WEBVTT - China Hacked Treasury Dept. in ‘Major Incident,’ US Says 0:00:02.880 --> 0:00:10.680 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.920 Wait inside from the reporters and editors who bring you 0:00:13.960 --> 0:00:18.320 America's most trusted business magazine, plus global business, finance and 0:00:18.360 --> 0:00:22.840 tech news. The Bloomberg Business Week podcast with Carol Messer 0:00:23.000 --> 0:00:26.160 and Tim Stenebeck from Bloomberg Radio. 0:00:26.920 --> 0:00:28.840 You want to talk next about the Treasury and some 0:00:28.960 --> 0:00:32.720 security breaches that have happened that are concerning America's debt 0:00:32.840 --> 0:00:36.000 levels poised balloon beyond already record levels as we know 0:00:36.040 --> 0:00:38.760 in the year ahead, leading to a decreasing number of 0:00:38.800 --> 0:00:41.600 primary dealers in the US treasury market. The decline of 0:00:41.600 --> 0:00:44.319 primary dealers and the rise of electronic trading have then 0:00:44.440 --> 0:00:47.400 led to concerns about the potential for just such breakdowns 0:00:47.760 --> 0:00:50.199 in the treasury market. Joining us now to discuss is 0:00:50.200 --> 0:00:54.560 Bloomberg's Michael McKenzie. Michael, several concerning headlines over the last 0:00:54.640 --> 0:00:58.240 few days. How can we be sure that the Treasury, 0:00:58.880 --> 0:01:02.360 if it's not now becomes impenetrable. It needs to be right. 0:01:03.960 --> 0:01:07.960 Absolutely, And I think the US, whether it's exchanges, any 0:01:08.000 --> 0:01:10.080 kind of marketplace, they spend a lot of time, a 0:01:10.120 --> 0:01:14.120 lot of effort making sure they can be protected from hacking. 0:01:15.280 --> 0:01:18.240 I know, covering equities more than ten fifteen years ago, 0:01:18.319 --> 0:01:20.280 all major exchanges were well on top of this. It 0:01:20.319 --> 0:01:22.240 was the only area they actually exchanges actually talked to 0:01:22.240 --> 0:01:25.160 each other, actually agreed to work together. Normally they're in 0:01:25.200 --> 0:01:28.160 a cup throw a business are trying to grab IPOs. 0:01:28.520 --> 0:01:30.600 So I'm sure the Treasury is on it. 0:01:30.720 --> 0:01:33.959 And you know, again, it's just something that I think 0:01:34.040 --> 0:01:35.800 every company has to do this, all right? 0:01:35.880 --> 0:01:37.960 Are they also on it? Michael? I want to get 0:01:37.959 --> 0:01:40.080 to the story that you did with that Liz Kapa, 0:01:40.160 --> 0:01:44.280 McCormick and Alex Harris about the pipeline the primary dealers, 0:01:44.360 --> 0:01:46.760 and I feel like this gets into the wonkiness of 0:01:46.840 --> 0:01:48.040 following the markets right. 0:01:48.560 --> 0:01:49.040 Explain. 0:01:49.480 --> 0:01:49.800 Explain. 0:01:49.840 --> 0:01:51.640 First of all, the role of primary dealers. 0:01:52.320 --> 0:01:54.480 Primary dealer system was created in nineteen sixty by the 0:01:54.480 --> 0:01:56.920 New York Fed. The New York Fed selects the primary 0:01:56.920 --> 0:02:00.880 dealers and their job is to interact with the New 0:02:00.960 --> 0:02:03.440 York Fed market's desk. So when the New York Fed 0:02:03.480 --> 0:02:06.559 does REPO and all kinds of you know, money market 0:02:06.600 --> 0:02:10.320 type operations on a daily basis, they're interacting with the 0:02:10.320 --> 0:02:13.119 primary dealers. Primary dealers then turn around and say Okay, 0:02:13.160 --> 0:02:16.240 if you want to buy and sell treasuries, where where 0:02:16.280 --> 0:02:19.280 the registered market maker who does that for you? So 0:02:19.280 --> 0:02:23.240 you have a lot of big asset managers, hedge funds, 0:02:23.320 --> 0:02:25.120 or types of people who want to come in here 0:02:25.120 --> 0:02:27.760 and buy and sell treasures. They normally go through the 0:02:27.760 --> 0:02:29.680 primary deal and market for the bulk of what they 0:02:29.760 --> 0:02:31.520 do and what. 0:02:31.680 --> 0:02:34.440 Your story gets into that there's not as