Banking on Africa: The Bitcoin Revolution (2020) - full transcript
- How you feeling?
- Very excited.
Making history.
And also, there's gonna be a lot
of very pleased people at the school.
It's not just a tech thing.
It's not just a new invention.
It's something that can
actually help real people.
So, it's fun to do that and exciting.
It gives it all meaning,
not just interest.
- Living at
the bottom of Africa
can really make world
affairs feel like things
that just happen somewhere else.
So in 2014, when I heard the
word Bitcoin for the first time
I made it my mission to find out
what is so wrong with the way things are
that people are trying
to change the financial
system for everyone.
The thing about storytelling though,
the story you expect is
never the one you find.
I reached out to friends to find out
who knew about this thing called Bitcoin
and I was pointed in the
direction of Lorien Gamaroff.
Within four minutes of receiving my email
about being interviewed on Bitcoin,
Lorien responded, saying,
"Yes, I do believe that
this will impact our lives
"as much as the internet has done."
So can you first explain to
me what cryptocurrency is?
- All it is, essentially, is
a mechanism for being able
to transfer digital assets
without there having
to be a duplicate of that digital asset.
I'll give you an example.
If you have an MP3, or a digital photo,
it's very easy to make a copy
of that digital photo or MP3
and send it to multiple friends,
or what this term is called, double spend.
In 2008, an anonymous
developer, or engineer,
or financial guru devised a way
to create a digital currency,
which essentially solved that problem,
where you could create a digital asset
that could be transferred
from entity to another
and couldn't be easily copied.
In 2011, I read a blog
about an underground website
that was using this new internet
currency that was different
from any other currency that
had ever come before it,
and I immediately decided to
try and play around with it
and see where it would go,
and acquired a number of them,
when they were worth very little.
And then, over the years I've
just seen the usage explode
and people come around to the idea
that this could very will
be the next innovation
that disrupts and upturns our lives,
and has a massive positive impact.
- There are thousands of
cryptocurrencies out there
and they're quite diverse in terms
of what their intentions are
and what they were designed to do.
So, for me the discussion
begins with Bitcoin.
It's the the proto cryptocurrency.
It's the first one that mattered.
- When you first geek out about Bitcoin,
and blockchain, and cryptocurrency,
you tend to become very
excited about the tech itself,
and I think I made the mistake
quite a few times early on
of getting too technical
when I'm just speaking
to my mum, or my wife, or friends
who just want to understand how it works.
It's digital money.
- In 2016,
we attended the Bitcoin
and Blockchain Africa Conference,
so we could hear people
who get it, explain it.
There was a woman on stage from
Botswana who educates people
on both the potential
and risks of Bitcoin.
After she shared her personal story,
I snuck over and slipped a
piece of paper into her hand
with the hastily scrawled words,
I'm making a documentary and
I would love to interview you.
- Come, come, come.
Welcome to my farm.
This is a very small farm
that I started in 2017,
when the Bitcoin market went a bit up.
I managed to buy the goats
and I bought myself some chickens,
and I set up the farm.
And I also managed to buy myself this car.
That is why it has got all
these Bitcoin stickers.
You can come and check out my goats.
They are like way cool.
The other ones are not yet here.
I think they're still in the bush.
The humble beginnings.
I'm hoping in the future
I'll have much, much wider farm
as I continue in my journey of Bitcoin.
So this is a Bitcoin farm.
But instead of mining
Bitcoin, I'm mining goats.
The piece of land, I got it in 2011,
so from 2011 until 2017
there was nothing happening.
I couldn't clean it up
because I didn't have money.
Some of my goats are coming.
It's one of my passions
besides teaching people about Bitcoin.
My husband is the one
who is always coming here
most of the time
because as for me, I'm always
busy doing my education
and doing my Satoshi Centre,
and sometimes touring.
People have flooded
Africa with a lot of scams
and a lot of our people are
falling into those scams.
So I'm not basically
only focused on Botswana.
Where education is needed, I go.
The whole idea of the farm
is so that I can be
able to sustain myself.
I'm just educating people
without making any profit out of it.
For me, education is very important
even though I get stressed
when my life is not
working according to plan,
and my vision for the Satoshi Centre
is not really accomplished, I would say,
but I'm always grateful
for the Bitcoin community
because they are really
a super, amazing family.
Everyone in the Bitcoin
space, they're amazing.
- The original document
that outlined the vision to
reinvent the world of finance
and technology was released in 2008
against the backdrop of
the financial crisis.
In order to understand all of that,
the most obvious place to start was money.
What is money?
Where did it come from?
And why isn't the way it
works working for us anymore?
- One of the first things
we figured out to do
that really distinguished us
from the other animals on this
planet was invent language
and a way of communicating with each other
that could convey very complicated ideas.
We could have armies of 100s
or 1000s of individuals,
where other great apes would only be able
to organize in clusters of
up to about 100 individuals.
So, that gave us an edge.
Language was extremely powerful
as an organizing mechanism,
but the thing we needed next was a way
of making our trust in
each other portable.
We used seashells.
Baboon bones were a popular
form of currency in Africa,
but money is, and always has
been, a form of an IOU note.
I could give you something
and you could trust that
that thing had value because
society believed it did.
Things like dollars and rands,
we call those fiat currencies
and fiat is a Latin word
that means 'let it be done'.
It basically means that they have value
because governments say they do.
Governments tell us that
you will use this money.
You will accept it as repayment of debt
and you will pay your
taxes in this currency.
So, it really is just
is because we say so.
There was a period where fiat currencies
were backed by the gold standard,
and now really money is just backed
by a government's ability
to enforce taxation
within its borders.
Governments, or their
central banking authorities,
can print as much money as they want to.
The decision to print money
is something that lies
with a few individuals.
It's open to flawed decision
making and really it's fair
to say that fiat money
isn't backed by anything.
- For a time,
Bitcoin felt like a lot of talk
and very little action,
but Lorien was taking
Bitcoin out of academia,
out of the future,
and creating a real
world use for it in 2015,
something tangible for the world to see.
- If you consume electricity,
you're gonna have a meter
installed at your property.
There's two modes that
that meter can be in,
either postpaid or prepaid.
Postpaid is where you
just consume the utility
and at the end of the
month somebody will come
and read your meter and
then send you a bill
and then you pay.
You're consuming first and then you pay.
Now prepaid meters are
trying to solve the problem
where people are consuming
and then not paying,
which is a problem we have,
and it's showing itself
in our energy provider,
Eskom, where they say
they don't have enough money
to maintain the power stations
because they can't recover
from the municipalities.
The municipalities can't recover
because nobody wants
to pay for the utility.
They've already consumed it.
So, they're trying to close that gap
by switching all their
customers on to prepaid,
so they can't consume unless they've paid.
But it then introduces another problem
from a consumer's point of view.
At least 80% of Africans are unbanked.
If they want to make a
payment they have to use cash.
Obviously now, the costs are increased
because the vendor has costs,
and there's traveling
costs, security costs.
So, although prepaid systems
will solve the recovery from
the utility's point of view,
it doesn't solve anything from
the consumer's point of view.
Bitcoin is a payment system,
which is an electronic payment system,
that is outside of the banking system.
Anybody who has an app
on their mobile phone,
it doesn't even have to be a smartphone,
they can easily become
part of the Bitcoin economy
and have access to electronic payments.
So, it's just a common sense
thing if you think about it,
that being able to make
Bitcoin a payment method
for a pre-payment system
opens up that massive market,
and it has opportunity to
drastically reduce costs
and increase efficiency,
at least from the
perspective of the consumer.
So now, there's a solution, Bitcoin,
and applied to smart metering
can solve a massive
problem throughout Africa
as well as Latin America and Asia Pacific.
- I started my journey with Bitcoin
in a little bit of a sad way.
- Can you tell me that story?
- My son, right here on the wall.
In 2007, I gave birth to a baby boy.
His name was called
Pako, which means praise.
He was born with a heart defect
called hypertrophic
obstructive cardiomyopathy.
I was looking for ways in
which I can raise money
and probably take him overseas.
It was kind of difficult here in Botswana
for them to promise me anything.
One time, the doctor told me
that there's literally
nothing that they can do.
When we brought to South
Africa, I was very happy.
I said my son would get help.
But they said to me, "For us
to be able to help your son,
"we finish first with the
list that is in South Africa
"for children who need transplants."
So I went online to try and do freelancing
so maybe I can be able to raise more funds
to be help my child.
Then I remember I got across a survey
where they say you can do a survey
and you can be paid in Bitcoin.
I went through that, worked my heart out.
I never got any Bitcoins
from the work that I did.
A lot of things that I met were scams.
One scam after another.
And then in April, on the
4th, my son died, so yeah.
The first time I heard about Bitcoin
was to raise money for my son.
So when he died, I felt
like I have lost the purpose
for why I should work online.
So I just stopped.
Something was just nagging me in my head,
like you need to go back
to that Bitcoin thing
and look at it and see if
it can be of any worth.
The more I read, the more I get learned.
I decided let me take
another step further.
