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tv   Inside Story  Al Jazeera  June 7, 2022 3:30am-4:01am AST

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a set of south africa has 11 official languages with our cars, used by less than 14 percent of the population offers zulu and closer. but africans was the language of segregation during white minority rule when black citizens were told where they could live, work, attempts, school, and own land. roughly 20 percent of the population of south africa understand africans, but the rest don't. so you setting was roughly 50000000 people who do not understand africans. so i might as well have taken her zulu, which is the biggest language in south africa. and used that if that if you wanted to use one of the bigger languages, while not a british government requirement, ryan air has so far refused to say, if it will withdraw the test join wolf al jazeera.
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ah, he with al jazeera, these are the top stories. now, boris johnson has survived a challenge to his position as a britain's prime minister. but more than 40 percent of his colleagues cast ballots against him in a conference with another group of refugees and migrants has set off from southern mexico, heading north towards us for them. they've time this to coincide. the summit in los angeles, the team from the un that nuclear watchdog, he's trying to reach the russian control zappa risha, how a thornton ukraine. they're worried about warnings from ukraine's atomic regulator that they've lost control of nuclear material at the plant. a former leader of the extreme right wing at found boys group is facing a new charge of the january 2021 attack us capital case area, and still south tenants keys assaulting the attack. there's other headlines. news
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continues here on al jazeera, after inside story. the walk was no, no, no, no, no, no. this is i don't need to be looking at it to me. i can just leave you a message. you open at the home and ya today and we're going to, you will be set up with me . i'm a lot of money out of the book if you're the one i know, i mean,
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i mean i shooting off the edge of the to ah, they're being called the future of money, but could to currencies like bitcoin, look to be in trouble. they're losing value and finance regulators are considering tighter controls, so can crip to make a comeback. this is inside story. ah
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hello and welcome to the program. i'm hash him abala crypt occurrences like bitcoin have been some of the most popular investments during the past 3 years. they merged a decade ago as an alternative to money free from the control of governments and central banks. but now that changing, i did speak last november 1 bitcoin was worth $67000.00. now it's down more than half to $31000.00. other digital currencies have also fallen sharply, and i say high inflation has made risky investments, including bit coins less attractive. and the cost of running could, to currency transactions has increased due to higher energy prices around the world
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. developing countries have led the growth in digital currencies, vietnam recorder, the greatest crypto currency activity during the past year. it's followed by india and pakistan where peer to peer transactions have risen in nigeria. crypto is the preferred way to trade, especially with china. the government in our bolger sat new rules this year and even lost its own digital coin the year before and curve to currencies are in demand in afghanistan, a country and turmoil, and among the poorest in the world. when it's hard to handle traditional money, like the u. s. dollar, digital money is gaining popularity in argentina, researchers found it has the world's highest proportion of workers being paid in cooked occurrences. many by bitcoin is to protect themselves against an inflation rate of 50 percent. and swings in the value of the country's currency, the paso,
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if quite a crypt stations goal is to make the use of crypto currency common in the real economy. in other words, nowadays is used as a method to save money due to inflation. but beyond that, we want to, to encrypt the currency into a daily life currency. luckily w on or not, who are so low crypto currencies, not based on the countries economy. so this benefits me quite a lot, even if the local currency loses value. crypto is not based on durgin tinian, esl, but dollars or euro. so i will always keep the same value law. ah, let's bring in our guests in london name asked lamb, chief market analyst at arbitrate in rome, briar lucy, professor of international finance and commodities, a trinity business school, and a former central banker in singapore, xannon capron, director of kanisha,
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a financial technology, research and consulting firm focused on asia. welcome to the program name. according to the economist, the market value of crypt occurrences was almost 3 trillion dollars in november. then it fell to 2 trillion in april. now it's at 1.2 trillion. could this be at the beginning of the end for the crew to currency? thanks for having me. i think it is a bold statement because character, different beast be stuff is on kind. because last big coins, corn, history of the last 10 years. one thing becomes very prominent, bitcoin is capable of come about a phone, basically can retrace more than 50 to 75 percent and it is capable of recovering those losses within. ready 2 months, in fact, we have