many as 0:02:34.480 --> 0:02:36.960 they're used to. So what are the concerns here? We've 0:02:36.960 --> 0:02:38.440 only got about a couple of minutes or so, But 0:02:38.480 --> 0:02:39.840 I want to get to the point because it's an 0:02:39.840 --> 0:02:42.600 important story. It's the kind of story that Bloomberg does 0:02:42.600 --> 0:02:44.839 so well, that you do so well, and explaining why 0:02:44.880 --> 0:02:45.480 we should care. 0:02:46.320 --> 0:02:49.119 Yeah, no, we should care because the real problem here is, Yes, 0:02:49.200 --> 0:02:51.320 the number of proper dealers is shrunk, but a lot 0:02:51.320 --> 0:02:54.919 of that's due to solidation or we've had family mergers 0:02:54.919 --> 0:02:57.680 since the heyday of the nineteen eighties. What's really the 0:02:57.680 --> 0:03:00.359 problem here is that the amount of US treasure dead 0:03:00.360 --> 0:03:03.400 outstanding has just rocketed. It's gone up something like I 0:03:03.440 --> 0:03:06.400 think fifteen billion in the last ten years, and so 0:03:06.480 --> 0:03:08.800 at the moment the treasury mark is about twenty nine trillion. 0:03:09.080 --> 0:03:12.040 They think it could get to fifty trillion within the 0:03:12.040 --> 0:03:16.080 next ten years if the presence pacers spending continues. So 0:03:16.160 --> 0:03:18.880 this really is a wake up call to people in Washington. 0:03:19.200 --> 0:03:22.320 You've got to get serious about spending. You've got to 0:03:22.360 --> 0:03:28.160 find new sources of revenues at ie taxes to kind 0:03:28.160 --> 0:03:30.960 of settle the system down. Because the system is showing 0:03:31.000 --> 0:03:34.840 signs of stress. Dealers can't really be as active as 0:03:34.880 --> 0:03:36.920 they used to be. That's partly because of the post 0:03:36.920 --> 0:03:39.920 financial crisis regulation. So in the story we talk we 0:03:40.080 --> 0:03:42.640 sort of quote Jamie diamond saying, look, you know, we 0:03:42.680 --> 0:03:44.680 have a trillion dollars of cash we could put to use, 0:03:44.720 --> 0:03:46.920 but we can't because regulators say we can't do that. 0:03:47.640 --> 0:03:49.960 So there's a real kind of tension here. And the 0:03:50.000 --> 0:03:52.040 genesis for this story was that, you know, myself and 0:03:52.080 --> 0:03:54.400 Liz and Alex, we've been to a couple of conferences 0:03:54.440 --> 0:03:57.160 this year and this is the number one issue is 0:03:57.160 --> 0:03:59.800 that the debt keeps going up. The primary dealer is 0:04:01.120 --> 0:04:04.280 instructed to work on the behalf the treasury to sell 0:04:04.400 --> 0:04:07.200 debts smoothly and make sure there are no sort of 0:04:07.200 --> 0:04:09.720 blow ups in auctions, but they're coming under a lot 0:04:09.760 --> 0:04:12.720 more pressure and if the debt continues to rise, this 0:04:12.800 --> 0:04:14.920 is a problem. And finally, if we look at the 0:04:14.920 --> 0:04:17.760 ten year treasure yield, when the Fed began cutting rates 0:04:17.760 --> 0:04:21.159 in mid September, that was yielding around three sixty. Today 0:04:21.200 --> 0:04:23.480 it's closing out this year around four sixty. So it's 0:04:23.520 --> 0:04:26.120 reason a percentage point pretty much. Now, if you go 0:04:26.160 --> 0:04:29.159 into the wonkiness of the bomb market, about three quarters 0:04:29.160 --> 0:04:31.599 of that rise in the tenure yield is due to 0:04:31.640 --> 0:04:34.440 a higher term premium. And that term premium is what 0:04:34.520 --> 0:04:39.720 investors are demanding in terms of extra yield take down 0:04:39.920 --> 0:04:43.040 US debt, and that's really a worrying sign, all. 0:04:43.000 --> 0:04:46.479 Right, all right, So just another thing to think about 0:04:46.560 --> 0:04:48.160 for twenty twenty five, where I feel like a lot 0:04:48.160 --> 0:04:50.240 of things are going to come at us. Michael, it's 0:04:50.240 --> 0:04:52.600 an incredible deep dive by you guys, and I highly 0:04:52.600 --> 0:04:55.719 recommend everybody check it