It's no longer about my son,
now it's about changing my country.
It's about changing the people.
I will group together people
and I will teach them about Bitcoin.
So 2013, I did my first meet-up.
But before the meet-up, I did a video,
which I put on YouTube.
I did an old t-shirt
with my Bitcoin address
and I was like, I want
to work for this company.
Even by then I don't even
understand what Bitcoin was.
Like for me, it was more like a company.
Then 2014, my group was growing
and I kept on educating
people about Bitcoin
from that moment onwards.
- So why can
we trust that crypto
is worth something?
- Bitcoin, as a primary
example, has a finite supply,
which makes it a deflationary currency.
It actually in very real
terms is scarcer than gold.
There's no central
authority that can decide
to raise interest rates
or to print more money
as a part of quantitative easing.
The Bitcoin network runs itself.
Once the network was set in motion,
that system runs by consensus.
- Can you tell me about Usizo?
- Sure, imagine
a poor school in Africa.
They have a Bitcoin meter.
Anybody from anywhere
in the world could pay
for a week or month's worth of electricity
directly without having to
go to that organization.
I actually thought instead of
just talking about something,
why don't I go and do it?
- What does Usizo mean?
- Usizo is a Zulu word, it means help.
The whole point of this project
is to kind of relieve the
burden of the electricity.
I mean, obviously
there's a lot more things
to be paid for in the school
and these schools have small budgets.
If they can have that
burden lifted a little,
where they don't have to
actually pay for the utilities,
then they can then spend
what little they have
on other things.
One of the struggles that we've had
is trying to get a metering
company to agree to the project.
A lot of these metering
companies make a lot of money
on the vending solutions they've supplied,
taking the fees from
the fiat transactions.
Now, having a
blockchain-based system means
that the funds go directly
through to the meter,
and so the metering companies
that we've been dealing with
weren't willing to go
along with the project.
So, it was quite an uphill struggle,
but luckily we have found
some enlightened partners.
We've got about two bars out of the three.
So, I think communication should be fine.
But we also have an antenna.
So what we can do is perhaps
bring an antenna through here
just to boost the signal.
So, once we get the
donation going through,
and the meter can pick up the
payment on the blockchain,
the next step is for the
actual meter to switch on,
and then we should see
the school light up.
It will be hard to see now,
but at least we'll see something happen,
and then on Monday night
when it's all pitch-dark,
I think it'll be quite spectacular,
when everything goes on.
That's the theory, very exciting.
- The blockchain is the
operating system that it runs on.
So, you can see it as your Windows,
or your Linux, or macOS X.
The software layer is the blockchain
and Bitcoin is an app that
runs on top of the blockchain.
- Blockchain is
the magic behind the money,
but really it's just a
decentralized database
stored on a very large network
of computers all over the world.
It is the technology
that underpins Bitcoin
and other cryptocurrencies,
but it's not just for
monetary transactions.
You can use it to store
data like patents or wills,
or to exchange anything of value,
such as products, properties,
services and even votes.
The authenticity of the exchange
of value, or transactions,
is verified by the community as a whole,
rather than by a single
entity, removing the risk
of a single point of
failure in the system.
Each transaction is recorded
on a public distributed ledger
that can be viewed by anyone in the world.
- The blockchain is a
decentralized system,
and the strength of the blockchain
is that everybody's
checking everybody else.
No single institution is in
charge of this information.
Now that differs from the
current financial system
that we actually do
have all over the world.
In the case of South Africa,
in the center of our financial system,
is the South African Reserve Bank.
And the Reserve Bank
checks all the other banks,
and all the other banks check us.
And that's the difference
between a decentralized system,
the blockchain, for example,
and a centralized system.
If I, for example, want to
give you government money,
or Central Bank money, and I do a transfer
from my cellphone to your cellphone,
it is impossible for me to transfer money
from one bank account directly
into another bank account.
We think that is what happens,
but what really happens is that
I send a message to my bank,
which will send a message
to the Central Bank,
which will send a message to your bank
to make a deposit into your bank account.
So there's somebody else always in charge.
There's always a middle man somewhere
between my account and your account.
- So who invented
blockchain and Bitcoin?
- The creator of Bitcoin,
the cryptocurrency
and the technology, is Satoshi Nakamoto.
People think it's a group of people,
or it could be an individual,
he's a complete mystery.
No-one knows who he is.
People have their suspicions.
I have my suspicions as well.
Several people have come out
to claim that they are Satoshi Nakamoto.
I think it's quite nice
that it's a mystery.
I like the fact that
I don't know who it is
and I think we would be disappointed
if we found out who it was.
- So why did
you name your dog Satoshi?
- Bitcoin and cryptocurrency,
and blockchain technology
has taken over my life.
I love Bitcoin, I really do,
and I like what it stands for,
and the name suits him completely.
- I'll organize small
talks and I'll go around.
I've been in Gabarone,
and I went to Francestown
to go and teach people about Bitcoin.
I met students who are into IT.
We talked blockchain and all that
and I began to tell them
about the possibility
of changing the way
things are in our country.
The way things are in the world.
I was inspired by Satoshi Nakamoto,
liberating the people
from what was happening
during the financial crisis,
coming up with something that
would really help people.
The Satoshi Centre's vision
was to create a community lab
where people can come
and learn about Bitcoin
and also be able to be very creative.
- Somebody came up with this
idea of making it possible
to trust the record of ownership of money,
without trusting any
individual in the ecosystem
that makes things work together
and that is such a clever invention,
that we have to make it work
and make it valuable in the
way we apply it to society.
If you compare it to the
traditional financial system,
I don't think any of us really get excited
about going to our bank,
or excited about logging
onto a banking system.
One of the disadvantages of cryptocurrency
is the complexity stall,
that we're working with a
very rough, technical thing
where you need to understand things
like the transaction fees
and things like that.
But, to be fair, if you compare it
to the traditional financial system,
that's not really clear as crystal either.
It's really very difficult to understand
how banking fees are
going to apply to you,
what's it going to cost
to transfer 10 000 rands
to a U.S. bank account.
Things like that are
also very, very complex.
- What we're gonna
basically do is an auction.
The item in question is this over here,
which is a 100 rand note.
You're gonna be bidding
for this 100 rand note.
It's a standard auction.
Whoever wins the auction
gets the 100 rand note.
A slight switch though on
the traditional auction model
is that the person who comes second
has to pay whatever their bid was,
but they don't get the note.
So, I'm gonna open it up at 10 rand.
Would anybody pay me 10
rand for a 100 rand note?
Who's first?
10 rand, we got 10 rand in the back.
180 rand going once,
180 rand going twice.
Sold for 180 rand.
You can come and settle afterwards
and the person who came second
needs to settle with me as well.
It's not that central financial
authorities were a bad idea.
It gave us a way of scaling up to what now
is the global financial system.
It gave us a way of
trading with each other.
You could travel to the
other side of the world
and you could start to
trade with people there,
and that was fantastic,
but where it has failed us,
for example, is where
human greed has been able
to manipulate the system,
to put it quite bluntly.
That's the second highest price
I've ever gotten for a 100 rand note.
It's a great game for me
because I essentially
now have made 310 rand
and parted with 100 rand, right?
The game of course is rigged.
It's designed so that I'm gonna win
and it has to do with
the irrational mindset
people have around money.
We all remember what happened
with the financial crisis in 2009.
In that situation, we were reminded again
that banks can fail.
We have a fractional
reserve banking system
in most countries where
banks don't actually
have to have all of the money
that they're storing on
behalf of their customers,
they only need to keep
enough of that money around
that they can satisfy all
of the withdrawals requested
in any given period.
When a bank gives you a loan
to buy a house, for example,
they don't have to have that money either.
That's basically money they
can make out of thin air.
But when you have a run on the bank,
when there's a crisis
and everybody tries to pull their money
out of the banking
system at the same time,
banks don't have that money
and that causes them to collapse.
Governments then stand
as what we call a lender of last resort.
So, governments say, if the
bank doesn't have enough money
to sort out all of its customers,
we'll step in and we'll lend
them the money to do that.
But, of course, that money needs
to come from somewhere too,
and so what happened in
2009 was you had banks,
which didn't have enough money
to pay all of the people
trying to withdraw their money.
The U.S. government
didn't have enough money
to act as a lender of last resort,
and so, the U.S. taxpayer
effectively had to bail out a bank
with a tax-free, non-reversible loan
that never had to be paid
back to the taxpayer.
Now, it doesn't really matter
how you present that story.
It doesn't strike me as fair.
- Every country's
economy is intertwined
with every other country's economy,
imports, exports, investments,
and the world reserve currency,
meant that the financial crisis in America
became the global financial crisis.
The saying before 2008
was that the banks were too big to fail,
but the bigger they are,
the harder they fall.
Over a decade later,
there are now banks that are even bigger
than the too-big-to-fail banks
of the financial crisis years.
- Hi, my name is Bheki Mahlobo,
and I have a question
for the chief economist.
So, I'm an economics student,
and I'm not sure if you've noticed,
but a lot of people in the Bitcoin space,
they know more about economics
than most PhD students
in universities actually.