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a history making, you know, what invested entry is the song when it comes to bit corner important factors from a price perspective in the the nose for each year. and if we look at the trend for the last 10 years, you see higher for me each and every single year. so that is currently keisha. this is an upward trend. number 2 is the adopt ability. are more of the situation is hedge funds and regulators are saying yes, flash showing green flash too big point or crypto currency? well, these 2 trains remaining quite concerned. ok, brian many now are blaming centered banks for what happened to the crypto currency, particularly when it comes to the tightening of monetary policy. do you see it as
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a direct consequence of what was happening? i don't, i think common crypto currencies. a currency is a misnomer. we have an experiment ongoing in el salvador, where the governments are made bitcoin a legal tender and the evidence from all research that i've seen. and there is some . busy there is that the vast majority of people in el salvador took the initial money that they were deposited into. busy electronic wallets and really haven't used it since it's not being used as a currency in, in any meaningful sense. criptos are a speculative asset class and as such, they're perfectly okay as inspectors of asset class. they're high risk and potentially high reward as a name has mentioned, you do see these very large swings as part of the, the system. the reality is that as interest rates are rising and they are going to
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be rising globally to things are happening. when is we're going back to a more traditional a pre, even global financial crisis, monetary and fiscal environment. secondly, we're going to see a situation where. busy investors risk appetites are going to be reduced. a large part, i believe, of the run off in crypto prices and crypto attractiveness was because you have this role of money seeking yield anywhere. and as a consequence, once that role of money begins to receipt, then the need to seek out ever more expect to says high risk, high reward asset classes, not just crypto, but other forms of assets will recede with it. as a, as affected us as class. it's perfectly fine, it's perfectly reasonable as a currency. it doesn't work. ok, xannon y is curved to curb is so popular in asia,
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particularly if you're not. i think for many of the reasons that brian mentioned, speculate the asset. and when you look at a, you know, the various jurisdictions across asia, historically china run ups in the stock market, heavily retail driven, people see crypto currency and speculative asset classes is a way to make a lot of money. whether that be real estate or the stock market or now crypto currency. and so i think a lot of investors, or retail speculators, are trading it like that. and so that's why we're seeing a lot of adoption. there is certain use cases though. i mean, when you're trying to move money around the world, there are a lot of fees involved in making transactions. and so crypto currency can see use cases kind of be nice use cases in many of the emerging markets where oftentimes moving money cross order is cheaper than using traditional currencies. and so i think outside of the spectrum about that there are some use cases but as was hinted
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out before and places like out, but who are spending on a day to day basis. we really don't see that adoption at this point. now understand when you talk about the, the swings in the cycles of the market and you say this is pretty much normal in a way or another. and the group to currency remains resilience in the face of the downturn. but for a normal average citizen who would like to invest, think of the currency or contin played that in the future. how can you explain to him that the algorithmic stable coin, tara, for example, which stood at something like $50000000000.00 and ended within few weeks worthless. this is a new paradigm. experiments are being done. some of them are successful and some and unfortunately hierarchy is an example of one for investors who are invested in the crypt, currency specs, idea to speculate space once you're only in. yes,
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well they're willing to lose just like any other investment thesis. and you shouldn't always look to hedge your race against differ nasa classes. and you may be wondering, we're speaking of her to currencies. why are you speaking of at different asset classes? you have to think from a traditional mindframe when it comes to your criptos because within criptos you have different saturday. just like how the s and b has different sectors. you have gaming, you have the file, you have crypto exchanges, your critical currencies, you have holes and you're feeding colors, as well as you are diversified. i keys these particular sectors, which i've mentioned on your show a few times before. i think when should be okay about position to take advantage on this is especially suspect brian of the same time you have the u. s.