out on Bloomberg Dot comment on 0:04:55.720 --> 0:04:59.640 the Bloomberg Happy New Year, Happy year, Yeah, be woll 0:05:00.000 --> 0:05:02.440 Blomrig's Michael mackenzie, who keeps a watch on the rates 0:05:02.440 --> 0:05:04.960 market and certainly the treasury trade. Hey, we're going to 0:05:05.000 --> 0:05:07.359 stay with the treasury. Vonnie, you kicked it off the 0:05:07.400 --> 0:05:10.160 story that really caught our attention yesterday the US Department 0:05:10.480 --> 0:05:13.920 Treasury Department hacked by a Chinese state sponsored actor through 0:05:13.920 --> 0:05:17.560 a third party software service provider. It's how the world works, 0:05:17.839 --> 0:05:20.320 and yet you expect it to be safe and secure. 0:05:20.440 --> 0:05:24.000 Treasury describing the situation as a major cybersecurity incident. For 0:05:24.120 --> 0:05:26.200 more on this and some thoughts, we are joined by 0:05:26.200 --> 0:05:30.360 Wendy Thomas, the CEO of Secure Works, a cybersecurity firms. Wendy, 0:05:30.520 --> 0:05:32.479 your thoughts when you saw and heard this story? 0:05:33.960 --> 0:05:36.520 Well, there's a few recurring themes that we've certainly talked 0:05:36.520 --> 0:05:41.400 about before. A vulnerability and a third party technology that 0:05:41.560 --> 0:05:45.360 enabled these hackers to steal an authentication key bypass security 0:05:45.400 --> 0:05:50.239 measures and access Treasury workstations and documents. And the theme 0:05:50.320 --> 0:05:52.960 of while no one's claimed credit for this attack, a 0:05:53.160 --> 0:05:57.720 high profile Chinese state sponsored cyberactivity. So I think these 0:05:57.760 --> 0:06:00.880 are recurring themes. But certainly this is a major incident 0:06:00.920 --> 0:06:02.200 as we cap off this year. 0:06:02.600 --> 0:06:05.280 How do we know it's a Chinese date sponsored actor? 0:06:05.360 --> 0:06:07.200 And if we do know that, if we have the 0:06:07.240 --> 0:06:09.800 tools to tell what kind of a hack it is, 0:06:09.839 --> 0:06:11.760 why can't we protect against that kind of hack here? 0:06:13.240 --> 0:06:16.440 It is a good question. So the Treasury has confirmed 0:06:16.480 --> 0:06:20.000 that they've identified a number of indicators that do point 0:06:20.080 --> 0:06:25.279 to a China state sponsored APT or advance persistent threat actor. 0:06:26.800 --> 0:06:29.360 The ways that you protect against this, whether you're a 0:06:29.360 --> 0:06:32.920 government or a business, remain the same. 0:06:33.200 --> 0:06:33.320 Right. 0:06:33.360 --> 0:06:35.560 You have to be able to prevent everything that you can. 0:06:36.200 --> 0:06:41.600 But because we are so incredibly interconnected via software, via 0:06:41.640 --> 0:06:44.360 supply chain vendors that are key part of doing business 0:06:44.400 --> 0:06:47.240 each day, we have to prevent as much as we can, 0:06:47.279 --> 0:06:51.640 but frankly be ready to detect and respond quickly. If 0:06:51.680 --> 0:06:54.920 you look at the date at which Beyond Trust first 0:06:54.920 --> 0:06:58.560 detected some anomalous activity, it was December second, and we're 0:06:58.600 --> 0:07:02.920 sitting here on December thirty. First. The patches were issued 0:07:02.960 --> 0:07:06.080 sort of mid month and December added to sisa's non 0:07:06.120 --> 0:07:10.880 exploited Vulnerabilities catalog mid December. It does take speed in 0:07:11.000 --> 0:07:14.600 order to one identify that something is hitting and two 0:07:14.640 --> 0:07:18.520 be able to protect. And that's a holistic approach of prevent, detect, 0:07:18.560 --> 0:07:19.120 and respond. 0:07:19.440 --> 0:07:21.840 Is there an argument that the public should have known sooner? 0:07:21.920 --> 0:07:23.880 I mean, when does the public get to know about 0:07:23.920 --> 0:07:24.400 such things? 