This is because in university
we're not particularly exposed
to different, other schools
of economic thought,
like the Austrian school
of economics, for example,
and if we're not exposed to certain things
then we won't question certain things,
for example, like money.
In school we're not particularly
taught what money truly is.
What is your opinion of Bitcoin being used
as a way to escape this
economy that exists right now?
- You're absolutely right
that in our universities
we should teach other
schools of thought as well,
and a very important school of thought
is the school of thought of real freedom.
And I've got a suspicion.
This new technology will
really put the power
in the hands of the individuals
and allow us to experience
that real, real freedom
and not to enslave us the way
that politicians have been enslaving us
for the last couple of hundred years.
This is a real freedom,
but not only is it real freedom,
it's very, very dangerous and with that,
goes a huge responsibility as well.
- 21-year-olds don't normally
go to events like we did the other day.
- Yeah, yeah.
- That's not a
normal 21-year-old thing to do.
- Usually like clubs
and stuff, right, yeah.
The first time I heard about Bitcoin
was from a movie called 'Dope'.
This movie doesn't cover
Bitcoin in a positive light.
And then, I heard it again, and I was like
maybe let me look at it and
do a little bit more research,
and that's where I fell
down the rabbit-hole
as the saying says.
My economics teacher
was heavily into gold.
So he was explaining
central banking, right,
and fractional reserve banking,
and inside I was like whoa,
this seems a little bit shady.
He explained that we actually
don't need the system.
In a normal economy things are supposed
to get cheaper over time,
not expensive over time,
and the common thing that
I'm hearing on the news
or YouTube is that no, we need inflation
so that there's economic growth.
I did a little bit more digging
and then that's when I found Mises.
They follow the Austrian
school of economics,
and then they explain that no,
we actually don't need
inflation for economic growth,
and, in fact, that whole statement
is a whole contradiction in itself.
When you define economic growth
it's the increase in production,
and the increase in production
causes prices to decrease.
An example of this would be technology.
When the first phone came
out it was quite expensive
and then eventually
there was a lot of people
contributing to different designs,
basically providing
alternatives to smartphones
and then the prices of
smartphones decreased over time.
That also could apply
to the economy as well,
and now I know, this person,
what he's saying on TV,
is utter nonsense.
And then, what can I do about it?
It's like buy Bitcoin, bruh.
- Using this greedy algorithm
I can make a lot of money,
and actually the only way
you could've won that game
was to not play it.
The problem is, when you
have money on the table
human beings start acting
in a very curious way,
but I wanna use this auction as an example
of our banking system,
and, in fact, the financial system
that runs the world today.
Because it is rigged.
There are rules that have
been put in place that mean
that you will lose every time you play
and somebody will make a lot of money
because they control the algorithm
that ensures that you lose.
Our current banking systems,
while they're useful for
things like being carrots
and going to the movies and stuff,
are exploitive, and they're exclusionary,
and they cut out a lot of the world,
and we don't have to play the game anymore
because we have the
technology now to opt out.
Money was always centralized,
was always opaque,
was always exclusionary,
had too many middlemen,
too many rent-seekers, too
many people quite frankly
benefiting from exploiting others.
Finally, we could use the internet
to create a financial system
that benefited everybody potentially,
that was resistant to censorship,
that nobody could take control of,
that's what the world had been waiting for
and finally it arrived
with the Bitcoin network.
- I was never interested
in all these subjects,
this economics and finance,
and since Bitcoin I became interested,
and I would still be
living in my oblivious way,
hoping that whoever's running
the system is running it fine
and that we don't end up in the same way
that Zimbabwe ended up where
their money became worthless.
It's not so much about not
having a long-term view,
it's just about being educated on this
and the majority of people
aren't educated on this.
- Can I just go on and say something else
that I think it is important?
- Absolutely, absolutely.
- Okay, if we use a blockchain system,
the power is actually where
I believe it should be
and that's in the hands
of the individuals.
We do not need the
permission to transfer money
between my account and your account.
And that, of course, also
opens the possibility
for things like, for example, fraud
and tax evasion and all
sort of illegal things.
And the responsibility
is also in the hands
of the individuals, the
way I believe it should be.
- Why?
Why should we have that
kind of responsibility?
- In all instances when governments
got involved with money,
in all instances without
one single exception
they have either destroyed the money
or they are in the
process of destroying it.
So don't think that a
politician or Central Bank
is in the position that
you can always trust him.
It's just another individual,
just another human,
and they always make
mistakes and it's inevitable.
But ideologically, I also believe
that I should have the
right to decide for myself
whether I want to lend you money,
whether I want to borrow money,
it's not up to some politician
or some other institution
to tell me what I can and what I can't do.
That's my business.
- There exists
a definite two-camp divide
over whether Bitcoin should
be used to facilitate liberty
and self-sovereignty or
if it should be regulated
to protect users.
Can you give me an example of
some of these crazy schemes
that people are coming
up with using crypto?
- There's so many.
I remember, but most of them
coming from South Africa.
So in the very beginning, I
remember they used to call me
and try to recruit me.
They say like, "You've
got a network of people
"you can make a lot of money."
I'm like, "I would rather be poor
"than to join something
that at the end of the day
I'll hurt my own people."
There's always a joining thing.
It's like a pyramid scheme.
The lady came to our office.
She was really heartbroken
because she has put a lot
of money into a scheme
and then it disappeared.
People actually put
their children's school fees.
What I know is once you start
having an influx of people
calling and saying they want Bitcoin,
know that there's a scheme coming up.
So they're good in a sense
maybe they make Bitcoin
to be used a lot.
But at the same time, they're really bad.
The bad surpasses the good.
One of the biggest challenges
to explaining Bitcoin
is to somebody who comes
already with the 'preknowledge'
of what Bitcoin is and then
they come to you and say like,
"How much do I join?
"How would I make money very quick?"
You try to convince the person
that it's not about joining,
it's like a revolution.
It's like a new technology
arising altogether.
It's about you understanding.
They're like, "No, but it's not that."
The pros for me, is liberation, freedom,
the ability to control your own money
or the ability to send any
amount of crypto or carry it.
Imagine if you were to
carry a chunk of gold,
you want to pass through the
border or whatever, you can't.
So that's the beauty of Bitcoin.
The negativity is people using it wrongly,
making our people poor.
Also, lack of regulations and stuff.
If you can have maybe some
sort of regulatory framework,
it will also help protect us.
I know you cannot control it
because of the way it was created,
but just regulations, it
can help a little bit.
- Since Bitcoin's early days
it's been shrouded in
mystery and controversy,
from the bankruptcy of Mt. Gox,
one of the early exchanges,
to the infamy caused by the
dark web Silk Road marketplace
that accepted Bitcoin for
nefarious goods and services.
While Silk Road became one
of the first use cases for Bitcoin,
it also perhaps put
the mainstream adoption
of cryptocurrencies years behind
where it might have been otherwise.
- It was run by Dread Pirate
Roberts, or Ross Ulbricht.
If you follow the news you
know that Ross Ulbricht
was found guilty by a jury.
The federal judge took his
activities very serious
and she actually sentenced
him to serve a life sentence.
They counted at least six individuals
who had purchased
narcotics off of Silk Road
and died as a result.
What we basically are focused on,
one, is criminal offenses
involving digital currency,
which could be any sort of
crime, whether it's narcotics,
whether it's murder-for-hire,
whether it's identity theft and so on,
in which the bad guys
are utilizing Bitcoin
rather than other forms of money
because they, in our experience,
believe it to be untraceable,
which is clearly an
accident on their part,
a misunderstanding to say
the least.
But we also deal with the
regulation of exchanges of money.
- Very nice.
- Don't touch, don't touch.
- No, you must be careful.
Every single transaction that
occurs in the Bitcoin network
is recorded in something
called the blockchain,
a public ledger of every
transaction that's made.
The only problem is that
even though you can see
every single transaction,
and you can see the addresses,
which are like the account
numbers of the people
that are holding those bitcoins,
you don't actually know who
those addresses belong to.
So, the correct term isn't
anonymous, it's pseudonymous.
Cash is truly anonymous.
If you have a suitcase of
cash and you go and spend it,
there's no way that that
transaction is recorded.
So, Bitcoin is less anonymous than cash
and we certainly know how cash can be used
for nefarious purposes.
We know that suitcases of money
and drug deals happen all the time.
- There was a
name that kept coming up
in conversation and research,
and for his name alone it
felt necessary to meet him.
Fluffy Pony.
It's a nickname that stuck years ago
that despite his best efforts,
Riccardo is not able to get rid of,
but amongst the noise of the crypto world,
Fluffy Pony definitely stands out.
Why is privacy so important
and how is it lacking in the
way we currently do things?
- Privacy is the natural state of things.
You're not closing the
door at the bathroom
because you want to plot to
overthrow the government.
You're closing the door at the bathroom
because you don't want
people to see you on the loo.
There's certain aspects of our
life we wanna keep private,
that we might reveal to certain people.
