay I see your questions by the way so I know that we're talking about the bubble we're gonna get to the bubble. Someone says the F too much that I got that how safe is bitcoin so going back to my point cut to about it calling. They are is. According bitcoin. Is not a guarantee it's not a guarantee of success. Nor. Is a guarantee of failure and let's ask a few people there are few people by the way including Jamie Dimon. This guy right here. The CEO of JPMorgan. Who thinks that bitcoin is actually ridiculous in fact I want to read you that something that Jamie diamond said recently at a bank investor conference in New York he said. The current seeming going to work you can't have a business where people can invest. Can invent a currency out of thin air and they get people were buying it are really some are so Jamie Dimon one of the naysayers. Jamie Dimon does not believe at that point another one who doesn't really think highly eight point. It this guy right here. The Oracle of Omaha. He says it doesn't make sense this thing is not regulated it's not under control it's not a supervision. Annie United States Federal Reserve. Or any other Central Bank I don't believe in this whole thing at all I think it's going to implode. So that is the primary issues with bitcoin so the naysayers the people who don't believe it's going anywhere at their biggest issue is. Who is the overseer who was watching over bitcoin guaranteeing. That is testing instrument for putting money. So they have issues Warren Buffett. Jamie I'm. On the side. Some people are much more it for example the CEO of Goldman Sachs Lloyd Blankfein he's interested he says he's curious about it. Then there's guys. No legal bus twins Tyler and Cameron wing of us who watched the social network. All about the formation of FaceBook remember these guys these guys who it took. Mark Zuckerberg to court over FaceBook. Well they found something else to spend their time on when that thing work out. They found bit coy. They put eleven million dollars into bitcoin 2013. Well today. This op on on a good foot anyway but they're doing even better now with their eleven million worth 2013. Then remembers it coaching not about I don't. They guy or people or gal who created it polite. So sit time she not promote. What's really interesting here is remember I told you. That there are only 21 million big points well sit toe she not Comodo owns. One million. That basically means that sit Toshiba Comodo. Controls 5%. Of that whole Arnold bitcoin market in the world. And that a lot of people on edge because for want individual or one small group of individuals. To have that level of control. Is concerning I wouldn't put this in context free the United States government United States. Controls. Four point 3%. Of the goals in the world. 4% the entire country. So weak the United States. Have less schooled in our control then the amount of control that sit toe she not the moto has over eight point. And that put some people on edge because they say. If one person Noory small group of individuals had that much control. This could be very. Bat because what happens if they sell all of it at once. So that is one of the things that people are our concern. What is it going to purchase great question Randall. So big is prime Mir currently at this point being used Q purchased things online things light. Literally you can buy anything at long as the person on the other end of the transaction. Is willing to take coin. And you can you can exchange bitcoin you don't have to exchange it as a full one singular point. You can exchange in light up point 8001. Big points in order to buy some things out. This costs twenty dollars for example you wouldn't actually give a full bitcoin work 9700. Dollars to buy. You would. Give a portion a small percentage. Of that point to by somebody is saying they use bitcoin OK let's see what he is eight point four C. OK so people are making jokes here but yes there are. There's this underground market that many people suspecting Essen and it's been. Prove it in some cases like silk road for example. I'm going to musty till there but I'm happy to break it down later at a meter time but there are these underground markets because of the fact that. Bitcoin is not traceable in the way that other transactions are are traceable. There is a fear that some of those bit coins could be used to do you illegal things so. That's one of the things but I want to add that the place where a lot of people. Can either a point where a lot of people do by that point it's called base. They actually just had. And interaction with the IRS where the virus now is saying you have to give us records. The bitcoin purchases. And sales that are happening on base in their reasoning is. They want to make sure that people are properly paying taxes. On the big points that they are buying and selling so that that changes. If that that can definitely change a lot what happens with the currency going forward because it puts a little. Additional late of regulation and the whole thing another thing is the SEC. Is now saying that they are looking hats bitcoin and digital coins in general because they want to understand what's happening here so. Something to keep in mind. Also note and I think this is currently interesting so Ciena is just joining the conversation asked how her way here. You sell to get quite so quite base you buy and sell bitcoin I'm point base you can sell a number of their called. Crypto currencies that you might have also heard the theory Miriam is very similar to that point not the price. In fact it's it's more like 500 dollars right now tonight the area. But these are these digital currencies that Leanne. On the line that you can't touch. But that exists as units of valley as stores of value. That fluctuate depending on whether or not people were buying and selling them believed that they are going higher or lower. So. Who is buying these things so who does pretty interesting. Asia 62%. Of bitcoin trading right now is happening in Japanese yet still a lot of debate calling earning. Is happening in Japan. It's all happening in the United States 21% of point nine it's happening and US dollars. And 90%. Is happening in South Korea. So I'm not positive I myopic my opposite much larger than the street right now that we said it ups that I could talk talent here for my office. So things for joining me. Let's see. That's right. David bitcoin does not use a bank or a third party scene can make payments and no one will know you are that's exactly right it's and that is. For some that is the appeal of that coin for others. That is the concern bitcoin because there's no way of following the money but there are definitely those who love the idea. That you can't follow the money that you can conceal it that it doesn't relate back to a company that it doesn't relate back to a government. So. Bills are of the basic things about bitcoin. Can't I