0:07:25.880 --> 0:07:28.520 Well, there's been an increasing work, especially by the US 0:07:28.640 --> 0:07:32.320 government over the last couple of years for organizations to 0:07:32.440 --> 0:07:36.040 report quickly, particularly if they are publicly treated companies in 0:07:36.080 --> 0:07:40.480 this case obviously a key government institution impacting our economy. 0:07:40.960 --> 0:07:42.680 But there is a bit of fog of war when 0:07:42.720 --> 0:07:45.080 you have a cyber attack and you detect something that's 0:07:45.120 --> 0:07:48.680 certainly anomalists, but you're not sure if it's malicious, and 0:07:48.720 --> 0:07:51.080 that's where companies like secare works come in to help 0:07:51.400 --> 0:07:56.480 quickly attribute anomalous activity to certain thread actors and to 0:07:57.080 --> 0:08:01.840 non exploited vulnerabilities in order to protect the actual breach 0:08:01.880 --> 0:08:05.480 of information or documents or encryption through ransomware. 0:08:05.760 --> 0:08:07.360 Wendy, is this just a case of this is the 0:08:07.440 --> 0:08:09.880 environment we live in, and China's going to hack into 0:08:09.920 --> 0:08:12.280 our systems. We're going to hack into Chinese systems. And 0:08:12.680 --> 0:08:14.920 it's a digital world, it's a cloud based world. This 0:08:15.040 --> 0:08:18.360 is just the way it is. Despite cybersecurity companies like 0:08:18.400 --> 0:08:21.400 yourself and solutions out there. This is just the new 0:08:21.440 --> 0:08:23.240 reality or continued new reality. 0:08:24.480 --> 0:08:26.760 I think the reality is that the attacks will continue. 0:08:26.920 --> 0:08:29.760 Right as twenty twenty five looms, we look to have 0:08:29.840 --> 0:08:35.360 continued heightened geopolitical tension, which could contribute to additional escalating 0:08:35.400 --> 0:08:40.120 cyber activity, particularly with China, and whether that's increasing tariff 0:08:40.679 --> 0:08:45.200 policies that may come into play the TikTok January nineteenth 0:08:45.240 --> 0:08:48.000 deadline that's coming around the sale of the company. 0:08:48.160 --> 0:08:50.640 Does something like this make you think that TikTok you 0:08:50.760 --> 0:08:52.199 understand the US concerns? 0:08:53.640 --> 0:08:53.800 Oh? 0:08:53.840 --> 0:08:54.480 Absolutely. 0:08:54.520 --> 0:08:57.199 I think anybody using TikTok should do so with caution, 0:08:57.360 --> 0:09:00.320 whether they're an individual. I mean, the volume and variety 0:09:00.360 --> 0:09:02.760 of citizen data that TikTok is harvesting in order to 0:09:02.800 --> 0:09:06.199 feed its algorithm has concerns for all of us. And 0:09:06.240 --> 0:09:08.640 that's why I think you've seen it first banned in 0:09:08.800 --> 0:09:13.360 government institutions where you can no longer mix kind of 0:09:13.360 --> 0:09:16.720 personal use of TikTok with a government used. 0:09:16.480 --> 0:09:19.880 Device that is so terrifying. I mean, is it much 0:09:19.880 --> 0:09:22.440 worse than some of the American corporations and what they're harvesting. 0:09:24.400 --> 0:09:26.200 Well, it's a little bit different where we do have 0:09:26.200 --> 0:09:28.839 disclosures around the data that is being harvested and used 0:09:28.840 --> 0:09:31.520 for those algorithms and the opportunity to opt out. This 0:09:32.240 --> 0:09:35.760 is a foreign power looking to harvest individual data, and 0:09:35.800 --> 0:09:38.199 we don't really know what type of positioning for political 0:09:38.240 --> 0:09:40.280 or economic advantage that might be used for. 0:09:40.679 --> 0:09:44.320 Wendy, thank you so much for joining. That was very explanatory, 0:09:44.480 --> 0:09:45.000 very helpful. 0:09:45.040 --> 0:09:45.320 Thank you. 0:09:45.320 --> 0:09:48.400 That's Wendy Thomas, CEO of Secure Works. 0:09:49.160 --> 0:09:52.679 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:52.720 --> 0:09:55.959 live weekday afternoons from two to five pm Easter Listen 0:09:56.000 --> 0:09:58.160 on Apple car Play and ed brot Auto with a 0:09:58.200 --> 0:10:01.200 Bloomberg Business app, or watch U Live on YouTube. 