We hopefully take our clothes off
in front of the person we're married to,
but we don't go and walk around
the shopping center naked.
But privacy has become, it's
sort of become, overshadowed
by oh bad people want privacy,
or things like if you
have nothing to hide,
then why do you care about privacy?
It's not about wanting
to hide it from everyone.
It's just that we wanna control
who sees the information.
If law enforcement or the government
want information about me,
they should have to come knock on my door
to get that information.
They shouldn't be able to
just get that information
because my bank is telling them
about every transaction I've ever done.
- I know people say there is
information on the internet,
but it's different.
If I'm able to really
expand on the information
maybe you picked from the internet
and make you understand,
it makes me feel good
because I know I've empowered you,
you will take the same knowledge
and you give it to someone.
So if I'm able to reproduce
someone who does what I do.
That's the real deal,
that's the real deal, yeah.
Had it not been for him,
I wouldn't be doing what I'm doing.
He made me to know about Bitcoin.
So because I was trying to
help him during that time,
now I'm helping people with knowledge.
So it's like transferring
whatever I wanted to do for him
now he's somehow doing it
for the people through me.
I'll continue to honor him, yeah.
He'll be my baby forever.
Yep, yeah.
- When I got introduced to
Bitcoin, it's like okay,
let me save, each month
I save, I save, I save.
I think more about the future,
what's gonna happen in the future
and I orientate my actions
today that'll impact the future.
I mean, that's the reason
why I'm studying, right?
I'm like, it seems like some
really interesting stuff
in the space of crypto.
I'm not saying I'm against banking,
I'm just against
fractional reserve banking.
So, I orientate my actions towards that,
the new financial system.
I would be a lot more stressed
if I didn't have Bitcoin, honestly.
- Why?
- Let's say, for example,
if we have the Central Bank
government decides like
yo, I'm gonna print like two trillion rand
into the economy.
The consequences of that
would be hyperinflation.
I can't remember who said
this, but it says like,
"Bitcoin's not about getting
your money out of the country,
"it's about getting your
country out of your money."
Essentially, it's like
protecting your savings,
protecting your stored value,
that's why I'm into Bitcoin.
- I think the financial
crisis started a discussion
that Bitcoin then accelerated
around why the financial
system works the way it does
and whether or not it
should work that way.
How can we make it more transparent?
How can we make it more fair?
How can we improve the world
of money for everybody?
But it was a very difficult discussion
to have with people in
the early days of Bitcoin.
I was writing for Finweek
Magazine at the time
and I did a story on Bitcoin in 2011,
and some of my colleagues
literally laughed at me.
They were like, "This is the dumbest thing
"we've ever heard of, it's a bubble,
"it'll never be worth more than $9."
At its height it was worth $20,000
and it's gonna be worth a
lot more than that one day,
and every time we see this cycle.
We have people laughing,
it's not gonna last,
it's over-inflated,
and every time they're right
for a very short period of time,
and then every time they're proven
ultimately wrong in the medium-term.
I believe that one day
it's something that you
won't have to understand.
It just makes your life better.
Very few people can tell you
exactly how their smartphone works.
It doesn't matter because the narrative
has become about why it's good for them.
What does it enable in their lives?
Well I can speak to my grandchildren.
I can stay up-to-date with the news.
I can take pictures of my family.
Those are the things that matter.
How the processor works
and all of the software
that makes it possible,
nobody really needs to
understand the bits and pieces.
- Welcome to Emaweni, in
the middle of the night.
- At two
o'clock in the morning,
I followed Lorien out to Soweto
to witness history being made
with a live demonstration of
his Bitcoin prepaid meter.
Lorien would be Skyping
through to a conference
on the other side of the
world at MIT in Boston,
where his friend Ed would
be making a Bitcoin payment
straight to the meter.
- So, what I'm gonna do
is I'm actually going to -
be ready, okay, so let's get
this whole thing started.
They're gonna be calling right now,
in about two minutes
and then I'm gonna come to that classroom.
- Okay.
- Shame, they've been here
for two hours, three hours.
They got here at 12.
Hi, Ed.
- This is a pack room here.
- Hi, everybody.
- Can you see all of them?
- Hi, nice to see you
all, thanks for coming.
- Could you shortly
explain where you are
and what you're doing there?
- Sure, I'm in a city outside
of Johannesburg, in South Africa,
it's called Soweto.
Where I am right now is very close
to where Nelson Mandela
used to live in his youth,
and I'm in a small school.
We're gonna be demonstrating
our blockchain prepaid metering system.
So, this is now one of
the electrical boxes.
I don't think you can actually see,
but there is a ,
this is now just a conventional meter box,
but there's a blockchain
enabled meter over there,
and what we're gonna do now is
I'm gonna go to the classroom
and there's some teachers
there, and it's all dark,
and Ed's gonna now make the transaction.
- How long
does the transaction take?
- The transaction takes about,
it should take about 30 seconds.
All right.
Go for it.
Okay, and now we wait I guess.
And we hope it works.
So yeah, now what's happening
is it's now going through the blockchain,
the meter's gonna detect the payment,
it's gonna calculate the tariff,
and then load the required
amount of electricity
onto the meter.
So, there's nothing on it at the moment.
That's why we're in the dark.
And, hopefully in a few seconds
the meter should be activated.
I'm actually sitting in
one of the classrooms here,
so you can see
the staff here, ready?
This should be a few, about 30 seconds.
- 41 seconds.
- 41 seconds, okay.
All right.
- Maybe you should
just switch them on.
- No, no, not fair if there's switching.
This is usually what
happens in the live demo.
- Yeah.
Let me just check if I
have the right address.
Yeah, yeah it's Emaweni.
- Hmm, oh there we go.
I've got four sons who are busy.
One of the things that
I've been involved with
is the Cub Scouts.
I take my sons there on a Friday night.
We get involved teaching
kids how to be independent,
and also, most importantly,
be good citizens.
It's very important to get children
to consider their
communities and their society
and to be empathetic to other people,
to try and make their communities better,
to build it up, to try
and think civic-mindedly.
- This is the
thing that I struggle with.
So in Africa, I don't know that it helps
to resolve third world problems
because if you live in a hut
you don't have access to the internet.
You don't have access to a phone.
Do you think that it's actually something
that could really
genuinely make a practical,
real-world, difference here?
- I tend to think that
cryptocurrencies have potential
to solve real world
problems all over the world.
You're not gonna solve all
the problems, certainly.
Even if it just becomes a
global reserve currency,
the local currency for a
country becomes less important,
where people can trivially
shift from whatever
the local currency is into Bitcoin,
and then it doesn't matter
what happens to the local currency.
Now, your reliance isn't on the government
to keep the economy stable
because you've got a back-up,
you've got a fallback.
That's very powerful and I think that
that's something that
could have lasting effects
and impact in Africa.
We've had this leapfrog thing that occurs,
where there's an innovation,
like digital cellphones
when they came out,
those were the first cellphones
that really got deployed in South Africa,
and because of that we were on 3G faster
than the United States and most of Europe,
and it's just because the infrastructure
is a little bit more modern,
because it was deployed
slightly later in the game.
There are a class of problems in Africa
where we can just leapfrog,
and use cryptocurrencies
to our advantage, and I think
that's what's gonna happen.
- Even though, myself
on a day-to-day basis,
I don't use Bitcoin in
the way I would like.
I do wanna be able to spend Bitcoin
and I do wanna be able
to have people out there
in this country spending Bitcoin.
I want merchants and service
providers to accept Bitcoin.
So, instead of waiting
for them to do that,
I'm now going and actually
providing those tools.
I will certainly strive
to create the opportunity
for people to spend it
in their day-to-day lives
and also to accept it in
their day-to-day lives.
- Ironically,
the story I expected
was to be told by a bunch of men in suits
just in pursuit of more money.
I expected to find
bandits, and terrorists,
and everyday-Joes organizing
dark deeds in dark places.
But in the last five and a half years,
the story I thought I would be telling
about the crypto space in
Africa never materialized.
I've realized that my
pessimism at the beginning
of this journey was
actually just misplaced,
but regardless, that pessimism
has now turned to optimism,
not so much because of the
tech, but because of the people
who are using it to make the
circle both bigger and better,
and that's what I call the
beginning of a revolution.
- Just off the top of my head.
- Bitcoin.
- Ethereum Classic.
- Huntercoin.
- Monero.
- Ethereum.
- Ripple XRP.
- Bitcoins.
- Bitcoin Gold, Bitcoin Silver,
Bitcoin Diamond, Bitcoin Private,
all of the things that start with Bitcoin
and have another word after it.
- Dash, Zcash.
- There's Cardano.
- EOS.
- Stellar Lumens.
- Calibur.
- IOTA.
- There's another one called E-Ora.
- Bitconnect.
I'm sorry, I'm sorry,
that was like a scam coin.
- Did I say Dash?
Of course Dash, Litecoin Cash.
- I just hit a blank.
- Now they're escaping me, these coins.
As many as I can.
- There's so many, it's
hard to think of them.
- UBU.
BNB.