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d c. another stable coin just because a it is backed by cache and short data treasury bills. it doesn't seem to really facing the same problems, the other could to currencies are facing. could this be an indication that trust remains paramount when it came comes to trading with come to currency? yes, mistake coins are an interesting situation because you've got basically 2 kinds of 2 kinds of stable points in thought hans, which are fully. busy allegedly fully that although it's unclear the extent to which these are fully backed by m dollars or, or near dollar equivalence. you've got ones that are backed by other commodities, including some cases of the criptos. but al, with licks now the latter to cannot under any circumstances be considered stable. the 1st one though is part of the paradox of crypto. busy because in order for this crypto to be stable, that has to utilize theater currency. and this goes to the fact that it as has been
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said, is a speculative acid class, not a currency. why would you, however, put your. busy lee into a dollar batch crypto. when you put, put it into a dollar backs bank of our salaries energy at forensic which would be supervised and regulated and would have deposit insurance, et cetera, if tomorrow morning or a dollar back. crypto stable frenzy was to evaporate. that basically the investors in it have lost everything. if a bank were to go into difficulties, there's usually deposit insurance, and we've seen that banks to the, to get an ebony bailout. and the puzzlers are the very last end of the q 4 balance . so 3 successively crypto currencies shows the roots of their failure as alternatives to current. so as an asset class, as i think we've all agreed, there are perfectly fine. but the majority of the height certainly around crypto
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currencies is not as an asset class, it's more around the fact that they will replace crypt. they're fixed that they're hard currency, that they're inflation proof, et cetera. ok then, and i mean, if i'm a member of the crypto currency community in a place like india, and i look up the market now. and then i know that the government doesn't like to currency moving forward to was putting will restrictions of what, what kind of future do you see for the cooper currency in a place like india? well, india, the story is really about the population and it's a massive, massive country and hasn't or is unable to crack down in the same way that china on cricket. if you look at crypto in china, up until 5 or 6 years ago, it was a private industry with, with many, many companies focused on various different use cases from exchanges and everything else. you know, india has a lot of that same central,
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but the story and it's kind of the same. and the government is not in favor of crypto because it really doesn't see what it adds to the system. but rather only think the risks that come out of having it there. so really they've come down hard . more recently they've put a 30 percent tax on crypto investing. and the legislation is kind of clear about the future. so certainly the people in the court system in india are considering what their next steps are. this has been established in india for a number of years now. and so, you know, i think was the countries like india kind of continue to figure out the way we put down, you know, even certain countries like here in singapore, we thought that there would be very pro crypto and now they're pulling back a little bit. so it's very difficult to tell what the strategy or the trajectory of regulation in any of these countries in asia is not. i'm up, i assume many in the past we drove to the, into the trip to currency. well, because of the most established of all those criptos, particularly bitcoin,
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now we lost 50 percent of its value. and the latest forecast suggest that i could for to something like 8000 compared to what stood before just a year ago, which was something like 68000. well, how do you see it? could it recover from that? ok, before i answer the question i just wanted to ask to a you were discussing before about the civil coins and it is very, very important for your masters. understand when it comes to stable coin when that particular piece didn't happen. i literally locked myself for 40 hours and read every single research paper and what was happening, doing that particular mehldau. and i came to a conclusion one particular factor, which is called a bang from this usually happens under so much from state ability in system. and people lose faith in a particular currency by sophia currency,
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about assembly show currency and begin to draw manipulations within the dock. what was happening, tara, they do take place in traditional markets as well. believe it or not, knowing the fear, currency space, but in other to the markets platform where marty takes place to simplify things. during the peak crisis during the any financial process of getting video or anywhere else, we have regulators. we have central banks, literally stepping in and limiting the amount of vehicle that anyone can make a daily basis. we've seen the devils of that increase happening in stable coins. we do not have that mechanism because that it rolls and goes against the you know, that everything the centralized things need to be decentralized, stuff like that. the 2nd thing, what people really confused about stable point is that it's bank one number of classes and there's no clarity. i'm not saying that is not true. i concur. that is
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absolutely true. what was being said. how much clarity to the house in relation to theat currencies, which are backed by a process right back and is used to be back by gold now with just sponsors. yes. now we have a more clarity in tan spot header. all the cautions are still out there, the companies which are providing on it. but a me issue over here isn't bankrupt, which is a control of how much money can leverage on any single day. if there is a panic today, you can have a drama. all right, brian, one via european center bank president, christy la god says that the bitcoin and all the other go to courtesies were, are worth nothing. what is she trying to tell us here? she said to tell you that they have no fundamental value whatsoever, which is absolutely the case. so they are worthless but not valueless. there. they