0:10:02.880 --> 0:10:05.160 So let's get to Alan Hibberd now pressneachls an alternative 0:10:05.160 --> 0:10:07.120 money specialist at goldsilver dot com. 0:10:07.200 --> 0:10:09.640 Alan, I mizzlstart. Where does gold, gold and water? It's 0:10:09.720 --> 0:10:11.040 key risks in twenty twenty five. 0:10:12.000 --> 0:10:12.960 Yeah, thanks for having me. 0:10:13.040 --> 0:10:15.200 So, I'm definitely expecting gold to have a great year 0:10:15.200 --> 0:10:17.000 in twenty twenty five, just like it did in twenty 0:10:17.040 --> 0:10:19.440 twenty four. I would not be surprised at all if 0:10:19.480 --> 0:10:22.480 it clears that three thousand dollars anounce threshold, and it 0:10:22.480 --> 0:10:24.679 could be the last year to buy gold under three 0:10:24.720 --> 0:10:27.520 thousand dollars an ounce. So in terms of the risk, 0:10:27.559 --> 0:10:29.480 what would prevent it from doing that? There's really two 0:10:29.559 --> 0:10:32.400 things that I see. One is actually bitcoin. If capital 0:10:32.440 --> 0:10:35.160 is attracted to bitcoin instead of gold, gold might not 0:10:35.240 --> 0:10:38.319 creep that high. And the other risk factor which really 0:10:38.360 --> 0:10:41.319 isn't a risk factor. It's actually peace. It's world peace. 0:10:41.440 --> 0:10:43.880 If all the wars and conflicts in the world settled 0:10:43.880 --> 0:10:46.400 down and our leaders are actually able to negotiate peace, 0:10:46.760 --> 0:10:48.920 capital might not flow into gold like it has been 0:10:48.960 --> 0:10:51.120 throughout the last couple of years. So those are the 0:10:51.120 --> 0:10:53.840 two risks that I see. It's really gold is bitcoin 0:10:53.880 --> 0:10:54.280 and peace. 0:10:54.600 --> 0:10:54.920 All right. 0:10:55.000 --> 0:10:56.880 So then for the run up that we've seen in 0:10:56.920 --> 0:11:00.760 twenty twenty four, Alan, is it because of the geopolitical 0:11:00.760 --> 0:11:03.959 concerns mostly which we know gold has typically historically been 0:11:03.960 --> 0:11:06.439 a safe haven. But is that the reason why we've 0:11:06.480 --> 0:11:08.040 seen such the run up In your. 0:11:08.040 --> 0:11:11.920 View, I think that's sort of the main underlying factor, 0:11:12.040 --> 0:11:15.560 because it's that geopolitical uncertainty that causes so many other things. 0:11:15.640 --> 0:11:17.480 So we saw it China buying a ton of gold. 0:11:17.720 --> 0:11:20.120 Not only is China the number one producer of gold 0:11:20.200 --> 0:11:22.480 in the world, it's also the number one importer of 0:11:22.559 --> 0:11:25.560 gold in the world, and that's very unusual. And investors 0:11:25.600 --> 0:11:29.360 around the world are also buying gold because of inflation, 0:11:29.559 --> 0:11:31.800 and the inflation is caused by all these countries who 0:11:31.800 --> 0:11:34.959 are fighting wars running their printing presses. So if it 0:11:35.000 --> 0:11:36.839 weren't for the wars, they wouldn't be running the printing 0:11:36.840 --> 0:11:39.960 presses so heavily. Investors wouldn't be worried about inflation, and 0:11:39.960 --> 0:11:42.240 they wouldn't be running to gold. So I think it 0:11:42.320 --> 0:11:45.320 really starts with all the geopolitical uncertainty. If we call 0:11:45.440 --> 0:11:47.640 get along, we wouldn't have to buy gold. We could 0:11:47.679 --> 0:11:48.480 just live our lives. 0:11:49.280 --> 0:11:51.160 Well, Alan, you heard Mike macgloane there. 0:11:51.160 --> 0:11:52.920 We were speaking a little bit about crypto and he 0:11:53.000 --> 0:11:56.080 maintains that this idea of a strategic reserve is a 0:11:56.080 --> 0:11:58.959 faustian bargain with the crypto people and the incoming president 0:11:59.000 --> 0:11:59.840 and the administration. 0:12:00.440 --> 0:12:02.280 Is that true in your view? 0:12:03.760 --> 0:12:07.600 Well, I think bitcoin is best thought of as superior money. 