PRIVEX.
This should be a lot easier.
- Very excited.
Making history.
And also, there's gonna be a lot
of very pleased people at the school.
It's not just a tech thing.
It's not just a new invention.
It's something that can
actually help real people.
So, it's fun to do that and exciting.
It gives it all meaning,
not just interest.
- Living at
the bottom of Africa
can really make world
affairs feel like things
that just happen somewhere else.
So in 2014, when I heard the
word Bitcoin for the first time
I made it my mission to find out
what is so wrong with the way things are
that people are trying
to change the financial
system for everyone.
The thing about storytelling though,
the story you expect is
never the one you find.
I reached out to friends to find out
who knew about this thing called Bitcoin
and I was pointed in the
direction of Lorien Gamaroff.
Within four minutes of receiving my email
about being interviewed on Bitcoin,
Lorien responded, saying,
"Yes, I do believe that
this will impact our lives
"as much as the internet has done."
So can you first explain to
me what cryptocurrency is?
- All it is, essentially, is
a mechanism for being able
to transfer digital assets
without there having
to be a duplicate of that digital asset.
I'll give you an example.
If you have an MP3, or a digital photo,
it's very easy to make a copy
of that digital photo or MP3
and send it to multiple friends,
or what this term is called, double spend.
In 2008, an anonymous
developer, or engineer,
or financial guru devised a way
to create a digital currency,
which essentially solved that problem,
where you could create a digital asset
that could be transferred
from entity to another
and couldn't be easily copied.
In 2011, I read a blog
about an underground website
that was using this new internet
currency that was different
from any other currency that
had ever come before it,
and I immediately decided to
try and play around with it
and see where it would go,
and acquired a number of them,
when they were worth very little.
And then, over the years I've
just seen the usage explode
and people come around to the idea
that this could very will
be the next innovation
that disrupts and upturns our lives,
and has a massive positive impact.
- There are thousands of
cryptocurrencies out there
and they're quite diverse in terms
of what their intentions are
and what they were designed to do.
So, for me the discussion
begins with Bitcoin.
It's the the proto cryptocurrency.
It's the first one that mattered.
- When you first geek out about Bitcoin,
and blockchain, and cryptocurrency,
you tend to become very
excited about the tech itself,
and I think I made the mistake
quite a few times early on
of getting too technical
when I'm just speaking
to my mum, or my wife, or friends
who just want to understand how it works.
It's digital money.
- In 2016,
we attended the Bitcoin
and Blockchain Africa Conference,
so we could hear people
who get it, explain it.
There was a woman on stage from
Botswana who educates people
on both the potential
and risks of Bitcoin.
After she shared her personal story,
I snuck over and slipped a
piece of paper into her hand
with the hastily scrawled words,
I'm making a documentary and
I would love to interview you.
- Come, come, come.
Welcome to my farm.
This is a very small farm
that I started in 2017,
when the Bitcoin market went a bit up.
I managed to buy the goats
and I bought myself some chickens,
and I set up the farm.
And I also managed to buy myself this car.
That is why it has got all
these Bitcoin stickers.
You can come and check out my goats.
They are like way cool.
The other ones are not yet here.
I think they're still in the bush.
The humble beginnings.
I'm hoping in the future
I'll have much, much wider farm
as I continue in my journey of Bitcoin.
So this is a Bitcoin farm.
But instead of mining
Bitcoin, I'm mining goats.
The piece of land, I got it in 2011,
so from 2011 until 2017
there was nothing happening.
I couldn't clean it up
because I didn't have money.
Some of my goats are coming.
It's one of my passions
besides teaching people about Bitcoin.
My husband is the one
who is always coming here
most of the time
because as for me, I'm always
busy doing my education
and doing my Satoshi Centre,
and sometimes touring.
People have flooded
Africa with a lot of scams
and a lot of our people are
falling into those scams.
So I'm not basically
only focused on Botswana.
Where education is needed, I go.
The whole idea of the farm
is so that I can be
able to sustain myself.
I'm just educating people
without making any profit out of it.
For me, education is very important
even though I get stressed
when my life is not
working according to plan,
and my vision for the Satoshi Centre
is not really accomplished, I would say,
but I'm always grateful
for the Bitcoin community
because they are really
a super, amazing family.
Everyone in the Bitcoin
space, they're amazing.
- The original document
that outlined the vision to
reinvent the world of finance
and technology was released in 2008
against the backdrop of
the financial crisis.
In order to understand all of that,
the most obvious place to start was money.
What is money?
Where did it come from?
And why isn't the way it
works working for us anymore?
- One of the first things
we figured out to do
that really distinguished us
from the other animals on this
planet was invent language
and a way of communicating with each other
that could convey very complicated ideas.
We could have armies of 100s
or 1000s of individuals,
where other great apes would only be able
to organize in clusters of
up to about 100 individuals.
So, that gave us an edge.
Language was extremely powerful
as an organizing mechanism,
but the thing we needed next was a way
of making our trust in
each other portable.
We used seashells.
Baboon bones were a popular
form of currency in Africa,
but money is, and always has
been, a form of an IOU note.
I could give you something
and you could trust that
that thing had value because
society believed it did.
Things like dollars and rands,
we call those fiat currencies
and fiat is a Latin word
that means 'let it be done'.
It basically means that they have value
because governments say they do.
Governments tell us that
you will use this money.
You will accept it as repayment of debt
and you will pay your
taxes in this currency.
So, it really is just
is because we say so.
There was a period where fiat currencies
were backed by the gold standard,
and now really money is just backed
by a government's ability
to enforce taxation
within its borders.
Governments, or their
central banking authorities,
can print as much money as they want to.
The decision to print money
is something that lies
with a few individuals.
It's open to flawed decision
making and really it's fair
to say that fiat money
isn't backed by anything.
- For a time,
Bitcoin felt like a lot of talk
and very little action,
but Lorien was taking
Bitcoin out of academia,
out of the future,
and creating a real
world use for it in 2015,
something tangible for the world to see.
- If you consume electricity,
you're gonna have a meter
installed at your property.
There's two modes that
that meter can be in,
either postpaid or prepaid.
Postpaid is where you
just consume the utility
and at the end of the
month somebody will come
and read your meter and
then send you a bill
and then you pay.
You're consuming first and then you pay.
Now prepaid meters are
trying to solve the problem
where people are consuming
and then not paying,
which is a problem we have,
and it's showing itself
in our energy provider,
Eskom, where they say
they don't have enough money
to maintain the power stations
because they can't recover
from the municipalities.
The municipalities can't recover
because nobody wants
to pay for the utility.
They've already consumed it.
So, they're trying to close that gap
by switching all their
customers on to prepaid,
so they can't consume unless they've paid.
But it then introduces another problem
from a consumer's point of view.
At least 80% of Africans are unbanked.
If they want to make a
payment they have to use cash.
Obviously now, the costs are increased
because the vendor has costs,
and there's traveling
costs, security costs.
So, although prepaid systems
will solve the recovery from
the utility's point of view,
it doesn't solve anything from
the consumer's point of view.
Bitcoin is a payment system,
which is an electronic payment system,
that is outside of the banking system.
Anybody who has an app
on their mobile phone,
it doesn't even have to be a smartphone,
they can easily become
part of the Bitcoin economy
and have access to electronic payments.
So, it's just a common sense
thing if you think about it,
that being able to make
Bitcoin a payment method
for a pre-payment system
opens up that massive market,
and it has opportunity to
drastically reduce costs
and increase efficiency,
at least from the
perspective of the consumer.
So now, there's a solution, Bitcoin,
and applied to smart metering
can solve a massive
problem throughout Africa
as well as Latin America and Asia Pacific.
- I started my journey with Bitcoin
in a little bit of a sad way.
- Can you tell me that story?
- My son, right here on the wall.
In 2007, I gave birth to a baby boy.
His name was called
Pako, which means praise.
He was born with a heart defect
called hypertrophic
obstructive cardiomyopathy.
I was looking for ways in
which I can raise money
and probably take him overseas.
It was kind of difficult here in Botswana
for them to promise me anything.
One time, the doctor told me
that there's literally
nothing that they can do.
When we brought to South
Africa, I was very happy.
I said my son would get help.
But they said to me, "For us
to be able to help your son,
"we finish first with the
list that is in South Africa
"for children who need transplants."
So I went online to try and do freelancing
so maybe I can be able to raise more funds
to be help my child.
Then I remember I got across a survey
where they say you can do a survey
and you can be paid in Bitcoin.
I went through that, worked my heart out.
I never got any Bitcoins
from the work that I did.
A lot of things that I met were scams.
One scam after another.
And then in April, on the
4th, my son died, so yeah.
The first time I heard about Bitcoin
was to raise money for my son.
So when he died, I felt
like I have lost the purpose
for why I should work online.
So I just stopped.
Something was just nagging me in my head,
like you need to go back
to that Bitcoin thing
and look at it and see if
it can be of any worth.
The more I read, the more I get learned.
I decided let me take
another step further.
It's no longer about my son,
now it's about changing my country.
