Bitcoin, Black Money & Geopolitics | Dr. George Friedman Interview

hi my name is Jonathan Roth and this is geopolitical Futures video I'm joined from Austin Texas by dr. George Friedman we're here to talk about probably the hottest topic in the world right now and that's Bitcoin and I must preface this conversation George by saying first off that I have spent a considerable amount of the last three or four months traveling around the world checking out what's happening on the cryptocurrency mining side of things and I obviously have my own opinions but we're here to find out what yours are and I think those are the most pressing right now especially with what's happening geopolitically when it comes to Bitcoin this is a question many people have why does Bitcoin really matter George to anyone that's interested in geopolitics well in 2008 do we saw an asset class housing go down in price and derivatives simply crash we're still living with the wreckage of that we're living with Europe fragmented oil prices having come down and really crushing Saudi Arabia and Russia the Chinese having turned from a high growth to a low growth economy and huge stresses on the United States so if bitcoin is going to become as large and important as its proponents claim that's really important to understand what it is because any asset class can decline and if it declines it has consequences way beyond those of those who own the asset as we saw in 2008 so this is a geopolitical question assuming that the proponents are correct and this is going to be as huge as it is we really have to understand it because if it has a crisis it's gonna hit all of us interesting ok look you just wrote a fascinating article that went into some of the background really debating what bitcoin actually is whether it's a currency or an asset and you really laid it out as best as I've ever seen it laid out online why don't you explain for me what is Bitcoin is it a currency or is it an asset what is it well certainly an asset question is is it currency or a commodity what kind of asset is it as a currency currencies tend to be stable they go up by small percentages if they collapse it's usually downward and because of political reasons but a currency that fluctuates wildly in its price as this has on the upside means that you get up in the morning and you find out you have more or less money than you thought you had and an economy in that situation has troubled pricing anything so it's not behaving as if it were a currency as for a commodity you have to say what commodity is it a commodity usually has a use value it's oil it's pineapples it's something what is the use value of the Bitcoin so it is not a commodity in any way that we've understood it it's not behaving like a currency it's something else and what that else something else is the proponents are saying is a very new way to look at value and people like Warren Buffett are saying is just a bubble for people who don't know what they're talking about I'm trying to figure out what it is interesting okay now look I want to kind of go down an interesting path here with you because I think out of anyone I think you are the right person at answer these types of questions and get your perspective on this and that is this may be the sense that Bitcoin has obviously there's a dark side to Bitcoin there's a dark side everything I mean US dollars were used to sell and still to this day are used to sell narcotics around the world there's billions of dollars reportedly stash billions of US dollars stashed in the Colombian countryside and obviously Bitcoin has been used this way now there are some people that wonder because the NSA did experiment with Bitcoin and crypto currencies back in the 1970s if this is in some sort of mechanism to help siphon money from let's just say countries that are maybe somewhat unfriendly to the US and maybe not the best economically situated maybe that's China Venezuela Iran countries like this and move currency out of those countries easily and bring them to the US where it's helping prop up the economy obviously asset prices are rising with what's happening with real estate things along those lines what your take on that well if we're going to go to cruise you know conspiracy theories maybe the Mafia who's loaded with money cartels in Mexico hired people to create the Bitcoin so they could move money around and launder it no I don't think that's the case I don't think they the theory Ottawa did he was government created it there are a lot of smart people kicking around and this took off it took off because it gave you the promise of real security and real secrecy and that's what really is being sold it's excited if there's any selling going on I've got a technology that guarantees both your privacy and the security the prom is this in the end this is digital and as we know everything digital has been broken at a certain point and this is encryption and every encryption that we've known historically has at some point been broken now this may well be the one that can't be broken but I guarantee one thing forgetting the US government and forgetting the mafia there are some really brilliant people mathematicians hackers and all that who are doing nothing right now trying to figure out how to game the Bitcoin if not how to break into it how to steal the passwords how to go to the people's computers and get that whatever it is and I'm not smart enough to be able to imagine how they're going to do it I can guarantee you without any doubt there are people looking to do this and other people who maliciously will want to break in and just wreck it now the proponents of it say can be done and this may be the first digital product that is hack proof but the odds against that are pretty good hmm okay well III would love to have a debate on you with that but I think we're gonna set it aside and we will save that because we're gonna do that one day but what I do want to ask you about is this where do we go from here it seems like obviously the regulatory bodies especially in the u.s. they're paying attention to what's happening with Bitcoin it's the hottest thing on Wall Street right now where do you think things go from here and circling back around of what you started off the conversation talking about that you're concerned that obviously something like this if it rises big enough thing it could impact the entire system you know try to put connect all those dots for me well there is no underlying product that you're buying there is an abstract concept in digital form and it's price is determined by supply and demand now the supply sometimes goes up the supply goes down there are those who are delighted that the price went up and there are those who are saying the price can go down and whenever I hear you gotta buy this it's got to go up and won't go down I run like crazy I've got brokers who promise me that what goes up goes down and the faster it goes up the more likely it is to go down equally fast so right now we've have an abstract product where demand purely psychological is forcing it upward and it can go down there's one class of people of course who really want to use this mechanism as you pointed out they've bought drugs with dollars but their basic problem is money laundering and this is a venue in which not only can money be laundered but it's very hard for the government to really get a handle on what's going on so if you were to guess and I'm purely guessing you know what is this huge amount of money coming in to the bitcoins well if I have some money I didn't want a report this is a pretty good place it looks to most people to put it there and then there as always a bunch of enthusiasts small investors who think this is the thing that'll make me rich and they're in there and you've got a really volatile mix of people buying and being motivated to be in there small investors with weak hands who will panic with the price goes down other people who are just passing through and cleaning their money it's a volatile situation we've never seen anything like this people are happy to admit that we've never seen anything like this I'm the pessimist I'm the bad guy I'm the guy who says I've never seen anything like this and that makes me scared of what it is the rest of you then enjoy yourselves well dr. Friedman always appreciate your insights and this is a topic that will most certainly be discussed and debated here over the next few months given what's happening really appreciate your time look forward to talking you next time right here

17 thoughts on “Bitcoin, Black Money & Geopolitics | Dr. George Friedman Interview”

  1. Transaction costs, transaction speed, currency fluctuations, no army is behind them, etc. -> No currency
    commodity? -> Waste of electricity.
    Coin rates partly fluctuate with the dollar.
    I also think that the all-time high was partly caused by a spiral between demand and press reports.

    Computer science is just too boring for him.

  2. Another guest who does not truly understand crypto currency , it's ecosystem, and it's disruptive capabilities.

  3. "China Uncensored" has a great presentation on how Chinese politicians use rumor to pump and dump value of bitcoin. Shows how a thing like Bitcoin could be used to further destabilize and lead to wealth inequality.

  4. At around 4:00 Jonathan says "the NSA experiments with bitcoin and cryptocurrencies in the 1970s" WHAT!?!?
    Bitcoin and the blockchain didn't exist as far back as 2000 let alone 1970s!

  5. if Bitcoin or blockchain currency survives 2018-2020 it will change currency owning and it will stay on "forever".

  6. The main value of bitcoin comes from the lack of trust in governments. Not only local governments but also that internationa corpo-oligarchy which runs globalisation.
    There is only one way to break bitcoins – make in regulated by government. It would cause instant inflation.

  7. somebody buy otherwise price wouldnt go up..all computers with malware helping hacker to mine new coins ,so how legal it is? but in that sense brilliant, market can go only two ways up or down,it make possible just ppl trade and they dont even understand that graph they see is just beautiful painting which can be moved every direction painter wants.

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