0:12:07.840 --> 0:12:11.200 And anytime that two different moneies come up against each other, 0:12:11.559 --> 0:12:15.240 the same thing happens every single time throughout history. Capital 0:12:15.280 --> 0:12:17.960 flows from the weak money into the strong money, and 0:12:18.000 --> 0:12:19.679 it's only a matter of time. So if you look 0:12:19.679 --> 0:12:21.680 at the United States and you want to discuss the 0:12:21.720 --> 0:12:24.600 Strategic National Bitcoin Reserve, is it a good idea, is 0:12:24.640 --> 0:12:26.200 it a bad idea? Is it going to happen within 0:12:26.200 --> 0:12:28.000 the first hundred days, or is it not even going 0:12:28.040 --> 0:12:30.280 to happen in the next four years, all of that 0:12:30.320 --> 0:12:33.880 doesn't really matter. Capital is definitely going to flow from 0:12:33.960 --> 0:12:37.240 weak money like the US dollar into strong money like bitcoin. 0:12:37.559 --> 0:12:38.720 It's just a matter of time. 0:12:38.840 --> 0:12:40.520 I think you to back that up a little bit. 0:12:40.559 --> 0:12:43.600 Why do you say bitcoin is superior money? It's not 0:12:43.600 --> 0:12:44.760 even money, no offense. 0:12:44.840 --> 0:12:47.120 I have yet to transact in bitcoin, and I think 0:12:47.120 --> 0:12:49.440 if you ask, most people, unless you go to an 0:12:49.480 --> 0:12:53.240 emerging area, have yet to transact in bitcoin. 0:12:54.120 --> 0:12:55.400 Yeah, it's a great question. 0:12:55.440 --> 0:12:57.040 I'm glad you asked, and I could talk about it 0:12:57.080 --> 0:12:59.400 for hours, but I'll try to keep my answer short. 0:13:00.000 --> 0:13:03.200 There's really two ways to think about money. First is 0:13:03.280 --> 0:13:05.920 as a medium of exchange, which I would actually call 0:13:05.960 --> 0:13:07.520 it currency. So if you're going to buy a cup 0:13:07.600 --> 0:13:10.400 of coffee or groceries, you're going to use currency, and 0:13:10.440 --> 0:13:13.679 you want something that moves quickly, it has low transaction 0:13:13.760 --> 0:13:16.000 fees and doesn't take a lot of energy to make 0:13:16.000 --> 0:13:18.400 that transaction, and the US dollar is great for that. 0:13:18.920 --> 0:13:21.520 The other reason you'd have money is as a store 0:13:21.559 --> 0:13:24.520 of value, and that basically means you acquire it and 0:13:24.559 --> 0:13:26.760 then you hold it for ten years or twenty years, 0:13:26.760 --> 0:13:28.720 and it just sits there, and you might even forget 0:13:28.720 --> 0:13:30.840 that you have it, but the whole point is for 0:13:30.880 --> 0:13:33.240 it to stay in one place and secure your value 0:13:33.280 --> 0:13:36.839 over time. That's gold and it's bitcoin, so that when 0:13:36.880 --> 0:13:39.200 I say money, I'm referring to gold or bitcoin. That's 0:13:39.240 --> 0:13:42.760 store of value of functionality, whereas a currency like the 0:13:42.880 --> 0:13:45.560 US dollar that's more of a medium of exchange. So, 0:13:45.640 --> 0:13:48.160 by the way, don't hold your breath on being able 0:13:48.240 --> 0:13:50.840 to use bitcoin to buy a cup of coffee. It's 0:13:50.840 --> 0:13:53.520 not going to happen. It shouldn't happen, doesn't matter. 0:13:54.200 --> 0:13:56.360 Why are you so convinced it's a store of value 0:13:56.440 --> 0:13:59.200 because the supply is finite? Does that make it a 0:13:59.200 --> 0:14:00.000 store of value as. 0:14:00.160 --> 0:14:04.400 Really it's partly because the supply is finite, But more importantly, 0:14:04.600 --> 0:14:09.920 it gets increasingly more difficult to make another bitcoin. That's 0:14:10.000 --> 0:14:13.120 so so, so critical. That happens naturally with gold. No 0:14:13.200 --> 0:14:15.160 one has to design it that way. But if there's 0:14:15.200 --> 0:14:17.440 two different ounces of gold sitting in the ground, and 0:14:17.480 --> 0:14:19.840 one's really easy to get to and one's really hard 0:14:19.880 --> 0:14:22.200 to get to, you're going to mine up the easy one, 0:14:22.440 --> 0:14:24.720 so later in the future you're going to have to 0:14:24.720 --> 0:14:27.360 go after that hard one and spend more energy to 0:14:27.440 --> 0:14:31.280 get a unit of gold. In the future, bitcoin mimics 0:14:31.320 --> 0:14:34.960 that same property artificially using code, so that it takes 0:14:35.000 --> 0:14:38.440 more and more and more energy to mine each subsequent bitcoin. 