It's about changing the people.
I will group together people
and I will teach them about Bitcoin.
So 2013, I did my first meet-up.
But before the meet-up, I did a video,
which I put on YouTube.
I did an old t-shirt
with my Bitcoin address
and I was like, I want
to work for this company.
Even by then I don't even
understand what Bitcoin was.
Like for me, it was more like a company.
Then 2014, my group was growing
and I kept on educating
people about Bitcoin
from that moment onwards.
- So why can
we trust that crypto
is worth something?
- Bitcoin, as a primary
example, has a finite supply,
which makes it a deflationary currency.
It actually in very real
terms is scarcer than gold.
There's no central
authority that can decide
to raise interest rates
or to print more money
as a part of quantitative easing.
The Bitcoin network runs itself.
Once the network was set in motion,
that system runs by consensus.
- Can you tell me about Usizo?
- Sure, imagine
a poor school in Africa.
They have a Bitcoin meter.
Anybody from anywhere
in the world could pay
for a week or month's worth of electricity
directly without having to
go to that organization.
I actually thought instead of
just talking about something,
why don't I go and do it?
- What does Usizo mean?
- Usizo is a Zulu word, it means help.
The whole point of this project
is to kind of relieve the
burden of the electricity.
I mean, obviously
there's a lot more things
to be paid for in the school
and these schools have small budgets.
If they can have that
burden lifted a little,
where they don't have to
actually pay for the utilities,
then they can then spend
what little they have
on other things.
One of the struggles that we've had
is trying to get a metering
company to agree to the project.
A lot of these metering
companies make a lot of money
on the vending solutions they've supplied,
taking the fees from
the fiat transactions.
Now, having a
blockchain-based system means
that the funds go directly
through to the meter,
and so the metering companies
that we've been dealing with
weren't willing to go
along with the project.
So, it was quite an uphill struggle,
but luckily we have found
some enlightened partners.
We've got about two bars out of the three.
So, I think communication should be fine.
But we also have an antenna.
So what we can do is perhaps
bring an antenna through here
just to boost the signal.
So, once we get the
donation going through,
and the meter can pick up the
payment on the blockchain,
the next step is for the
actual meter to switch on,
and then we should see
the school light up.
It will be hard to see now,
but at least we'll see something happen,
and then on Monday night
when it's all pitch-dark,
I think it'll be quite spectacular,
when everything goes on.
That's the theory, very exciting.
- The blockchain is the
operating system that it runs on.
So, you can see it as your Windows,
or your Linux, or macOS X.
The software layer is the blockchain
and Bitcoin is an app that
runs on top of the blockchain.
- Blockchain is
the magic behind the money,
but really it's just a
decentralized database
stored on a very large network
of computers all over the world.
It is the technology
that underpins Bitcoin
and other cryptocurrencies,
but it's not just for
monetary transactions.
You can use it to store
data like patents or wills,
or to exchange anything of value,
such as products, properties,
services and even votes.
The authenticity of the exchange
of value, or transactions,
is verified by the community as a whole,
rather than by a single
entity, removing the risk
of a single point of
failure in the system.
Each transaction is recorded
on a public distributed ledger
that can be viewed by anyone in the world.
- The blockchain is a
decentralized system,
and the strength of the blockchain
is that everybody's
checking everybody else.
No single institution is in
charge of this information.
Now that differs from the
current financial system
that we actually do
have all over the world.
In the case of South Africa,
in the center of our financial system,
is the South African Reserve Bank.
And the Reserve Bank
checks all the other banks,
and all the other banks check us.
And that's the difference
between a decentralized system,
the blockchain, for example,
and a centralized system.
If I, for example, want to
give you government money,
or Central Bank money, and I do a transfer
from my cellphone to your cellphone,
it is impossible for me to transfer money
from one bank account directly
into another bank account.
We think that is what happens,
but what really happens is that
I send a message to my bank,
which will send a message
to the Central Bank,
which will send a message to your bank
to make a deposit into your bank account.
So there's somebody else always in charge.
There's always a middle man somewhere
between my account and your account.
- So who invented
blockchain and Bitcoin?
- The creator of Bitcoin,
the cryptocurrency
and the technology, is Satoshi Nakamoto.
People think it's a group of people,
or it could be an individual,
he's a complete mystery.
No-one knows who he is.
People have their suspicions.
I have my suspicions as well.
Several people have come out
to claim that they are Satoshi Nakamoto.
I think it's quite nice
that it's a mystery.
I like the fact that
I don't know who it is
and I think we would be disappointed
if we found out who it was.
- So why did
you name your dog Satoshi?
- Bitcoin and cryptocurrency,
and blockchain technology
has taken over my life.
I love Bitcoin, I really do,
and I like what it stands for,
and the name suits him completely.
- I'll organize small
talks and I'll go around.
I've been in Gabarone,
and I went to Francestown
to go and teach people about Bitcoin.
I met students who are into IT.
We talked blockchain and all that
and I began to tell them
about the possibility
of changing the way
things are in our country.
The way things are in the world.
I was inspired by Satoshi Nakamoto,
liberating the people
from what was happening
during the financial crisis,
coming up with something that
would really help people.
The Satoshi Centre's vision
was to create a community lab
where people can come
and learn about Bitcoin
and also be able to be very creative.
- Somebody came up with this
idea of making it possible
to trust the record of ownership of money,
without trusting any
individual in the ecosystem
that makes things work together
and that is such a clever invention,
that we have to make it work
and make it valuable in the
way we apply it to society.
If you compare it to the
traditional financial system,
I don't think any of us really get excited
about going to our bank,
or excited about logging
onto a banking system.
One of the disadvantages of cryptocurrency
is the complexity stall,
that we're working with a
very rough, technical thing
where you need to understand things
like the transaction fees
and things like that.
But, to be fair, if you compare it
to the traditional financial system,
that's not really clear as crystal either.
It's really very difficult to understand
how banking fees are
going to apply to you,
what's it going to cost
to transfer 10 000 rands
to a U.S. bank account.
Things like that are
also very, very complex.
- What we're gonna
basically do is an auction.
The item in question is this over here,
which is a 100 rand note.
You're gonna be bidding
for this 100 rand note.
It's a standard auction.
Whoever wins the auction
gets the 100 rand note.
A slight switch though on
the traditional auction model
is that the person who comes second
has to pay whatever their bid was,
but they don't get the note.
So, I'm gonna open it up at 10 rand.
Would anybody pay me 10
rand for a 100 rand note?
Who's first?
10 rand, we got 10 rand in the back.
180 rand going once,
180 rand going twice.
Sold for 180 rand.
You can come and settle afterwards
and the person who came second
needs to settle with me as well.
It's not that central financial
authorities were a bad idea.
It gave us a way of scaling up to what now
is the global financial system.
It gave us a way of
trading with each other.
You could travel to the
other side of the world
and you could start to
trade with people there,
and that was fantastic,
but where it has failed us,
for example, is where
human greed has been able
to manipulate the system,
to put it quite bluntly.
That's the second highest price
I've ever gotten for a 100 rand note.
It's a great game for me
because I essentially
now have made 310 rand
and parted with 100 rand, right?
The game of course is rigged.
It's designed so that I'm gonna win
and it has to do with
the irrational mindset
people have around money.
We all remember what happened
with the financial crisis in 2009.
In that situation, we were reminded again
that banks can fail.
We have a fractional
reserve banking system
in most countries where
banks don't actually
have to have all of the money
that they're storing on
behalf of their customers,
they only need to keep
enough of that money around
that they can satisfy all
of the withdrawals requested
in any given period.
When a bank gives you a loan
to buy a house, for example,
they don't have to have that money either.
That's basically money they
can make out of thin air.
But when you have a run on the bank,
when there's a crisis
and everybody tries to pull their money
out of the banking
system at the same time,
banks don't have that money
and that causes them to collapse.
Governments then stand
as what we call a lender of last resort.
So, governments say, if the
bank doesn't have enough money
to sort out all of its customers,
we'll step in and we'll lend
them the money to do that.
But, of course, that money needs
to come from somewhere too,
and so what happened in
2009 was you had banks,
which didn't have enough money
to pay all of the people
trying to withdraw their money.
The U.S. government
didn't have enough money
to act as a lender of last resort,
and so, the U.S. taxpayer
effectively had to bail out a bank
with a tax-free, non-reversible loan
that never had to be paid
back to the taxpayer.
Now, it doesn't really matter
how you present that story.
It doesn't strike me as fair.
- Every country's
economy is intertwined
with every other country's economy,
imports, exports, investments,
and the world reserve currency,
meant that the financial crisis in America
became the global financial crisis.
The saying before 2008
was that the banks were too big to fail,
but the bigger they are,
the harder they fall.
Over a decade later,
there are now banks that are even bigger
than the too-big-to-fail banks
of the financial crisis years.
- Hi, my name is Bheki Mahlobo,
and I have a question
for the chief economist.
So, I'm an economics student,
and I'm not sure if you've noticed,
but a lot of people in the Bitcoin space,
they know more about economics
than most PhD students
in universities actually.