want it to show you because there was. There wasn't time where there is a conversation around who is sit Toshiba and moto. And this conversation around that it's an important thing. Will such Oshima yup not the moto reveal him or herself or themselves in the future will that happen there's there's a lot of people who hope that it will. A lot of people hope that we'll hear from Toshiba and macho again. But. There were a number of incorrect. Ideas about who sit Toshiba and wise. And one of those people. Was a Japanese American who is correctly identified. As it Toshiba and his name included the Toshiba about it but he's not he's a Toshiba and moto. And it was this guy so you seem picture of this guy anywhere. That is not sit toe she knocked them out so. We have not seen at this point. That's coaching and although if you have any ideas on the situation happened moto is or meet you are still she feel for Asia credit and the comments here Atlanta follow up on. OK I'm glad your getting back to work. For your bass that's always a good idea you don't want to take too much time away from working in trouble. Randall you are right situation not the moto is a very very wealthy person that is one person owning one million. Bit coins and makes them billionaire at this point and multibillionaire. Okay how do you get bitcoin so. Again one of the places one of many places where you could purchase it is a place called queen based. And it derives its monetary value from. How we perceive that our demand for a lot of people are buying. Bitcoin at one time. Then that's in his and the price higher and one of the reasons that analysts speculate that it's bad as volatile as it's been. In the last couple of days. Kyle I would believe you if you actually spelled correctly. Toshiba Comodo but unfortunately your spelling is just slightly off so anyway. What are the reasons that. That the bitcoin. Rises in value is because there's more demand for it because again the number the supply. Big point is that 21 million dollar going to be so as more people do it. All of a sudden. The value goes up but one of the reasons that people speculate as to what has been in the last couple days. Is that there's been first of all the price action when it got about 9000 a lot of people started looking at saying what is the thing I'm interested I'm curious. That led Hugh Moore Google searches in fact. That Google searches for bitcoin in the last couple of days have exceeded the searches on Google. For trop. So the interest and it going on Google has just gotten massive in the last couple of days. All of that talk has led. Very likely to some new purchases but you have to keep in mind that the people who owned bitcoin for a long time. At this point are doing something called profit taking that means we don't summing for a long time it went up a lot of value all of a sudden. You want to take some profits off of the table because you'd like to just make sure that those early I think that you put under a year. Dirty your bed and and keep them safe so people are doing that they're taking profits off the table because of how high. How high a bit point got in the last couple of days. Glitzy. Let's see. Well that's another point David still governments could get involved. Actually came up in today's white house press conference. I'm Sarah Sanders mentioned that they are monitoring that calling so all of a sudden. Here we are. In a new world where the White House is talking about it. How do they really know the price of eight points or Jonathan the whole thing is dynamic. Bit coins price is literally changing every Sackett. Based on the amount of buyers and sellers and it points of the same way that the price on the stock. Is changing every couple you know not every couple of seconds literally fractions of a second the price of the stock is changing. Bitcoin is doing the same thing the exact same thing. On you're fine who is asking about what point is and how will work I recommend you go back to the beginning of this video because. It we start right there at what it is. Jared I do not own any bitcoin but I do you know a lot of people who own man and one thing I was seeing you is. At eight NC point of caution I again I'm a journalist I look at this stuff. I am not an advisor I am not your advisor. Your your economics advisor but is something that if you are interested in. I would talk to your your economics advisor about it I would talk to do somebody who you talked about your money and how you invest and save. For retirement but one thing I would say is even people who are heavily. Invested in bit calling. For the most part and and they're doing that by the way that's their business because they are hedge fund managers and that's how a spend 24 hours a day seven days a week of their time. Date. Are cautioning the they caution. Around the idea of going out and buying a bunch of bitcoin they say at the very most. You should have one Q 5% of your total well. The amount of money that you're putting into savings and it points and again. A very very small part one thing I've said people people already asked me you know private language I do I know a lot of people here who have tried. One so it's going to tell and water if you're curious about it I want it that but even want now is a lot of money so. Beat I'll be careful because. Yes Jason analysts are saying it is a problem it's about to burst. And one of the reasons that you are hearing from more and more people's heads and bubble that's about to burst is even how much. Excitement and euphoria there's Benton. Arie recently because. Essentially nothing has changed in the world of bitcoin in the last few days except for the fact that more people are talking about it which in turn. Means more people are interested in buying it. So. That's where the bitcoin world is right now. You can buy a portion of one's that is tailored that is correct you can buy a portion of one but again keep in mind very well until. Definitely interesting. But very volatile. And it is something that I promise you that we keep talking about here at ABC I will keep talking about here on my FaceBook page. I appreciate all of the great questions from Alan you today. And let me know in the comments if you enjoy the conversation if there are other. Interesting questions that you have about it calling. More about the markets or the economy or jobs or wages any of those areas let me know in the comments and we'll design another conversation around that. If I love having conversations with you. And Gina and argue how much would it cost of I want vehicle in. Right now one to eight point run you about 718800. Dollars haven't looked at it in the last few minutes. But that was where was a few minutes. Have a great day everybody. Hope you are all doing well I will see you again.

This transcript has been automatically generated and may not be 100% accurate.

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