0:14:38.680 --> 0:14:41.280 That's good news for anyone holding bitcoin, because if you 0:14:41.480 --> 0:14:44.920 acquired it earlier, it didn't take you that much energy 0:14:44.960 --> 0:14:47.880 to get it. However, anyone who wants to acquire a 0:14:47.880 --> 0:14:50.120 bitcoin in the future has to give up a lot 0:14:50.160 --> 0:14:51.040 of energy to get one. 0:14:51.120 --> 0:14:52.880 I guess Ellen, I would ask that if there's a 0:14:52.920 --> 0:14:56.000 limited supply, I understand the dynamics of supply and demand, 0:14:56.040 --> 0:14:58.600 but if there's a limited supply, how can it be 0:14:58.680 --> 0:15:01.520 something that is used much more or broadly. I understand 0:15:01.520 --> 0:15:04.840 the value of maybe blockchain in terms of transacting, but 0:15:05.200 --> 0:15:10.360 the individual bitcoin as a way of transacting, If it's 0:15:10.360 --> 0:15:13.560 going to be limited in supply forever, how can it 0:15:13.560 --> 0:15:16.400 be something that's much more broadly in use in terms 0:15:16.400 --> 0:15:18.720 of how we look at the US dollar or other currencies. 0:15:20.240 --> 0:15:22.640 Yeah, well, it sort of relates to my previous answer, 0:15:22.680 --> 0:15:25.160 which is that I wouldn't expect bitcoin to be used 0:15:25.160 --> 0:15:27.840 in day to day transactions, even if you develop something 0:15:27.880 --> 0:15:31.040 like the Lightning network or other layer two solutions they're called. 0:15:31.560 --> 0:15:34.800 I don't think it'll be that common to actually transact bitcoin. 0:15:35.520 --> 0:15:38.680 It will be more common to transact to US dollars, euros, 0:15:38.800 --> 0:15:39.440 yen and. 0:15:39.440 --> 0:15:40.760 So forth, whatever jurisdiction. 0:15:40.800 --> 0:15:43.680 Alan didn't. People say that about NFTs too, And they're 0:15:43.800 --> 0:15:45.360 not worth very much these days. 0:15:45.240 --> 0:15:45.520 Are they. 0:15:46.600 --> 0:15:50.680 I would not go anywhere near NFTs. No, I only 0:15:50.760 --> 0:15:53.240 go near Bitcoin. I made a mistake going after a 0:15:53.280 --> 0:15:56.880 dozen other cryptos when I thought they had attractive use cases. 0:15:57.160 --> 0:15:59.560 But they're very hard to value and they have real 0:15:59.600 --> 0:16:02.640 idiots syncratic risks. So I even went so far as 0:16:02.680 --> 0:16:06.160 to go visit one of these cryptocurrencies in person. I 0:16:06.200 --> 0:16:07.960 looked at their code, I met the team, I did 0:16:07.960 --> 0:16:10.640 my due diligence, and I lost ninety nine point nine 0:16:10.680 --> 0:16:12.760 percent of my value on that coin. And I have 0:16:12.920 --> 0:16:16.640 multiple stories like that these. Most of these cryptocurrencies, they're 0:16:16.680 --> 0:16:19.040 not well. Some are designed to be scams. They're not 0:16:19.080 --> 0:16:20.840 all designed to be scams, but some of them turn 0:16:20.880 --> 0:16:24.200 out to be scams because they have so many idiosyncratic risks. 0:16:24.200 --> 0:16:26.440 You have to have execution on the part of the 0:16:26.480 --> 0:16:28.560 software team. You have to have marketing, you have to 0:16:28.600 --> 0:16:31.280 have adoption, you have to have functionality. You can't have 0:16:31.360 --> 0:16:34.800 problems and you can't really have competitors that accomplish the 0:16:34.800 --> 0:16:37.120 same thing better than the way you accomplished it, or 0:16:37.120 --> 0:16:38.400 you're not going to attract capital. 0:16:38.440 --> 0:16:40.920 So if you say bitcoin is still in the process 0:16:40.920 --> 0:16:43.720 of price discovery, how do you discover, you know, a 0:16:44.120 --> 0:16:47.800 price when it's it's very unclear what the fundamentals are. 0:16:48.120 --> 0:16:50.640 Yeah, I mean right, its value is that it hunts 0:16:50.680 --> 0:16:54.040 outside the establishment. And yet that lack of transparency raises 0:16:54.120 --> 0:16:54.920 so many questions. 