This is because in university
we're not particularly exposed
to different, other schools
of economic thought,
like the Austrian school
of economics, for example,
and if we're not exposed to certain things
then we won't question certain things,
for example, like money.
In school we're not particularly
taught what money truly is.
What is your opinion of Bitcoin being used
as a way to escape this
economy that exists right now?
- You're absolutely right
that in our universities
we should teach other
schools of thought as well,
and a very important school of thought
is the school of thought of real freedom.
And I've got a suspicion.
This new technology will
really put the power
in the hands of the individuals
and allow us to experience
that real, real freedom
and not to enslave us the way
that politicians have been enslaving us
for the last couple of hundred years.
This is a real freedom,
but not only is it real freedom,
it's very, very dangerous and with that,
goes a huge responsibility as well.
- 21-year-olds don't normally
go to events like we did the other day.
- Yeah, yeah.
- That's not a
normal 21-year-old thing to do.
- Usually like clubs
and stuff, right, yeah.
The first time I heard about Bitcoin
was from a movie called 'Dope'.
This movie doesn't cover
Bitcoin in a positive light.
And then, I heard it again, and I was like
maybe let me look at it and
do a little bit more research,
and that's where I fell
down the rabbit-hole
as the saying says.
My economics teacher
was heavily into gold.
So he was explaining
central banking, right,
and fractional reserve banking,
and inside I was like whoa,
this seems a little bit shady.
He explained that we actually
don't need the system.
In a normal economy things are supposed
to get cheaper over time,
not expensive over time,
and the common thing that
I'm hearing on the news
or YouTube is that no, we need inflation
so that there's economic growth.
I did a little bit more digging
and then that's when I found Mises.
They follow the Austrian
school of economics,
and then they explain that no,
we actually don't need
inflation for economic growth,
and, in fact, that whole statement
is a whole contradiction in itself.
When you define economic growth
it's the increase in production,
and the increase in production
causes prices to decrease.
An example of this would be technology.
When the first phone came
out it was quite expensive
and then eventually
there was a lot of people
contributing to different designs,
basically providing
alternatives to smartphones
and then the prices of
smartphones decreased over time.
That also could apply
to the economy as well,
and now I know, this person,
what he's saying on TV,
is utter nonsense.
And then, what can I do about it?
It's like buy Bitcoin, bruh.
- Using this greedy algorithm
I can make a lot of money,
and actually the only way
you could've won that game
was to not play it.
The problem is, when you
have money on the table
human beings start acting
in a very curious way,
but I wanna use this auction as an example
of our banking system,
and, in fact, the financial system
that runs the world today.
Because it is rigged.
There are rules that have
been put in place that mean
that you will lose every time you play
and somebody will make a lot of money
because they control the algorithm
that ensures that you lose.
Our current banking systems,
while they're useful for
things like being carrots
and going to the movies and stuff,
are exploitive, and they're exclusionary,
and they cut out a lot of the world,
and we don't have to play the game anymore
because we have the
technology now to opt out.
Money was always centralized,
was always opaque,
was always exclusionary,
had too many middlemen,
too many rent-seekers, too
many people quite frankly
benefiting from exploiting others.
Finally, we could use the internet
to create a financial system
that benefited everybody potentially,
that was resistant to censorship,
that nobody could take control of,
that's what the world had been waiting for
and finally it arrived
with the Bitcoin network.
- I was never interested
in all these subjects,
this economics and finance,
and since Bitcoin I became interested,
and I would still be
living in my oblivious way,
hoping that whoever's running
the system is running it fine
and that we don't end up in the same way
that Zimbabwe ended up where
their money became worthless.
It's not so much about not
having a long-term view,
it's just about being educated on this
and the majority of people
aren't educated on this.
- Can I just go on and say something else
that I think it is important?
- Absolutely, absolutely.
- Okay, if we use a blockchain system,
the power is actually where
I believe it should be
and that's in the hands
of the individuals.
We do not need the
permission to transfer money
between my account and your account.
And that, of course, also
opens the possibility
for things like, for example, fraud
and tax evasion and all
sort of illegal things.
And the responsibility
is also in the hands
of the individuals, the
way I believe it should be.
- Why?
Why should we have that
kind of responsibility?
- In all instances when governments
got involved with money,
in all instances without
one single exception
they have either destroyed the money
or they are in the
process of destroying it.
So don't think that a
politician or Central Bank
is in the position that
you can always trust him.
It's just another individual,
just another human,
and they always make
mistakes and it's inevitable.
But ideologically, I also believe
that I should have the
right to decide for myself
whether I want to lend you money,
whether I want to borrow money,
it's not up to some politician
or some other institution
to tell me what I can and what I can't do.
That's my business.
- There exists
a definite two-camp divide
over whether Bitcoin should
be used to facilitate liberty
and self-sovereignty or
if it should be regulated
to protect users.
Can you give me an example of
some of these crazy schemes
that people are coming
up with using crypto?
- There's so many.
I remember, but most of them
coming from South Africa.
So in the very beginning, I
remember they used to call me
and try to recruit me.
They say like, "You've
got a network of people
"you can make a lot of money."
I'm like, "I would rather be poor
"than to join something
that at the end of the day
I'll hurt my own people."
There's always a joining thing.
It's like a pyramid scheme.
The lady came to our office.
She was really heartbroken
because she has put a lot
of money into a scheme
and then it disappeared.
People actually put
their children's school fees.
What I know is once you start
having an influx of people
calling and saying they want Bitcoin,
know that there's a scheme coming up.
So they're good in a sense
maybe they make Bitcoin
to be used a lot.
But at the same time, they're really bad.
The bad surpasses the good.
One of the biggest challenges
to explaining Bitcoin
is to somebody who comes
already with the 'preknowledge'
of what Bitcoin is and then
they come to you and say like,
"How much do I join?
"How would I make money very quick?"
You try to convince the person
that it's not about joining,
it's like a revolution.
It's like a new technology
arising altogether.
It's about you understanding.
They're like, "No, but it's not that."
The pros for me, is liberation, freedom,
the ability to control your own money
or the ability to send any
amount of crypto or carry it.
Imagine if you were to
carry a chunk of gold,
you want to pass through the
border or whatever, you can't.
So that's the beauty of Bitcoin.
The negativity is people using it wrongly,
making our people poor.
Also, lack of regulations and stuff.
If you can have maybe some
sort of regulatory framework,
it will also help protect us.
I know you cannot control it
because of the way it was created,
but just regulations, it
can help a little bit.
- Since Bitcoin's early days
it's been shrouded in
mystery and controversy,
from the bankruptcy of Mt. Gox,
one of the early exchanges,
to the infamy caused by the
dark web Silk Road marketplace
that accepted Bitcoin for
nefarious goods and services.
While Silk Road became one
of the first use cases for Bitcoin,
it also perhaps put
the mainstream adoption
of cryptocurrencies years behind
where it might have been otherwise.
- It was run by Dread Pirate
Roberts, or Ross Ulbricht.
If you follow the news you
know that Ross Ulbricht
was found guilty by a jury.
The federal judge took his
activities very serious
and she actually sentenced
him to serve a life sentence.
They counted at least six individuals
who had purchased
narcotics off of Silk Road
and died as a result.
What we basically are focused on,
one, is criminal offenses
involving digital currency,
which could be any sort of
crime, whether it's narcotics,
whether it's murder-for-hire,
whether it's identity theft and so on,
in which the bad guys
are utilizing Bitcoin
rather than other forms of money
because they, in our experience,
believe it to be untraceable,
which is clearly an
accident on their part,
a misunderstanding to say
the least.
But we also deal with the
regulation of exchanges of money.
- Very nice.
- Don't touch, don't touch.
- No, you must be careful.
Every single transaction that
occurs in the Bitcoin network
is recorded in something
called the blockchain,
a public ledger of every
transaction that's made.
The only problem is that
even though you can see
every single transaction,
and you can see the addresses,
which are like the account
numbers of the people
that are holding those bitcoins,
you don't actually know who
those addresses belong to.
So, the correct term isn't
anonymous, it's pseudonymous.
Cash is truly anonymous.
If you have a suitcase of
cash and you go and spend it,
there's no way that that
transaction is recorded.
So, Bitcoin is less anonymous than cash
and we certainly know how cash can be used
for nefarious purposes.
We know that suitcases of money
and drug deals happen all the time.
- There was a
name that kept coming up
in conversation and research,
and for his name alone it
felt necessary to meet him.
Fluffy Pony.
It's a nickname that stuck years ago
that despite his best efforts,
Riccardo is not able to get rid of,
but amongst the noise of the crypto world,
Fluffy Pony definitely stands out.
Why is privacy so important
and how is it lacking in the
way we currently do things?
- Privacy is the natural state of things.
You're not closing the
door at the bathroom
because you want to plot to
overthrow the government.
You're closing the door at the bathroom
because you don't want
people to see you on the loo.
There's certain aspects of our
life we wanna keep private,
that we might reveal to certain people.