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don't have the fundamental value. they don't give you a yield, they don't give you a return. you can't really spend them anywhere and you can't pay taxes with them, et cetera. so in some senses, they're little bit like fear currencies except that you can lend, feared courtesy to people and they will give you an interest rate for under normal circumstances. you can use for your currency to pay your taxes, et cetera. they handle fundamental value. i, as a consequence, any value that they have is a value that is believed to be one that they will be able to accrue in the future. so in that sense, it's little bit turvenio. i believe criptos are valued because i believe that somebody else will believe in the future that they will have an increased value. and therefore, i will hold on to them a huddle as they call it, hold on for dear life, until i can get rid of them something out to somebody else in traditional financial markets, that's called the racial fool theory. xannon could the self be an opportunity to get rid of the flawed turn,
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criptos and the badly run companies that could regenerate a new phase for the for, for the market to rejuvenate, to move forward. i think, you know, the cargo industry is no stranger to the cycles that if you look 3 or 4 years ago, b, i c o, the initial coin offering that were largely peddling business models. i made no sense whatsoever. i think what your crypto industry over the past couple years has been able to take advantage of is liquidity in the market. you know, there's quantitative easing and the very cheap money that people have access to made it very easy to get for people to invest in crypto d. c to invest in companies even if they didn't have the best business model. and, and certainly that's in many cases, not limited to crypto. i think we're seeing that across venture capital. now globally, valuations are coming down. it's much more difficult for starting to raise capital, and we're seeing that already. and it's probably going to get worse later in the year. the same thing and crypto, you know, i think investors would be
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a lot pick year about what they invest in. although you know that being said, you still have organizations like a 16 year anderson or it's that are investing heavily and some of these purposes, whether it be an antique or meta verse or, or otherwise. so remains to be seen. but i don't think ok, we're done with herbs. certainly almost. i have a different angle to cover with you gentlemen. ny. we're not talking about figures . we're not talking about stock markets. we're not talking about it. industry, we're talking ultimately about lives and dreams have been shattered over the last few weeks with the meltdown. people who were investing in the curb to currency and they saw their, their savings wiped off. do you think because you spoke about the clarity and the transparency that this is about time to be the think the whole disclosure procedure, the backing of these companies have and what kind of assets they have for people to say. i trust that there is a backing for this company and that at the end of the day, i can,
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i can expect the returns of the yields briefly if you don't mind. sure. so i think there is, there's significant need for that particular mechanism to come into play. us are where regulators are priority their support or at least to sort of an assurance on, in addition to. ringback disclosures, but in the, in the thigh, the responsibility lies within master and inefficient made their own research look brian of the criptos paying the price for mirroring the stock market itself. because when we saw how it all started, the central bank starting the, the a, a quantitative easing the increasing of the, of the interest rate. suddenly we saw the stock market, those diving automatically. we saw the curb to currency following. so it could, could, could it be because of this correlation between both i don't think so. i mean this
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or. ready is a correlation between. busy b, market movements pretty checkmark, bozeman some criptos. but if criptos came to price racing in, then investors are paying the price financing. it's for investing in a bubble, and we know how bubbles end they burst and when they burst, they destroy a lot worse. and this has what has happened in the crypto market over the last violence bubbles are in damage. and the nature of these markets is they are totally on regulated. that's their attraction, and that's their destruction. in the only way in which you could have a market which was not subject to these kinds of problems would be to remarket, which is regulated and which was monitored, but that would be antique. and, and technical to what the crypto enthusiasts wish xannon or is asia bracing for a crypt to winter? certainly, i think that's what it looks like. it has become a big part of the crypto industry over the past couple of years, whether it be played or if there's
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a lot of money that's flowing into the region. and there's a lot of kind of value that was created and has now been lost in crypto is growing . and so, you know, asia is we'll face the same challenges that every other market does. if not even more to late in certain markets that are invested heavily and have many start ups that are focused on the space. now aim with we we, we need to as a couple of the big bitcoin minors now, widely seen as a culprit blamed for what happened because they say that the used energy for the use of the energy, particularly when it comes to their computers, to, to meet the coin, the quip to currency is responsible for the meltdown. not necessarily at all because the latest headlines with energy is going to be used for mining. i think the assets to continue to shift and move to evil and use us to
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main or, or to be really quick on says are significant and the momentum that we are seeing where it would have to leave it. i really appreciate your site. nice lamb brian the season and capron, thank you very much indeed. and thank you for watching. you can see the program again any time by visiting our website al jazeera dot com for further discussion. go to our facebook page. that's facebook dot com, forward slash a joints i saw. you can also join the conversation on twitter. i'll hand is add a j in size 40 from the house in my bottom. and the entire team here in bo huh. bye for now. ah aah!
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