0:16:56.280 --> 0:16:57.960 Well, bitcoin is transparent. 0:16:58.000 --> 0:16:59.800 I mean it's a public blockchain, right, so you can 0:16:59.840 --> 0:17:02.600 go and look online and see where all the blockchains 0:17:02.600 --> 0:17:04.760 are sitting with the history of them has been in, 0:17:04.800 --> 0:17:06.720 what block they were mined. You can see all of that. 0:17:07.040 --> 0:17:10.320 So transparency is actually pretty fantastic on bitcoin. However, if 0:17:10.320 --> 0:17:12.159 I want to see how many dollars exist, I have 0:17:12.240 --> 0:17:15.760 to trust the Federal Reserves data, and I don't and 0:17:15.800 --> 0:17:18.240 it could be outdated and I don't know who's holding 0:17:18.280 --> 0:17:19.280 those dollars or where they are. 0:17:19.359 --> 0:17:21.399 Right the faith of the US government, And I know 0:17:21.440 --> 0:17:23.919 some could debate that right now, but nonetheless you have 0:17:23.920 --> 0:17:27.199 the faith of the US government. Listen, this excitement, we 0:17:27.240 --> 0:17:29.480 know we could go on for probably another hour. Means 0:17:29.480 --> 0:17:30.960 this is going to be a hot topic in twenty 0:17:31.000 --> 0:17:33.040 twenty five. Allen, thank you so much. Have a great 0:17:33.040 --> 0:17:36.600 new year. Alan Hibbard, Precious Metals and alternative money specialist 0:17:36.640 --> 0:17:39.080 over at goldsilver dot com. 0:17:39.680 --> 0:17:43.520 You're listening to the Bloomberg Business Week podcast. Listen live 0:17:43.640 --> 0:17:46.800 each weekday starting at two pm Eastern on applecar Play 0:17:46.840 --> 0:17:49.679 and Android Auto with the Bloomberg Business App. You can 0:17:49.720 --> 0:17:53.000 also listen live on Amazon Alexa from our flagship New 0:17:53.040 --> 0:17:58.000 York station, Just say Alexa. Play Bloomberg eleven thirty for. 0:17:58.119 --> 0:18:01.560 More on this group pharmaceuticals what to watch out for 0:18:01.680 --> 0:18:03.920 In twenty twenty five, we were joined by Bloomberg News 0:18:04.080 --> 0:18:06.679 healthcare reporter Madison Muller, who is a must read on 0:18:06.800 --> 0:18:09.879 all companies and developments in this space. Madison, good to 0:18:09.920 --> 0:18:12.200 have you here with us. You know, I'm thinking about 0:18:12.240 --> 0:18:16.760 twenty twenty four. You know, an explosive year, Bloomberg News 0:18:16.800 --> 0:18:18.800 wrote last week, twenty twenty four was the year weight 0:18:18.840 --> 0:18:23.000 loss drugs took over. What was significant about twenty twenty four? 0:18:23.040 --> 0:18:24.880 After what was it? Kind of a busy year for 0:18:24.960 --> 0:18:26.880 this space also in twenty twenty three. 0:18:27.880 --> 0:18:30.159 Yeah, twenty twenty four was really the year that we 0:18:30.200 --> 0:18:34.080 saw the real world impacts of these drugs start to 0:18:34.119 --> 0:18:37.680 take shape. So it's not just talking about the clinical 0:18:37.720 --> 0:18:41.040 studies and how much percent weight loss and how great 0:18:41.080 --> 0:18:44.200 these drugs are, but we were actually seeing what happens 0:18:44.280 --> 0:18:48.320 when you put these out into the general population, and 0:18:48.440 --> 0:18:52.399 the challenges with insurance coverage, the challenges with just affordability 0:18:52.440 --> 0:18:56.159 and access in general, supply shortages. We also saw, as 0:18:56.200 --> 0:18:58.720 I know we've talked about on the show, the rise 0:18:58.760 --> 0:19:02.159 of telehealth companies that are making cheaper copy or selling 0:19:02.240 --> 0:19:05.560 cheaper copycat versions of the drugs and advertising them really 0:19:05.560 --> 0:19:09.240 widely on social media, and the sort of battle that's 0:19:09.320 --> 0:19:12.560 ensued between the drug companies and the compounding pharmacies that 0:19:12.640 --> 0:19:15.480 make these copycat drugs. So there was a lot that 0:19:15.680 --> 0:19:19.800