We hopefully take our clothes off
in front of the person we're married to,
but we don't go and walk around
the shopping center naked.
But privacy has become, it's
sort of become, overshadowed
by oh bad people want privacy,
or things like if you
have nothing to hide,
then why do you care about privacy?
It's not about wanting
to hide it from everyone.
It's just that we wanna control
who sees the information.
If law enforcement or the government
want information about me,
they should have to come knock on my door
to get that information.
They shouldn't be able to
just get that information
because my bank is telling them
about every transaction I've ever done.
- I know people say there is
information on the internet,
but it's different.
If I'm able to really
expand on the information
maybe you picked from the internet
and make you understand,
it makes me feel good
because I know I've empowered you,
you will take the same knowledge
and you give it to someone.
So if I'm able to reproduce
someone who does what I do.
That's the real deal,
that's the real deal, yeah.
Had it not been for him,
I wouldn't be doing what I'm doing.
He made me to know about Bitcoin.
So because I was trying to
help him during that time,
now I'm helping people with knowledge.
So it's like transferring
whatever I wanted to do for him
now he's somehow doing it
for the people through me.
I'll continue to honor him, yeah.
He'll be my baby forever.
Yep, yeah.
- When I got introduced to
Bitcoin, it's like okay,
let me save, each month
I save, I save, I save.
I think more about the future,
what's gonna happen in the future
and I orientate my actions
today that'll impact the future.
I mean, that's the reason
why I'm studying, right?
I'm like, it seems like some
really interesting stuff
in the space of crypto.
I'm not saying I'm against banking,
I'm just against
fractional reserve banking.
So, I orientate my actions towards that,
the new financial system.
I would be a lot more stressed
if I didn't have Bitcoin, honestly.
- Why?
- Let's say, for example,
if we have the Central Bank
government decides like
yo, I'm gonna print like two trillion rand
into the economy.
The consequences of that
would be hyperinflation.
I can't remember who said
this, but it says like,
"Bitcoin's not about getting
your money out of the country,
"it's about getting your
country out of your money."
Essentially, it's like
protecting your savings,
protecting your stored value,
that's why I'm into Bitcoin.
- I think the financial
crisis started a discussion
that Bitcoin then accelerated
around why the financial
system works the way it does
and whether or not it
should work that way.
How can we make it more transparent?
How can we make it more fair?
How can we improve the world
of money for everybody?
But it was a very difficult discussion
to have with people in
the early days of Bitcoin.
I was writing for Finweek
Magazine at the time
and I did a story on Bitcoin in 2011,
and some of my colleagues
literally laughed at me.
They were like, "This is the dumbest thing
"we've ever heard of, it's a bubble,
"it'll never be worth more than $9."
At its height it was worth $20,000
and it's gonna be worth a
lot more than that one day,
and every time we see this cycle.
We have people laughing,
it's not gonna last,
it's over-inflated,
and every time they're right
for a very short period of time,
and then every time they're proven
ultimately wrong in the medium-term.
I believe that one day
it's something that you
won't have to understand.
It just makes your life better.
Very few people can tell you
exactly how their smartphone works.
It doesn't matter because the narrative
has become about why it's good for them.
What does it enable in their lives?
Well I can speak to my grandchildren.
I can stay up-to-date with the news.
I can take pictures of my family.
Those are the things that matter.
How the processor works
and all of the software
that makes it possible,
nobody really needs to
understand the bits and pieces.
- Welcome to Emaweni, in
the middle of the night.
- At two
o'clock in the morning,
I followed Lorien out to Soweto
to witness history being made
with a live demonstration of
his Bitcoin prepaid meter.
Lorien would be Skyping
through to a conference
on the other side of the
world at MIT in Boston,
where his friend Ed would
be making a Bitcoin payment
straight to the meter.
- So, what I'm gonna do
is I'm actually going to -
be ready, okay, so let's get
this whole thing started.
They're gonna be calling right now,
in about two minutes
and then I'm gonna come to that classroom.
- Okay.
- Shame, they've been here
for two hours, three hours.
They got here at 12.
Hi, Ed.
- This is a pack room here.
- Hi, everybody.
- Can you see all of them?
- Hi, nice to see you
all, thanks for coming.
- Could you shortly
explain where you are
and what you're doing there?
- Sure, I'm in a city outside
of Johannesburg, in South Africa,
it's called Soweto.
Where I am right now is very close
to where Nelson Mandela
used to live in his youth,
and I'm in a small school.
We're gonna be demonstrating
our blockchain prepaid metering system.
So, this is now one of
the electrical boxes.
I don't think you can actually see,
but there is a ,
this is now just a conventional meter box,
but there's a blockchain
enabled meter over there,
and what we're gonna do now is
I'm gonna go to the classroom
and there's some teachers
there, and it's all dark,
and Ed's gonna now make the transaction.
- How long
does the transaction take?
- The transaction takes about,
it should take about 30 seconds.
All right.
Go for it.
Okay, and now we wait I guess.
And we hope it works.
So yeah, now what's happening
is it's now going through the blockchain,
the meter's gonna detect the payment,
it's gonna calculate the tariff,
and then load the required
amount of electricity
onto the meter.
So, there's nothing on it at the moment.
That's why we're in the dark.
And, hopefully in a few seconds
the meter should be activated.
I'm actually sitting in
one of the classrooms here,
so you can see
the staff here, ready?
This should be a few, about 30 seconds.
- 41 seconds.
- 41 seconds, okay.
All right.
- Maybe you should
just switch them on.
- No, no, not fair if there's switching.
This is usually what
happens in the live demo.
- Yeah.
Let me just check if I
have the right address.
Yeah, yeah it's Emaweni.
- Hmm, oh there we go.
I've got four sons who are busy.
One of the things that
I've been involved with
is the Cub Scouts.
I take my sons there on a Friday night.
We get involved teaching
kids how to be independent,
and also, most importantly,
be good citizens.
It's very important to get children
to consider their
communities and their society
and to be empathetic to other people,
to try and make their communities better,
to build it up, to try
and think civic-mindedly.
- This is the
thing that I struggle with.
So in Africa, I don't know that it helps
to resolve third world problems
because if you live in a hut
you don't have access to the internet.
You don't have access to a phone.
Do you think that it's actually something
that could really
genuinely make a practical,
real-world, difference here?
- I tend to think that
cryptocurrencies have potential
to solve real world
problems all over the world.
You're not gonna solve all
the problems, certainly.
Even if it just becomes a
global reserve currency,
the local currency for a
country becomes less important,
where people can trivially
shift from whatever
the local currency is into Bitcoin,
and then it doesn't matter
what happens to the local currency.
Now, your reliance isn't on the government
to keep the economy stable
because you've got a back-up,
you've got a fallback.
That's very powerful and I think that
that's something that
could have lasting effects
and impact in Africa.
We've had this leapfrog thing that occurs,
where there's an innovation,
like digital cellphones
when they came out,
those were the first cellphones
that really got deployed in South Africa,
and because of that we were on 3G faster
than the United States and most of Europe,
and it's just because the infrastructure
is a little bit more modern,
because it was deployed
slightly later in the game.
There are a class of problems in Africa
where we can just leapfrog,
and use cryptocurrencies
to our advantage, and I think
that's what's gonna happen.
- Even though, myself
on a day-to-day basis,
I don't use Bitcoin in
the way I would like.
I do wanna be able to spend Bitcoin
and I do wanna be able
to have people out there
in this country spending Bitcoin.
I want merchants and service
providers to accept Bitcoin.
So, instead of waiting
for them to do that,
I'm now going and actually
providing those tools.
I will certainly strive
to create the opportunity
for people to spend it
in their day-to-day lives
and also to accept it in
their day-to-day lives.
- Ironically,
the story I expected
was to be told by a bunch of men in suits
just in pursuit of more money.
I expected to find
bandits, and terrorists,
and everyday-Joes organizing
dark deeds in dark places.
But in the last five and a half years,
the story I thought I would be telling
about the crypto space in
Africa never materialized.
I've realized that my
pessimism at the beginning
of this journey was
actually just misplaced,
but regardless, that pessimism
has now turned to optimism,
not so much because of the
tech, but because of the people
who are using it to make the
circle both bigger and better,
and that's what I call the
beginning of a revolution.
- Just off the top of my head.
- Bitcoin.
- Ethereum Classic.
- Huntercoin.
- Monero.
- Ethereum.
- Ripple XRP.
- Bitcoins.
- Bitcoin Gold, Bitcoin Silver,
Bitcoin Diamond, Bitcoin Private,
all of the things that start with Bitcoin
and have another word after it.
- Dash, Zcash.
- There's Cardano.
- EOS.
- Stellar Lumens.
- Calibur.
- IOTA.
- There's another one called E-Ora.
- Bitconnect.
I'm sorry, I'm sorry,
that was like a scam coin.
- Did I say Dash?
Of course Dash, Litecoin Cash.
- I just hit a blank.
- Now they're escaping me, these coins.
As many as I can.
- There's so many, it's
hard to think of them.
- UBU.
BNB.
PRIVEX.
This should be a lot easier.